See Your Future Clearly

SuperIQ is an intuitive Self Managed Superfund System that’s designed to link all the services you may need, helping you to make the best decisions about your financial future.

Will the Coalition deliver its superannuation promises?

The newly elected Government had previously announced their proposed changes to superannuation. They had indicated that these proposed superannuation reforms were, and now are, part of their ongoing attempts to improve the fairness, sustainability and efficiency of the superannuation system.

Superannuation policies for the 2013 Federal Election

On Monday, 5 August 2013, the Government went into Caretaker mode with a Federal election to be held on Saturday, 7 September 2013.

The Federal Election should be the opportune time for politicians to look at their plans for developing the superannuation and retirement system so it becomes self-sufficient and to look at making changes that will stimulate Australian retirement savings.

Recent ATO Rulings and Determinations

Two key ATO Rulings have been released from the ATO this month which SMSF members and trustees need to be aware of. Outlined below is a very brief summary of the changes.

1. When a superannuation super income stream commences and cesses (applies from 1 July 2007)

Reminder - Minimum pension draw-down relief ceases

What it means?

The 25% drawdown relief previously available (following the Global Financial Crisis amid market uncertinity) in relation to meeting minimum pension requirements has ceased. This applies to account based pension and annuities (allocated pension and annuities and market linked pensions and annuities).

From 1 July 2013 minimum pension payments revert back to the standard minimums.

The following table shows the minimum payment factor (how much you have to withdraw each year):

ATO to increase its heavy surveillance of Self-Managed Superannuation Funds (SMSFs) in 2013/14

I recently read an article that commented on the fact that the ATO were not keeping an eye on what was going on in the SMSF space, let me start by assuring you that that statement is not factually correct. An increase in SMSF numbers has made them an easy attack. The recently released ATO Compliance program 2013/14 will endeavour to keep those critics of SMSFs silent.

Withdrawal of excess concessional super contributions

The Government has successfully passed a super Bill that establishes a fairer system for the treatment of individuals with excess concessional contributions.

The ATO will retain the discretion to disregard, or allocate to another financial year, all or part of a person’s concessional contributions in relation to a financial year for the purpose of working out that person’s excess concessional contributions.

Superannuation Bills pass Parliament

The Government this week after much speculation has successfully passed some of their most important changes to superannuation.  They have indicated that these superannuation reforms are part of their ongoing attempts to improve the fairness, sustainability and efficiency of the superannuation system.

The following two superannuation measures have been passed by Federal Parliament and await Royal Assent:

• Increasing the concessional contribution cap for older Australians; and
• Raising the superannuation contributions tax for high income earners

Withdrawal of excess concessional super contributions

Under the current arrangements, concessional contributions that are in excess of the annual cap are effectively taxed at the top marginal tax rate (46.5 per cent) rather than the normal rate of 15 per cent.

Fund capped superannuation contribution rules

The following provides a recap on the non-concessional contribution rules in the lead up to the end of financial year contribution strategies.

Non-concessional Contributions

Non-concessional contributions include:

• Personal contributions for which no tax deduction is claimed
• Excess concessional contributions
• Spouse contributions
• Proceeds from the sale of small business that are contributed to super if the amount did not qualify for the 15-year or retirement CGT small business exemptions.

Superannuation income streams - tax certainty upon death of a member

Investment earnings derived by super funds on assets supporting pensions are exempt from tax. Draft Taxation Ruling 2011/D3 released last year suggested that the pension exemption ceases immediately upon death, unless a reversionary pension was in place.

Accordingly, as per ATO ID 2004/688 if an SMSF member dies with assets carrying unrealised capital gains, even if the deceased were receiving a pension upon death the pension would cease (unless a reversionary pension was in place). If SMSF assets were then sold or transferred, the SMSF would have CGT implications.