Self Managed Superannuation Funds E-Book

Max Newnham

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

Seitenzahl: 352

Veröffentlichungsjahr: 2012

Beschreibung

RE: Self Managed Superannuation Funds: A Survival Guide Self managed superannuation funds (SMSFs) are the fastestgrowing sector of the superannuation industry. It's no wonder, given the almost unlimited investment options available with SMSFs -- including investing in property, unlisted managed funds and collectables. So, is it time you joined the increasing number of Australians taking control of their fi nancial future with an SMSF? Self Managed Superannuation Funds: A Survival Guide will help you manage one of the most important fi nancial assets you'll ever own. Topics covered include: * determining if an SMSF is for you * selecting your own investments * setting up your super fund * managing the paperwork * understanding trustees' duties * complying with legislation * implementing tax-saving strategies.

Leseprobe

Contents

About the author

Acknowledgements

Preface

Chapter 1: The history of superannuation

Military superannuation pensions

Civil service superannuation pensions

Universal old-age pensions

Industrial and commercial pensions

Personal superannuation funds

Self managed superannuation funds

Chapter 2: Fund types and self managed super

What is a super fund?

The five types of super funds

What is a self managed superannuation fund?

Enduring power of attorney

Trusteeship

Rules and regulations covering SMSFs

Penalties for breaches

The government and SMSFs

The ATO and SMSFs

How much work is involved in having an SMSF?

Why start an SMSF?

Who should start an SMSF?

Advantages and disadvantages of SMSFs

Advantages

Disadvantages

Chapter 3: The technical stuff

Better, not simpler

The superannuation system

Who can make contributions?

What types of superannuation are there?

Preservation of benefits

Cashing restrictions

What are the different types of contributions?

Non-concessional/tax-free contributions

Concessional/taxable contributions

Rollovers

What are the limits on how much can be contributed?

Concessional contributions

Non-concessional contributions

Rollovers

When can a member access superannuation?

Retirement

Terminal medical condition

Severe financial hardship

Compassionate grounds

Permanent incapacity

Temporary incapacity

Termination of employment where benefit is less than $200

Death

Departing Australia permanently

Transition to retirement pensions

To pay an excess contributions tax assessment

What are the different types of pensions?

Chapter 4: Tax and superannuation

Taxation of superannuation funds

Taxable income of a super fund

Special income

Allowable deductions for a super fund

Taxation of super payments to individuals

Lump-sum payments

Pension payments

Tax treatment of excessive super contributions

The importance of tax file numbers

Chapter 5: The rules of the SMSF game

The referees

How the ATO deals with breaches of the rules

The main duties and responsibilities of trustees

The sole purpose test

The trust deed

Other duties and responsibilities

Auditing an SMSF

Independence

Reporting of contraventions by auditors

Test 1: Fund definition test

Test 2: New fund test

Test 3: Trustee behaviour test

Test 4: Trustee behaviour test

Test 5: Trustee behaviour test

Test 6: Financial threshold test

Test 7: Financial threshold test

Chapter 6: Setting up an SMSF

Setting up the fund

Decide on a name, members and trustees for the fund

Have the trust deed drawn up

Elect to be a regulated SMSF

Complete tax and ABN registrations

Open bank account/s

Sign trustee declarations

Decide on investment strategy for the fund

Put in place administration and accounting systems

Receive contributions and rollovers

Invest monies

Chapter 7: Running an SMSF

Administration of the fund

Trustee duties

Day-to-day duties

Monthly duties

Quarterly or half-yearly duties

Yearly duties

Meetings

Binding death benefit nominations

Insurance

Chapter 8: Documentation for SMSFs

Purchasing investments

Investment policy

Loan documentation for a property purchase

Transition to retirement pension

Lump-sum payment

Account-based pension

Death benefits

Conclusion

Chapter 9: Superannuation strategies

Salary sacrifice into super

Re-contribution before turning 60

Re-contribution after turning 60

Super splitting with spouse

Transition to retirement pensions

Self-employed super contributions

Not paying off a home loan

Self Managed Superannuation Funds

Reducing debt by selling assets to an SMSF

Transferring assets in specie

Joint venturing with your SMSF

Maximising the tax-free portion of a super fund in times of market downturn

Chapter 10: Making good investments

Risk

Types of risk

Reducing risk

Risk profiles and asset allocation

Different asset classes

Defensive or income assets

Growth assets

Defensive growth assets

Alternative assets

Where to get investment advice from

Learning from history

Chapter 11: Questions and answers

Accessing superannuation benefits

Administration issues for SMSFs

Avoiding being attacked by the ATO

Capital gain calculation

Centrelink and superannuation

Changing trustees

Choosing to have an SMSF

Commonwealth co-contribution

Components of superannuation

Contribution limits

Death and superannuation

Funding a pension

Getting advice

Joint venturing with an SMSF

Making super contributions

PAYG withholding

Paying of benefits

Pension phase SMSFs

Permanent disability

Personally held investments or super

Purchasing assets from members

Salary sacrificing

Segregation of SMSF assets

Self-employed contributions

Sole purpose test

Some with the lot

SMSF investments

Special income

Splitting super with a spouse

Surviving the crash

Taxation of lump-sum payouts

Taxation of pensions

Taxation of an SMSF

Taxation review

The work test

TTR pensions

Withdrawal of superannuation benefits

Appendix: super figures and tables

Glossary

Resources

Index

First published 2009 by Wrightbooks

an imprint of John Wiley & Sons Australia, Ltd

42 McDougall Street, Milton Qld 4064

Office also in Melbourne

Typeset in Granjon 12/15 pt

© Max Newnham 2009

The moral rights of the author have been asserted.

Reprinted in November 2010

National Library of Australia Cataloguing-in-Publication data:

Author: Newnham, Max.

Title: Self-managed superannuation funds: a survival guide / Max Newnham.

ISBN: 9781742169262 (pbk.)

Notes: Includes index.

Subjects: Pensions—Australia—Planning.

Retirement—Australia—Planning.

Retirement income—Australia.

Finance, Personal—Australia.

Dewey number: 332.02401450994

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 enquiries should be made to the publisher at the address above.

Disclaimer

The material in this publication is of the nature of general comment only, and neither purports nor intends to be advice. Readers should not act on the basis of any matter in this publication without considering (and if appropriate taking) professional advice with due regard to their own particular circumstances. The author and publisher expressly disclaim all and any liability to any person, whether a purchaser of this publication or not, in respect of anything and of the consequences of anything done or omitted to be done by any such person in reliance, whether in whole or in part, upon the whole or any part of the contents of this publication.

About the author

Max Newnham is a qualified chartered accountant with more than 30 years’ experience of working with both large and small businesses, helping them maximise their profits while not paying too much tax. He is a certified financial planner and is currently part-way through achieving specialist adviser status with the Self-Managed Super Fund Professionals’ Association of Australia (SPAA). Most of his professional time is spent advising trustees of SMSFs and providing business succession and retirement planning advice to small business owners.

In the mid 1980s Max conducted a media campaign to try to stop the Australian Taxation Office over-charging taxpayers who had been made redundant. As well as generating articles that appeared in most major daily newspapers around Australia, he also wrote to then treasurer Paul Keating to bring the matter to his attention. As a result of this campaign the Hawke Labor Government introduced legislation that forced the tax office to correct its practice.

This campaign led Max to start writing articles on tax and small-business issues. For many years he was a regular contributor of small-business and finance articles to The Age and The Sydney Morning Herald. Since February 1999 he has been writing a weekly column for The Age covering all aspects of tax and other business matters.

Leading up to the introduction of the New Tax System, many of his articles dealt with the impact of GST on small businesses. In April 2000 he published a book on GST titled The GST Survival Guide: For Families and Small Business.

Leading up to the introduction of Simpler Super most of his newspaper articles explained the new system. This led Max to writing Super Made Simple: A Survival Guide, which was published in 2007. Recognising the important part that tax plays in the managing of a small business, Max wrote Tax For Small Business: A Survival Guide, which was published in 2008.

Over the years Max has written many stories on what it takes to run a successful business. A selection of these was published in 2008 as a book called Great Aussie Success Stories.

Many of Max’s recent articles have been devoted to answering readers’ superannuation questions. It was the number of questions sent in by trustees of self managed super funds that directly resulted in Max writing this book.

As result of his writing Max has been used for talkback segments and technical analysis by several radio stations, including 3AW, 774 3LO and 3RRR. He also appeared as one of the specialist advisers on the Channel 10 small-business program Bread.

Max is a partner in the accounting practice TaxBiz Australia, based in Melbourne’s outer east at Bayswater and Monbulk. Max lives with his wife Liz in the Dandenong Ranges and when not writing enjoys reading, watching movies and spending time with their six children.

Acknowledgements

Writing a book such as this, dealing with the legal and administrative requirements of having a self managed super fund, requires a lot of research and assistance.

I would first of all like to thank everyone at my publisher, John Wiley & Sons Australia, for giving me the chance to write this book.

Thank you to Belinda Aisbett of Super Sphere Pty Ltd, a company specialising in audit consulting and training services for self managed super funds, for making sure the duties and responsibilities of trustees, and other legal bits, were accurate.

Preface

I want you to imagine this scene.

Arthur and Shirley walk into a room wearing hats. Written on each of the hats is the word ‘member’ and in Shirley’s hand is a letter. They walk up to the beautiful mahogany dining table in the middle of the room and place the letter on it.

They then remove the hats, rush around to the other side of the table, and pick up and put on identical hats, but this time with the word ‘trustee’ on them. Shirley picks up the letter, reads it studiously and states that the meeting of trustees for the Happy Ever After Super Fund is now called to order and she has been voted the chairperson of the meeting. She gives the letter to Arthur and then announces that the fund has received a request from its members, Shirley and Arthur, stating they want to start a pension.

Shirley says that the request to commence the pension is approved and quickly writes up a minute of the meeting and signs it. She then writes a quick letter confirming that the pension has been approved and puts the letter on the other side of the table.

Arthur and Shirley then take off their trustee hats, race around to the other side of the table, put on their member hats again, pick up the letter, read it and then jump gleefully around the room, happy in the knowledge they will now be receiving a pension from their own superannuation fund.

Does all of this sound a bit like a Monty Python sketch or an episode of Yes Minister? Well it isn’t. This is how trustee/members of a superannuation fund are expected to act (well maybe not the jumping-about-gleefully bit).

Yes, it is overly bureaucratic.

Yes, it does involve the trustees in a lot of paperwork.

But get used to it. Welcome to the wonderful, wacky and incredibly flexible world of self managed superannuation.

Self managed super funds (SMSFs) are like the other things in life that produce the best results and long-lasting satisfaction: they require a lot of effort and discipline to gain the maximum benefits. But with an SMSF, the trustees don’t have to go it alone; they can have as few or as many people assisting them as they want.

About this book

This book has been written to:

help people make an informed decision about setting up an SMSFhelp people understand what their duties arehelp people manage their administrative dutiesprovide examples of what documentation needs to be preparedprovide examples of tax and investment strategiesmake the task of being a trustee of an SMSF more enjoyable.

At the back of the book you will also find an appendix that answers all sorts of common SMSF questions, and another appendix that contains useful figures and tables. And there is a glossary if you need a reminder about any superannuation terms.

This book is to be used as a guide by trustees of a self managed super fund, and people contemplating becoming trustees, to assist them with the sometimes bewildering array of duties and responsibilities. It is not meant to be used as a legal text and should be used in conjunction with advice from suitably qualified and experienced professionals. This would include members of the various legal and accounting professional associations and organisations, and members of the Self-Managed Super Fund Professionals’ Association of Australia (SPAA).

The publication and release of this book was delayed due to a rumour that changes to superannuation would be made in the 2009 Federal Budget. Those rumours proved to be correct.

In addition to reducing maximum contribution levels for superannuation, other changes, including increasing the reduction factor for the Centrelink pension test, were made.

As much as possible this book reflects these changes, but I cannot stress too much that this book is a guide and professional advice should be sought before making major decisions that will affect your superannuation.

Max Newnham

Melbourne

13 May 2009

CHAPTER 1

The history of superannuation

Self managed super funds (SMSFs) are really the new kids on the super block. In their current form they really only came into existence in 1999, when responsibility for their regulation passed from the Australian Prudential Regulation Authority (APRA) to the Australian Taxation Office (ATO).

To understand how SMSFs work, it helps to understand how superannuation developed over the years.

Military superannuation pensions

One of the earliest examples of superannuation comes from Roman times. Given that the might of the Roman Empire was built on its military prowess, it’s not surprising that its soldiers were awarded pensions for their military service. This tended not to be in the form of an annual pension but involved gifts of land or one-off payments that were meant to provide security for the soldiers once they had put down their spears (or whatever their choice of weapon might have been).