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Tag Archive: DIY super

  1. Super Budget 2023

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    Welcome to our latest newsletter, Budget Edition, in which we provide a brief summary of the few super related measures that were in the budget.

    Please remember that the following budget announcements are not yet law.

    Better Targeted Superannuation Concessions

    The Government will be going ahead with its previously announced measure to reduce the tax concessions available to individuals with a total superannuation balance exceeding $3million, from 1 July 2025.

    This reform is intended to ensure that superannuation concessions are better targeted and sustainable. It will bring the headline tax rate to 30 per cent, up from 15 per cent, for earnings corresponding to the proportion of an individual’s total superannuation balance that is greater than $3 million.

    Unless this proposed approach is modified, unrealised gains, accounting adjustments, and/or book entries and tax refunds will potentially be subject to this new tax.

    Stay tuned to further developments.

    Superannuation Guarantee – Changes to payment frequency

    From 1 July 2026, employers will be required to pay their employees’ compulsory SG entitlements on the same day that they pay salary and wages. Currently, employers are only required to pay their employees’ SG on a quarterly basis.

    This measure will increase the payment frequency of superannuation to align with the payment of salary and wages, ensuring employees have greater visibility over whether their entitlements have been paid and better enable the ATO to recover unpaid superannuation amounts.

    Non-arm’s length income (NALI)

    The Government is proposing to amend the non-arm’s length income (NALI) provisions that apply to certain expenses incurred by superannuation funds.

    Specifically relevant to SMSF trustees, the Government is proposing to limit the level of a fund’s income that is potentially taxable as NALI to twice the level of the shortfall amount of the expense (it was previously proposed that it would be five times the level of the shortfall amount of the expense).

    Additionally, fund income taxable as NALI will exclude contributions.

    30 June 2023 Year End Reminder – Pension drawdowns and contributions

    With 30 June 2023 fast approaching, here is a timely reminder of two very important issues to consider:

    1. If you are in pension mode, please ensure that you have withdrawn at least the minimum pension drawdown by 30 June 2023.
    2. For those taxpayers that are in accumulation mode and contributing to superannuation – please make sure that contributions are received by the super fund by 30 June 2023. This means that payments should be made several business days before then, to ensure that funds are cleared.

    Also, just a quick reminder that the concessional contribution cap is $27,500 per member and the non-concessional contribution cap is $110,000 per member.

    Minimum pension drawdowns from 1 July 2023

    Minimum pension payments will no longer by reduced by 50% and will return to normal levels in 2023/24. Please bear in mind the need for extra cashflow when planning for the year ahead.

    Also, it may be that some members considering making extra pension payments now (above the minimum required for 2022/23) may wish to consider holding off until July 2023 to make up some of next year’s payments.

    As always, don’t hesitate to contact one of the friendly Greenlight Super Services team members if you require further assistance on (02) 6273 1066 or info@glss.com.au.

    This newsletter is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The newsletter has been prepared without taking in to account any personal objectives, financial situation or needs. The information contained is correct as of 10 May 2023.

  2. Budget Edition

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    Welcome to our latest newsletter, Budget Edition, in which we provide a brief summary of super and retirement related measures.

    Please remember that the following budget announcements are not yet law.

    Reducing the eligibility age for downsizer contributions

    The eligibility age to make downsizer contributions into superannuation is set to be reduced from 60 to 55 years of age. All other eligibility criteria will remain unchanged.

    This change will provide a boost to the number of individuals eligible to make a one-off, post-tax contribution to their superannuation of up to $300,000, using the sale proceeds of their family home – regardless of their superannuation balance.

    Relaxing residency requirements for SMSFs

    Previously announced in the 2021/2022 Budget, the residency requirements applicable to SMSFs and small APRA funds were set to be relaxed through:

    • The extension of the central management and control test “safe harbour” from two to five years, and
    • The removal of the “active member” test – which would allow members who are temporarily absent from Australia to continue contributing to their SMSF.

    The Government has confirmed that these changes, broadly aimed at allowing greater flexibility for SMSF members who are temporarily overseas, are still set to go ahead. However, the start date for both measures has been deferred.

    Increased Commonwealth Seniors Health Card income threshold

    The Government has confirmed its commitment to increase the income threshold for Commonwealth Seniors Health Card eligibility from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.

    This change will increase the number of individuals eligible to benefit from a Commonwealth Seniors Health Card.

    Incentivising Pensioners to Downsize

    The current Centrelink asset test exemption for proceeds from the sale of a family home, intended for the purchase of a new home, will be extended from 12 months to 24 months.

    Additionally, for income test purposes, only the lower deeming rate (currently 0.25%) will apply to these exempted proceeds over the 24-month period. These changes will allow pensioners more time to purchase, build or renovate a new home before their pension is affected

    Freezing of deeming rates

    The Government has also confirmed that it will freeze the social security deeming rates at their current levels until 30 June 2024.

    This change will support older Australians who rely on income from deemed financial investments, as well as the pension, to deal with the rising cost of living.

    As always, don’t hesitate to contact one of the friendly Greenlight Super Services team members if you require further assistance on (02) 6273 1066 or info@glss.com.au.

    This newsletter is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The newsletter has been prepared without taking in to account any personal objectives, financial situation or needs. The information contained is correct as of 26 October 2022

  3. Director ID – CALL TO ACTION

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    Welcome to our latest newsletter, Director ID Edition, in which we remind you of an important deadline coming up.

    About Director ID

    All company directors are now required to apply for a Director ID.

    A director identification number (‘Director ID’) is a unique identifier given to a director who has verified their identity with Australian Business Registry Services (‘ABRS’).

    The Director ID system is designed to help prevent the use of false or fraudulent director identities.

    Note that it is a criminal offence if you do not apply for a Director ID by the deadline. ASIC is responsible for enforcing director ID offences set out in the Corporations Act 2001.

    Who needs to apply and when

    Any person that is a director of a company will need to apply for their own Director ID and they will keep that same Director ID forever.

    Exactly when you need to apply depends on when you became a director, as illustrated by the following table:

    Date you first became a directorDate you must apply
    On or before 31 October 2021By 30 November 2022
    Between 1 November 2021 and 4 April 2022Within 28 days of appointment
    From 5 April 2022Before appointment

    This means that if you were already a director of a company before 31 October 2021, you need to apply for your director ID as soon as possible as the deadline is 30 November 2022.

    How to apply for your Director ID

    The fastest way to get a Director ID is to apply online using the myGovID app. There is no fee, and you only need to apply once. Note that no one can apply for you, as you need to prove your identity when you apply.

    Step 1 (only necessary if you don’t already have myGovID set up)

    You need to set up a myGovID with a Standard identity strength which requires at least 2 of the following Australian identity documents to verify your identity:

    • Driver’s licence or learner’s permit
    • Passport (not more than 3 years expired)
    • Birth certificate
    • Citizenship certificate
    • Medicare card
    • Visa (using your foreign passport)
    • Immicard

    You can set up myGovID by downloading the app and following the prompts.

    If you do not have at least two of the documents listed above, then go to Step 4.

    Step 2 – Gather your documents

    Once you have set up your myGovID, you must have further information that the ATO knows about you in order to apply online for your Director ID. You will need:

    • Your tax file number
    • Your residential address as held by the ATO
    • Information from 2 documents to verify your identity (eg ATO Notice of Assessment, APRA fund account details, a dividend statement, a PAYG or a Centrelink payment summary)

    Step 3 – Complete your application

    Log in to ABRS online using your myGovID to complete your application (best to do this on your computer rather than mobile phone, but you need to have both devices, as a code will pop on the mobile that will need to be accepted). The process does not take long if you have already gathered your documents as per Step 2. The link is https://www.abrs.gov.au/director-identification-number/apply-director-identification-number

    Step 4

    If you are unable to set up myGovID, or you don’t have the required Australian identity documents to apply online, how you apply depends on where you live.

    If you live in Australia, you can call 13 62 50. Note that you will be asked to verify your identity.

    If you live outside of Australia, you can apply by using a paper application form:

    Application for a director identification number (NAT 75433, PDF 651KB).

    Once you have your Director ID

    Please contact us to provide your Director ID once you have it, and make sure that you keep the number in a safe place as this is a number that you will have for life.

    As always, don’t hesitate to contact one of the friendly Greenlight Super Services team members if you require further assistance on (02) 6273 1066 or info@glss.com.au.

    This newsletter is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The newsletter has been prepared without taking in to account any personal objectives, financial situation or needs. The information contained is correct as of 7 September 2022

  4. Happy Financial New Year 2022!

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    Welcome to our latest newsletter, End of Financial Year Edition, in which we provide you with a brief checklist of items to consider.

    Contributions

    A brief reminder of some of the types of contributions you may have the opportunity to make by 30 June 2022:

    • Concessional contributions up to $27,500 pa;
    • Non-concessional contributions (so long as Total Super Balance at 30 June 21 is less than $1.7m) – the cap is $110,000 pa;
    • Access the bring forward rules – up to $330,000 if eligible;
    • Access unused concessional contributions (30 June 2021 Total Super Balance must be less than $500,000)
    • Spouse contributions (rebate maybe applicable);
    • Contributions using the one-off work test exemption (30 June 2021 Total Super Balance must be less than $300,000).

    Pensions

    It is important for members to reconcile all pension payments received from their SMSF retirement income streams since 1 July 2021 to ensure that there is no underpayment of the minimum pension payment required to be taken by 30 June 2022. If members do not withdraw the minimum pension required, then the SMSF will lose some or all of its tax exemption, and the relevant pension account will have to be rolled back to accumulation mode.

    If you are unsure what your minimum pension requirement is, please contact us so that we can assist you in this regard. We are working through every fund to check in on this as we speak.

    Valuations

    It is a requirement that all SMSF assets be valued at market value for reporting purposes. Whilst this is a simple process for listed securities, it can be quite complicated and time consuming to determine the market value of unlisted investments.

    We recommend that all SMSFs that have either direct property or indirect investment in property via unlisted structures commence the process of getting updated market valuations as soon as possible so that the 2022 year end work is not held up. To note this does not have to be formal valuations but must be based on comparable sales data.

    Some important changes from 1 July 2022

    Contributions

    • Individuals up to the age of 75 will no longer have to meet a work test to make voluntary, non-deductible contributions;
    • The bring forward rule will be extended to individuals up to the age of 75;
    • The minimum age to make downsizer contributions will reduce to 60.

    work test

    Currently, a member aged 67 to 74 can only make voluntary contributions to super if they have worked at least 40 hours over 30 consecutive days in the financial year. This work test must be met prior to them contributing.

    From 1 July 2022, this work test will only apply to a member who wants to claim a tax deduction on voluntary contributions made to super. This means that the work test will no longer apply to any of the following contributions:

    • Non-concessional contributions
    • Spouse contributions
    • Salary sacrifice contributions

    Further, where a member does make personal deductible contributions, they will be able to satisfy the work test at any time in the financial year.

    miscellaneous

    • The Superannuation Guarantee rate will increase to 10.5% pa;
    • The $450 minimum monthly threshold to be entitled to received Superannuation Guarantee will be removed;
    • Under the First Home Super Scheme eligible individuals will have access to an extra $20,000 of voluntary contributions to fund a home deposit (an increase from $30,000 to $50,000).

    As always, don’t hesitate to contact one of the friendly Greenlight Super Services team members if you require further assistance on (02) 6273 1066 or info@glss.com.au.

    This newsletter is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The newsletter has been prepared without taking in to account any personal objectives, financial situation or needs. The information contained is correct as of 6 June 2022

  5. Divorce on the horizon?

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    Aside from the emotional turmoil that a divorce brings to a family situation, there are an enormous range of financial issues to be worked through.  Here we breakdown the key issues from an SMSF perspective:

    1. Despite the extent of breakdown in the marriage, the law is very explicit about the expectations of all Trustees to continue to “act in the best interests of all members at all times”.  Specifically it spells out that Trustees cannot:

    • exclude another trustee from the decision-making process;
    • ignore requests to redeem assets and roll money over to another regulated complying super fund;
    • take any action that is not allowed by the Superannuation Industry Supervision (SIS) Act 1993 or the SMSF’s trust deed.

    2. A recent case highlighted the ongoing compliance responsibilities that any Trustee continues to carry, particularly if established as individual trustees, despite a marriage breakdown.  When the Shail’s divorced, Mr Shail withdrew $3.46m of the SMSF assets and took off overseas.  Despite appealing the original decision, it was upheld that Mrs Shail was jointly responsible for the missing assets, with the ATO issuing a penalty for non-compliance of nearly $1.5m and a devastating tax bill to boot of over $1.5m, both of which the individuals, not the super fund itself, were liable for!  (Check out a recent blog for more about the new ATO penalty regime.)

    3. When it comes to the divvying up of financial assets, you need to consider all of the assets before applying any super splitting, taking into account any tax or access implications.  Often lawyers and advisers can overlook the ages and personal situations of each of the members, missing opportunities to provide earlier access to an older member, or consider the future contribution opportunities of a younger member, for example.

    4. Payment flags can be applied to unlisted assets until they have been properly valued, preventing those assets from being liquidated before agreement has been met.

    5.If an asset needs to be sold down in order to split the superannuation (in the case of property for example), consider whether it is possible or feasible for the super fund to borrow money (either from a related party or bank) to meet the cash requirements.  This would only be possible however if the asset was originally set up to be held within a unit trust which was owned by the super fund.

    6. If the fund has not initially been set up with a Corporate Trustee and the split leaves a single member running the Fund, a new Trustee will need to be added or a new Corporate Trustee put in place.  This isn’t a costly exercise, but it will require all assets to be transferred to the new name.

    7. Liquidating assets to then “rollover” to another fund will create a Capital Gains Tax event that the Fund will need to pay before the proceeds can be rolled over.  In the case of divorce, CGT rollover relief is available where assets can be transferred to another SMSF set up by the exiting member.  In this case, the new fund takes on the original cost base of the asset.

    Extreme care in the strategy and record keeping needs to be taken to avoid costly mistakes, which is often challenging when communication breakdowns occur.  Make sure a trusted source of advice is guiding you every step of the way.  Better yet, avoid it completely if you can!