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SMSFs to be required to have Retirement Income Strategy

SMSFs to be required to have Retirement Income Strategy from www.solepurposetest.com/news MAY 21, 2018 BY LUKE SMITH

SMSFs would be required to develop a Retirement Income Strategy under changes to superannuation being developed by the Government.

The Government has released a position paper on the Retirement Income Covenant, which would require super funds – including SMSFs – to develop a Retirement Income Strategy for members.

“For too long superannuation has been focused only on accumulating savings. A retirement income framework is a pivotal part of the Government’s reform agenda for superannuation – an agenda squarely focused on protecting and improving outcomes for superannuation members,” said Minister for Revenue and Financial Services Kelly O’Dwyer.

“To fulfil the overarching purpose of superannuation, it is essential that trustees develop a retirement income strategy and consider the retirement income needs of their members.” 

This follows from an announcement in the 2018 Budget that the Government intends to amend the SIS Act to “introduce a retirement covenant that will require superannuation trustees to formulate a retirement income strategy for superannuation fund members”.

The Retirement Income Covenant is part of the Comprehensive Income Product for Retirement (CIPR), which was a recommendation of the Financial System Inquiry (FSI) to require super funds to pre-select a retirement income option for members. The Government has been slowly progressing CIPR since it was recommended by the FSI in 2014.

According to the position paper the only part of the Retirement Income Covenant that would apply to SMSFs is the requirement for a Retirement Income Strategy.

In terms of the broader Retirement Income Framework, the Government plans to prioritise progress of the Retirement Income Covenant, followed by simplified and standardised disclosures for retirement products, then retirement income projections and finally the regulatory framework.

The superannuation industry has criticised CIPR as “neither necessary nor sufficient”, as currently designed, to meet its goals.

 

By |May 22nd, 2018|budget, retirement, Self Managed Super Fund News, Uncategorized|Comments Off on SMSFs to be required to have Retirement Income Strategy
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2018 Budget measure proposes annual audit change to once every three years

SMSF Association Media Release – 8 May 2018 – Audits.

The 2018 Budget measure that proposes a reduction in the annual audit requirement to once every three years for self-managed super funds (SMSFs) with a good compliance history has been welcomed by the SMSF Association.

SMSF Association CEO John Maroney says this proposal, which will cut red tape for the SMSF sector, is a fitting reward for trustees who strictly adhere to the regulatory regime.

However, Maroney adds that it’s a strongly held Association position that an independent audit is essential to the integrity of the sector, and as such “we keenly await the implementation details of the proposal”.

This proposed change in auditing procedure for SMSFs, when coupled with the expansion of SMSFs from four to six members and the digital rollover measure announced by the Minister for Revenue and Financial Services, Kelly O’Dwyer, at last month’s inaugural SMSF Expo, help to cut red tape and improve flexibility for SMSFs.

Maroney says these positive measures, in line with a 2018-19 Budget that largely left superannuation alone, will come as an “enormous relief” to SMSFs and their advisers.

“This continued regulatory stability for SMSFs is welcomed by the Association and is sorely needed as trustees still come to grips with the superannuation tax changes that took effect on 1 July 2017.

“We look forward to a much-needed period of stability for superannuation and working through the implementation of the superannuation changes with the Government and regulators.”

He says the Association is pleased that the Government has acted to ensure the efficiency and integrity of the broader superannuation system.

“Capping fees on low balance superannuation accounts and introducing opt-in requirements for insurance in superannuation for certain fund members are positive measures that will ensure younger superannuation fund members do not have their account balances eroded unnecessarily.”

Older Australians were also beneficiaries of the Budget via an expanded Pension Work Bonus program, the enlarging of the Pension Loans Scheme to include people on the full-age pension and self-funded retirees, and granting a one-year superannuation work test exemption for recent retirees with balances under $300,000.

“These measures are welcomed by the SMSF Association for providing more flexibility for older Australians to manage their retirement.”

By |May 12th, 2018|budget, Self Managed Super Fund News, Uncategorized|Comments Off on 2018 Budget measure proposes annual audit change to once every three years
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2018-19 Budget Submission

SMSF Association 2018-19 Budget Submission

The SMSF Association welcomes the opportunity to make a pre-budget submission for the 2018-19 Federal Budget. As leaders of the SMSF sector, we believe the SMSF Association are able to offer insights on some key issues from the perspective of an industry that has grown to represent approximately $701 billion in assets and over 1.1 million SMSF members, becoming an integral part of Australia’s superannuation system and economy.

This year SMSF Association submission focuses primarily on improving the efficiency of the superannuation system.

After the introduction of the significant legislative changes which came into effect on 1 July 2017, it is essential that superannuation fund members continue to have a period of stability. The SMSF Association note the Government has stated they have no intent on any further changes to the superannuation rules in the foreseeable future.

In this submission the SMSF Association submit that the Government give ongoing consideration to how policy settings for superannuation and the age pension are integrated to ensure that efficient outcomes are delivered by the broader retirement income system. They believe that further consideration of this policy area is very much needed.

The SMSF Association also seeks action on Superannuation Guarantee (SG) reforms and believe that a recommitment to the increase in the SG rate to 12 per cent should be legislated to ensure retirement savings for individuals are adequate. This should be supplemented by reforms that allow individuals to choose which superannuation fund they want to receive their SG contributions and to prevent unscrupulous employers from using loopholes to avoid paying their full SG entitlements.

The SMSF Association also focus on how SMSFs can be an important source of funding for domestic infrastructure, social impact investment and commercialising innovation. Accessing SMSF capital to fund these important areas would support economic growth and also deliver improved retirement income outcomes for SMSFs.

The SMSF Association also seeks increased transparency regarding the SMSF levy and believe a review of the levy will ensure that SMSF trustee fees are used to regulate the sector in an efficient manner and for purposes which will improve the sector.

Additionally, the SMSF Association submission highlights significant red-tape issues impeding the superannuation system. The current restrictions facing SMSF members who reside outside of Australia and a host of technical amendments resulting from the introduction of the new super reforms on 1 July 2017, problems that could easily be resolved by Government through improved legislation.

Click here to download and read the full submission.

 

By |April 9th, 2018|Uncategorized|Comments Off on 2018-19 Budget Submission
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Event-based reporting webinar Nov 2017

Watch a video from a ATO webinar for SMSF's about Event-based reporting, November 2017.

Topics

  • Consultation with industry and frequency of SMSF reporting from 1 July 2018
  • What is event based reporting?
  • Why do we need event based reporting?
  • What are the impacts for SMSFs?
  • The reporting framework
  • Transitional concession for event based reporting
  • What events should be reported?
  • Frequency of SMSF reporting – case studies
  • Consequences of exceeding the transfer balance cap
  • Understanding some possible impacts of deferred reporting
  • Case studies

You may find some of the slides are a little difficult to read so here is a link to the ATO webinar slides.

By |January 9th, 2018|Self Managed Super Fund News, Uncategorized|Comments Off on Event-based reporting webinar Nov 2017
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CGT relief not for all assets

CGT relief provisions do not apply to all assets that the SMSF owns.

20 Dec 2017 from www.smsmagazine.com.au by Darin Tyson-Chan

SMSF advisers and trustees must be aware the capital gains tax (CGT) relief provisions contained in the super reforms do not apply to all assets the fund owns, a technical expert has said.

Speaking at the Institute of Public Accountants 2017 National Congress on the Gold Coast last month, SuperConcepts technical services executive manager Mark Ellem told delegates cash and fixed income products are not eligible for CGT relief and nor are traditional securities.

“The best example of a traditional security is debenture notes, floating notes where your return is based on interest rates and they go up and down in value depending on what interest rates are doing, unsecured loans, they’re traditional securities,” Ellem said.

“A gain or loss on a traditional security is not assessed under the CGT provisions – it’s on revenue account.

“So it’s not a capital gain or loss and you can’t reset the cost base because they don’t have a cost base. So have a look if you’ve got funds that invest in these interest-type securities.”

He noted in certain circumstances it was not as easy to determine if an asset is a traditional security just on the surface alone.

“We saw an asset that looked like a traditional security, but a lot of these items have class rulings. In this case we found a class ruling and it specifically said the asset was not a traditional security, therefore it came under the CGT provisions, therefore we could reset the cost base,” he said.

In addition to class rulings, advisers and their clients can also refer to product disclosure statements to help determine if an asset is a traditional security.

“Normally, but not always, the product disclosure statement will have a tax opinion in it about how a traditional security is assessed from an income perspective and also when it is sold,” Ellem noted.

“Even if it has that tax opinion, you should still see if there is a class ruling for the asset as well that is going to specifically say if it’s on revenue account or on capital account.”

 

By |January 8th, 2018|Self Managed Super Fund News, Uncategorized|Comments Off on CGT relief not for all assets
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Super Changes Reshape Succession Planning

From 1 July 2017, the need for specialist advice is as important as ever, with the introduction of the transfer balance cap (TBC) impacting on the amount of death benefits that a beneficiary can receive as an income stream. Clients who have already put plans in place to direct their superannuation where they want it to go on their death will have to redesign those plans. Advisers talking to clients about putting such plans in place will need to refresh their thinking around the relevant considerations to be addressed in the advice they provide.

Where the recipient of a death benefit pension exceeds their own TBC, they will need to take any excess as a lump sum death benefit. Different rules apply to modify the TBC rules for a child beneficiary and for a reversionary beneficiary. The amount of money that can now be retained within the superannuation environment upon the death of a member as either a pension account or an accumulation account of the recipient member has been materially curtailed.

This is a significant shift in relation to superannuation death benefits and estate planning, making it paramount to review all succession plans involving superannuation benefits.

Join Peter Hogan, the Head of Technical and Education in our November Masterclass.

The Masterclass workshop will provide you with specialised knowledge and skills to analyse your client’s information and provide solutions to their complex situations.

Get hands-on practice at determining the best course of action and subsequent outcomes for particular clients through the interactive discussion, activities and examples.

To ensure that you get the most out of the Masterclass, we will be providing

• A pre-course quiz to help us develop the Masterclass to suit your needs
• A webinar which will acquaint you and fellow participants with the course format and content as well as introducing content to be covered that we will later build on.
• A pre-course assignment which embeds the themes introduced in the webinar. It includes pre-reading material and a case study to analyse.
• A 3-hour intensive face-to-face course where you will explore and discuss all aspects. For most of the course we will look at some strategies you can use to get the best outcomes for your clients, and tackle some tricky real-life situations which will get you thinking outside the box.

Take advantage of an exclusive membership + Masterclass bundle by following this link for further instructions:
https://www.smsfassociation.com/masterclass-membership-bundle/
This event will be held at Cooper Grace Ward

Details

Date: 14 Nov 2017
9:30 am AEST – 12:30 pm AEST

Knowledge Area:

Managing Investment, SMSF Administration, Taxation

CPD Points: 6

Venue:

Cooper Grace Ward
Level 21 / 400 George Street
Brisbane, QLD 4000

$440

Price for Members Self Managed Super Fund Association

$575

Price for Non-Members

To book : https://www.smsfassociation.com/product/super-changes-reshape-succession-planning-bris/

By |October 16th, 2017|Uncategorized|Comments Off on Super Changes Reshape Succession Planning
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