Securing Your Superannuation Future E-Book

Daryl Dixon

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 303

Veröffentlichungsjahr: 2012

Beschreibung

Find Out if an SMSF is Right for You Are you thinking about setting up a self managed superannuation fund but unsure where to start? Are you worried that you're not maximising all the benefits an SMSF offers? In Securing Your Superannuation Future, Daryl Dixon offers practical, easy-to-understand tools and strategies to help you set up and run your own super fund. More Australians than ever are deciding to take control of their super, and Daryl's insights go beyond the standard requirements for running an SMSF. He reveals many tax-saving tips and practical steps to work through important decisions such as: * Do you need professional assistance to run your fund? * Who should be the trustees and members of your SMSF? * What steps should you take to build your super in a tax-effective way? * How do you construct your SMSF investment portfolio? * When and how should you access your super? * How can you maximise the amount of super you pass on to your beneficiaries?

Leseprobe

Table of Contents

Chapter 1: Is an SMSF right for you?

What is an SMSF?

What are the benefits of self managed super?

More investment options

Investment control

Fee transparency

General flexibility

Do you need to be a superannuation expert to run an SMSF?

How do SMSFs compare with other funds on fees?

What are the other funds charging?

How do SMSFs compare?

Is it worth swapping your current super solution for an SMSF?

Does an SMSF suit your stage in life?

You think an SMSF might be for you?

In summary

Chapter 2: SMSF pre-setup checklist

Step 1: identify the members of your SMSF

Who will be members of your SMSF?

Who can be members of the same SMSF?

Do all members share the same investment philosophy?

Should your children be members?

Step 2: select a trustee or trustees for your SMSF

Will all members be eligible to be trustees?

Should you have a corporate trustee or individual trustees?

Step 3: consider your overseas travel plans

Step 4: familiarise yourself with the roles and responsibilities of trustees

What are the penalties if you get it wrong?

Step 5: decide who will help establish and administer your SMSF

What options are available to set up your SMSF?

What options are available to administer your SMSF?

What services will an SMSF administrator provide?

How do you compare SMSF administrator fees?

What services will an accountant provide and how do they charge?

Step 6: decide if you need investment advice

Do you have the knowledge to manage your investment portfolio?

How much time do you have to manage your investment portfolio?

How do investment fees work?

Should you seek professional investment advice?

Step 7: decide if you need financial advice

Will you need financial advice when managing your SMSF?

What is the cost of getting financial advice?

Where to now?

SMSF pre-setup checklist

In summary

Chapter 3: The SMSF setup phase

Steps to set up your SMSF

Step 1: obtain a trust deed

Step 2: appoint the trustee(s) of your fund

Step 3: register your fund

Step 4: open a bank account in your fund’s name

Step 5: prepare an investment strategy

The rollover process

Make sure your personal details are up to date

Consider market volatility

Implement all outstanding strategies involving your existing fund

Review and take steps to retain your existing insurance

Investigate the cost of your existing super fund

Consider starting a pension in your existing super fund

Submit correct documentation and identification

In summary

Chapter 4: Making contributions to your SMSF

Are you eligible to make contributions?

What types of contributions can you make?

Concessional contributions

What is the limit on concessional contributions?

Employer super guarantee contributions

Salary sacrificing to super

Personal deductible super contributions

Which should it be: salary sacrifice or personal deductible contributions?

Non-concessional contributions

What is the limit on non-concessional contributions?

Triggering the bring-forward provisions

What is the benefit of making a personal non-concessional contribution?

When should you contribute?

Other types of contributions and strategies

Government superannuation co-contribution

Spouse contribution

Personal injury

Proceeds from the sale of small business assets

Contribution splitting

How do you make a personal contribution to super?

In summary

Chapter 5: How to construct your SMSF investment portfolio

Step 1: determine what type of investor you are

Determine your objectives and needs

Tolerance to risk

Capacity for loss

Investment timeframe

Income requirements

Step 2: determine your risk profile

Step 3: work out your asset allocation

Defensive assets

Growth assets

Resources

International shares

Step 4: build your portfolio

Diversifying within each asset class

Investing through funds versus stock picking

Investing through funds

Picking stocks

Step 5: manage your portfolio

Take an active approach to your portfolio

Other investment strategies

In summary

Chapter 6: Investment rules

Prepare a written investment strategy

You must invest for a sole purpose

Keep your SMSF and personal affairs separate

Naming of assets

Paying expenses from the fund

Banking income into personal accounts

Be careful when acquiring assets from related parties

Listed securities

Business real property

In-house assets

Keep things at arm’s length

Don’t provide financial assistance

Don’t give a charge over fund assets

Don’t borrow, unless you’re allowed

Improvements

Repairs and maintenance

Investment in artwork, cars, jewellery and wine

Storage and use

Insurance

Sale of a collectable to a related party

Commencement of rules

Be careful when using derivatives

In summary

Chapter 7: Accessing your SMSF benefits

Preservation status of benefits

Conditions of release

Reaching your preservation age

Retirement

Reaching age 65

How can you access your super within your SMSF?

How do you take a lump sum from your SMSF?

How do you take a pension from your SMSF?

What are the tax implications of withdrawing your super?

Starting multiple pension accounts

Starting a pension in the SMSF setup phase after each rollover is received

Starting a pension once the balance in your accumulation account reaches $40 000 to $50 000

Starting a pension before and after making a non-concessional contribution

Limiting the number of pensions

Tax-effective pension strategies

Between ages 55 and 59

How do pensions and lump sums affect your Age Pension?

In summary

Chapter 8: Insurance in your SMSF

Types of personal insurance you should consider

SMSFs and personal insurance

Benefits of holding insurance within super

Drawbacks of holding insurance in super

In summary

Chapter 9: Estate planning and protecting your SMSF

Who can receive your super benefits?

Your spouse

Your child

Financial dependants

Interdependants

Legal personal representative

What happens if you don’t have superannuation dependants or a legal personal representative?

How can benefits be paid?

Who decides who gets your super benefits?

Non-binding death benefit nominations

Binding death benefit nominations

Reversionary pensions

Death and taxes on super

Beneficiaries

The SMSF

Time limits

Does an SMSF continue after a member’s death?

Anti-detriment payments

How is the contributions tax reclaimed?

Where does my fund find the extra money to pay the anti-detriment amount?

Should every fund be prepared to make an anti-detriment payment?

What happens to your SMSF if you become bankrupt?

Are your SMSF assets protected?

Are your lump sum and pension payments protected?

What happens to your SMSF if you divorce?

What is your super worth?

Decide the method of dividing your super

How much of your super will be split?

How will your splitting agreement or order be effected?

Can you transfer assets subject to a split to another superannuation fund?

Are there any taxation implications?

Does the SMSF need to be restructured after the super split?

What happens to your SMSF if you lose capacity?

Who should be your attorney?

When can your attorney step in?

In summary

Daryl Dixon

First published in 2012 by Wrightbooks an imprint of John Wiley & Sons Australia, Ltd 42 McDougall St, Milton Qld 4064

Office also in Melbourne

Typeset in Times Regular 11.5/13.5

© Daryl Dixon 2012

The moral rights of the author have been asserted

National Library of Australia Cataloguing-in-Publication data:

Author: Dixon, Daryl.

Title: Securing your superannuation future: how to start and run a self managed super fund / Daryl Dixon.

ISBN: 9780730377788 (pbk.)

Notes: Includes index.

Subjects: Pension trusts – Australia.

Retirement income – Australia.

Retirement – Planning.

Dewey Number: 332.67254

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.

Cover design by Punch Bowl Design

Printed in Singapore by Markono Print Media Pte Ltd

10 9 8 7 6 5 4 3 2 1

Disclaimer

The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.

About the author

Daryl Dixon is the executive chairman of Dixon Advisory. Daryl is one of Australia’s foremost investment experts and a well-known writer and consultant. He has provided trusted advice to thousands of personal clients for more than 25 years and is an acknowledged expert in the areas of tax, super­annuation (including public sector superannuation), social security and invest­ments. He has also been a successful investor for more than 40 years.

Daryl is the author of numerous newspaper articles on investment and superannuation and writes regularly for TheCanberra Times, the Public SectorInformant, Smart Investor magazine and the Australian Financial Review Investor (in TheSunday Age and Sun Herald). He has written a number of books and consults on personal and business finance strategies.

Before establishing his own consulting firm, Daryl worked in the International Monetary Fund, the Treasury, the Department of Finance and as head of the former Social Welfare Policy Secretariat on major policy issues. He has worked as a consultant for a variety of government bodies and undertaken a large number of consultancies for diverse organisations covering the public, private and voluntary not-for-profit sections of the economy.

Daryl has a bachelor of arts degree with first class honours, majoring in economics from the University of Queensland. He won the Shell Scholarship, allowing him to complete a master of arts, majoring in economics, also with first class honours, from Cambridge University in the United Kingdom. Daryl has lectured in economics, public finance and taxation theory at the Australian National University and the University of Calgary, Canada.

Acknowledgements

Over my career I have had the privilege of working with many intelligent and dedicated people. To prepare a book like this, I have learnt that if you are going to do it properly you need the assistance and support of a strong technical team. I wish to acknowledge the following individuals who made such valuable contributions to the creation of this book:

Main technical writers/coordinators

Alan Dixon

Damien Kennedy

Linda Wilson

Tina Wilson

Contributing technical writers

Edward Chan

Frank Li

Alex MacLachlan

Copywriter

Natalie Laharnar

Throughout the book a number of individuals have shared their personal experiences of how an SMSF has helped them manage their own super. I wish to thank them for their contributions.

Preface

Over my long and diverse professional career, being fully informed and undertaking detailed research have been essential in achieving successful outcomes. This applies without doubt to making savings and investment decisions, my major area of interest after leaving academia and employment with the International Monetary Fund and the Australian Government to start my own business.

My first book, 25 Tax and Investment Strategies, demonstrated the benefits of paying as much, or even more, attention to strategies, including choosing the most suitable structure for owning an investment rather than individual investments. The success of this publication in helping small investors was such that chapter 13, ‘Never pay tax on a dividend’, resulted in legislation to close off the strategy.

This, my latest book, continues the tradition of all my books by providing comprehensive information to help ordinary Australians make sound decisions for managing their money. Many of my newspaper and magazine articles, including those in TheCanberra Times and Smart Investor as well as several books on superannuation strategies, have detailed the advantages, both for tax purposes and personal goals, of using super as a retirement savings vehicle.

Together with a large and growing number of other Australians, my family chose to use a DIY or self managed super fund (SMSF) to own the largest part of our investment assets. From both tax and social security aspects, there are compelling reasons to do so.

It is possible to obtain the same advantages using public offer retail, industry and some employer-sponsored funds. However, you may be surprised to know that many of the trustees and managers of these funds use an SMSF for their own super. One key reason they do so is the greater flexibility and control provided by using an SMSF, even when all the investment decisions are farmed out to professional managers.

In investigating the alternatives, don’t be scared off by criticism of the high costs of establishing and running an SMSF. Do your own research. In many cases, especially where small amounts are involved, the costs of running an SMSF will definitely be higher than those of using a public offer fund. Nevertheless, coming to a decision about whether to use an SMSF also involves a consideration of the additional benefits of doing so.

After many years’ experience helping clients, I can assure you that the benefits are often substantial and offset any higher costs incurred from using an SMSF. I specifically refer you to chapters 8 and 9 of this book, dealing with insurance and estate planning, which outline the substantial benefits of using an SMSF. Even though I have had one client threaten to sue me for not forcing her to take my advice, I leave it to you to come to your own decision after researching the benefits and costs of establishing or running an SMSF for your own superannuation.

This book, prepared with the assistance of a great technical team (credited in the acknowledgements) holds nothing back and considers all the issues relevant to establishing and running an SMSF. The great thing is that over the period since I established the Dixon Family Super Fund, the advice and services available to assist with the fund operation have improved greatly and are now much more affordable.

As with other important decisions, obtaining professional advice will help you make a decision. Even if you don’t want to master all of the detail provided in the following chapters, this book will help you prepare a checklist of all the items you need to consider. Read on.

Chapter 1: Is an SMSF right for you?