SMSF TRUSTEES New penalty regime in force

SMSF trustees take note
The new penalty regime is now in force

We reported about the changes to the penalties able to be handed down to self-managed superannuation fund (SMSF) trustees some months ago, but just as a timely reminder – a new penalty regime for SMSFs is now in effect and pertains to the activities of all SMSF trustees.

With its new regulatory powers, the Tax Office will be able to issue trustees with a direction to rectify contraventions, enforce mandatory education when there is non-compliance with superannuation law and impose administrative penalties that will be payable by the trustee, not out of the assets of the fund.

The last mandated power of the Tax Office has attracted the most attention with SMSF trustees now liable to fines of up to $10,200 for failing to adhere to superannuation law. To refresh your memory, below are the breaches, their corresponding penalty units, and the amounts SMSF trustees would be liable for.

Click here to read the full schedule of penalties in our July newsletter.

Contact our office on 02 9686 3130 to ensure you are on the right side of the law starting from July 1 this year.

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Thinking about winding up an SMSF?

How to wind up an SMSF
Recently, we compiled the questions you have to ask yourself before deciding to establish a self-managed super fund (SMSF). 

But what if you already have one that you want to wind up? There could be many reasons you may need to wind up your SMSF:

  • there are no members left
  • there are no assets left
  • divorce
  • insufficient funds
  • relocation overseas
  • old age
  • death

Once the decision to wind up an SMSF has been made, there are certain obligations and requirements trustees must satisfy - both for the fund's members and for the SMSF regulator, the Tax Office. Read your superannuation fund's trust deed, as it may contain vital information about winding up your fund.

Do remember however, once a fund is wound up, it cannot be reactivated. We outline the four steps you need to take below. Click here to read the full article on page 7:  Read more…

Wanting to set up an SMSF? Read on

Super and tax provisions offer incentives to save for retirement
These savings may be handed over, typically to a public offer fund to manage on one's behalf, or they may be managed directly by you.

Managing your own retirement savings however is a huge responsibility and one that should not be viewed lightly.  How you live and how comfortable your life will be when you're no longer earning an income will depend largely on your efforts of saving and the investment performance and management of your super fund. And while there is no greater way to take control of your retirement savings than setting up a self-managed superannuation fund (SMSF), this is not something that can be recommended for everyone.

We consistently report on matters pertaining to SMSFs, from compliance requirements to tax obligations. For those who are interested in establishing an SMSF but do not currently have one, the following may provide some insight into managing such a fund.

There are strict rules and tangible risks to setting up an SMSF, but at the same time you can choose how to invest your fund's money and exercise full control as well as having greater flexibility over your investment choices. With an SMSF, you are responsible, you are the trustee of your own fund, you need to comply with the superannuation laws and regulations and you wear the consequences of all your investment and compliance decisions.

While SMSFs will be suited to many people, they are certainly not for everyone. The Tax Office asks all prospective SMSF trustees to consider the following aspects before deciding whether they should manage their own super:  Read more…

DIVORCE Hidden costs on super

The hidden impact divorce can have on your super savings
According to research by a large retail superannuation firm, going through a divorce can lump 10 more years on to the average Australian's working life, as they endeavour to re-establish the level of retirement savings they may have accumulated through their married lives.

Suncorp Superannuation's Untying the Knot report purports to have uncovered the until-now unappreciated real cost of divorce for Australia's divorcees (estimated to be close to 100,000 people annually).

Suncorp said the most common considerations during divorce were property, child custody, the family car and the partner's income. However thousands or even hundreds of thousands of dollars were often excluded from a divorce settlement because superannuation may not have been taken into account in every case. The study found that up to 83% of divorcees did not consider superannuation in their divorce settlement.

The report found that most happily married Australians expect to retire in their mid to late 60s, while divorcees expect to work well past age 75, preventing them from getting the most out of their golden age.  Read more…

SMSF REGIME More changes from 1 July 2014

New rules being introduced after 1 July this year will affect SMSF trustees
  • the SMSF registration and rollover process will be amended to reduce the instances of funds being illegally released from SMSFs
  • proof of identity checks will be required for all people joining an SMSF, whether they are establishing a new fund or joining an existing fund â€" although note that identification measures will not apply retrospectively except for existing SMSFs wishing to organise rollovers from an APRA-regulated fund
  • new penalties will be introduced to prevent illegal early release
  • criminal and civil sanctions will be introduced for illegal early release scheme promoters, and
  • amounts illegally released early will be taxed at the superannuation non-complying tax rate, with an additional penalty that takes into account the individual circumstances.
Contact GJB on 02 9686 3130 or read more about how we help get your SMSF arrangements in proper order at #yourSUPER.

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Present $25,000 concessional contributions cap to increase to $30,000 from 1 July 2014
Many will welcome the $5,000 rise, seeing the cap of $25,000 has been in place since 2009-10.

The imminent increase will bring about a range of changes to various contribution strategies for self-managed superannuation funds (SMSF) members and Australian Prudential Regulation Authority (APRA) regulated fund members alike. It is therefore important to start thinking about planning for the increase.

A temporary higher cap of $35,000 has also been available to those individuals aged 59 and over as of June 30, 2013.  It will extend to those aged 49 years or over on June 30, 2014 (applying from July 1, 2014).

Click here to review our table which summarises these new caps on page 8.

The indexation of the concessional contributions cap has some additional flow-on effects to the non-concessional contributions cap, with this post-tax contributions cap being six times the concessional contributions cap. Therefore, from July 1, 2014, the non-concessional contributions cap will increase from $150,000 to $180,000.

Further, under "bring forward" rules, an individual who is under 65 years of age can bring forward two years' worth of future non-concessional contributions entitlements. From July 1, 2014, superannuation fund members aged 64 or less will be eligible for a higher bring-forward amount of $540,000 (up from $450,000).

Contact GJB on 02 9686 3130 to find out what strategies you can put into place to take advantage of the soon-to-be raised contributions caps.

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Across new obligations for SMSF Trustees?

New SMSF penalty regime to kick in on July 1, 2014
Did you know you may have to fork out $10,200 if you lend money to a fellow self-managed super fund (SMSF) member or a relative who is in dire need of some financial assistance? 

Or $1,700 for a breach as minor as failing to keep adequate records? The countdown is on, with only around four months remaining until the new SMSF administrative penalty regime kicks in on July 1.

If all this sounds familiar, it is because the SMSF penalty regime was essentially a measure that was due to be implemented by the previous federal government on July 1, 2013 but due to inadequate legislative support, the measure was held back. With the new government at the helm however, the measure has been given the nod and looks set to come into effect.

Currently, the Tax Office has a few ways in which it deals with non-complying funds. It can:  Read more…

New SuperStream standard - are you ready?

New SuperStream deadlines for SMSF trustees and employers
SuperStream is mandatory for all employers making super contributions and is being imposed in two stages. 

The new SuperStream standard requires super funds and employers to use new data and e-commerce standards for all superannuation transactions, and are designed to address inefficiencies in back office processing by encouraging the use of technology.

There has been widespread use of cheque payments and paper-based forms resulting in poor quality data, processing delays and duplicated or lost member accounts.

Superannuation funds, including SMSFs, must be ready to receive contributions and data in the new electronic standard from 1 July. If GJB processes your SMSF, we have matters in hand.

Large and medium sized employers are the first that must comply with the new system while small businesses have a further 12 months to comply.

From 1 July 2014:  Read more…

Audit your SMSF before annual return deadline

Timely tip for SMSFs
You may just be getting back into your regular routine, but one thing to take note of if you are a SMSF trustee is that the 2012-13 SMSF annual return deadline is fast approaching.

Lodgement dates
For the 2012-13 annual return, the deadline for SMSFs that are wise enough to use a tax agent is May 15, 2014. This is in contrast to those trustees of SMSFs who are self-preparers, where the relevant dates for the 2012-13 annual return are:

- October 31, 2013 - for new registrants that prepare their own annual return (note that this date has now passed), and
- February 28, 2014 - for SMSFs that are not new registrants.

Note that earlier lodgement dates may apply where the fund has previously failed to lodge on time or have more than one return overdue.  Read more…

Senior Australians and Pensioner Tax Offset explained

After working (and paying taxes) for most of your life, it can be a good feeling to get to that stage of your life where it's time to get some pay-back from the taxman
Your golden years can be given an extra glow by claiming the Senior Australians and Pensioner Tax Offset (SAPTO), if you qualify.

Your golden years can be given an extra glow by qualifying for the Senior Australians and Pensioners Tax Offset (SAPTO). We explain what this is and how you can claim it. And if you are a member of an SMSF, and are wise enough to use our services to help run it, we provide some timely tips in the run up to the annual return deadline.

What is a 'tax offset'?
Generally speaking, a tax offset can reduce your tax bill, but doesn't lessen "taxable income", just the tax owing on it. So a tax offset can reduce tax to zero in theory, but will never in itself result in a refund. And since receiving an offset can make you liable for less tax, you can earn more income before paying any tax (and the Medicare levy). Read more…