fbpx

1800 951 855

[email protected]

Register?

LOGIN

Archive June 3, 2020

  • Home   /  
  • 2020
    • ( Page3 )

When did you last review your SMSF’s investment strategy?

Comments Off on When did you last review your SMSF’s investment strategy?

You may be aware that the Australian Tax Office (ATO) has issued letters to nearly 18,000 SMSF trustees as part of a campaign to ensure trustees are aware of their investment obligations.

Of key concern is ensuring that trustees have considered diversification and liquidity of their assets when formulating and executing their fund’s investment strategy.

Importantly, it must be noted that the ATO letters are not an attempt to regulate and limit the control and freedom that SMSF trustees have but rather ensuring that if trustees wish to invest their assets in a certain way that they must clearly articulate their reasons for doing so.

An investment strategy should be considering the SMSF’s blueprint when dealing with the fund’s assets to ensure the SMSF’s investment objectives and members’ goals are met. It provides the parameters to ensure you invest your money in accordance with that strategy. This is where the ATO has a primary function to ensure that trustees act in accordance with these obligations.

An SMSF investment strategy must take into account the following items:

  • The risks involving in making, holding and realising the SMSFs investments, their expected return and cash flow requirements of your SMSF.
  • The diversification and composition of your SMSF investments.
  • The liquidity of your SMSF investments, having regard to expected cash flow requirements.
  • The SMSFs ability to pay your current and future liabilities, including benefits to the members.
  • Considering whether to hold insurance cover for each member of your SMSF.

An important requirement for you as trustee of your SMSF is to have an investment objective and a strategy to achieve that objective in place, before you start to make decisions about how you want to invest your SMSF money.

Of equal importance is that the investment objective and strategy is not set in stone. You can choose to change the investment objectives you have set for your SMSF at any time.

It’s not uncommon for SMSFs with lower member balances to find diversification a challenge as there is limited money to invest. Nonetheless, you are still required to demonstrate that you adequately understand and mitigate the associated investment risks.

If you find yourself in this position, it is important your investment strategy reflects these risks.

For example, if you have invested in a large illiquid asset such as real property which may form the majority of your fund, it is timely to ensure your strategy reflects the concentration and liquidity risk associated with this investment.

Where you have in place an adequate investment strategy that deals with these risks and can provide the necessary evidence to support your investment decisions, no further action is expected.

Where your fund has not complied with its investment strategy requirements under superannuation law, you may be liable to administrative penalties being imposed by the ATO, as Regulator of the SMSF sector.

Your investment strategy does need to be reviewed at least once a year and this will be evidenced by your approved SMSF auditor. It is also important to review your strategy whenever the circumstances of any of your members change or as often as you feel it is necessary. The following practical tips will help you keep on top of your obligations:

  • Put your investment objective and strategy in writing
  • Set an investment objective that you can comfortable achieve with the underlying investments you are comfortable to invest in
  • There is no template for an investment object and strategy, but make sure they reflect how you intent to invest your SMSF money
  • The investments you actually make must be accommodated by the investment strategy you have set
  • Most importantly, document your actions and decisions, as well as your reasons, and keep them as a record in order to demonstrate that you have indeed satisfied your obligations as a trustee in this important area

 

Source: SMSF Association

Personal Superannuation Contributions – 10% rule repealed

Comments Off on Personal Superannuation Contributions – 10% rule repealed

With the end of the financial year fast approaching, it is time to start thinking about income tax deductions.

Under the new Government changes to super, effective 1 July 2017, the 10% maximum earnings condition for personal superannuation contributions was removed for the 2017-18 and future financial years.

This rule provided that an individual must have earned less than 10% of their income from their employment related activities to be able to deduct a personal contribution.

This change ensures that individuals receiving employment income are not dependant on whether their employers offer salary sacrifice arrangements. Self-employed individuals and individuals in receipt of passive income can make deductible personal contributions regardless of the amount of salary or wages they earn.

This means most individuals under 75 years old can now claim a tax deduction for personal contributions to their SMSF (including those aged 65 to 74 who meet the work test).

Before the end of the financial year you need to:

  • Review if you have income available to contribute to your SMSF.
  • Review your total concessional contributions to ensure they are below the annual cap of $25,000.
  • Review any current salary sacrifice arrangement you may have for its necessity and benefits.

To be eligible for the deduction, you need to provide a valid notice of intention to deduct and have received acknowledgement of this notice from the fund.

Splitting amounts to your spouse

If you are planning to split all or part of your personal contributions with your spouse, you should give your trustee the notice of intent to claim a deduction first. 

If your trustee has accepted your application to split your contributions, they cannot accept the notice to claim a deduction.

This change may require you to adjust your contribution strategies going forward. 

This will most likely be the case if you are under 75 and the previous 10% rule prohibited you from making personal superannuation contributions.

Source: SMSF Association 

Is your SMSF diversified?

Comments Off on Is your SMSF diversified?

SMSF trustees need to truly understand diversification and better diversify their portfolios.

The benefits of a well-diversified portfolio are numerous but the key ones that SMSF trustees should focus on are the benefits of mitigating volatility and short-term downside investment risks, preserving capital and the long-run benefits of higher overall returns. By spreading an SMSF’s investments across different asset classes and markets offering different risks and returns, SMSFs can better position themselves for a secure retirement.

However, did you know that 82% of SMSF trustees believe that diversification is important but in practice many do not achieve it?

This is because half the SMSF population cite barriers to achieving diversification. The top being that it is not a primary goal for SMSF trustees, and they believe they have a lack of funds to implement it.

Furthermore, 36% of SMSF trustees say they have made a significant (10%) asset allocation change to their SMSF over the last 12 months. This demonstrates that SMSFs may not be actively restructuring their portfolio on an annual basis to respond to changing market conditions.

Another clear problem regarding diversification is the amount of SMSFs with half or more of their SMSF invested in a single investment. SMSF trustees say they primarily invest in shares to achieve diversification in their SMSF, while just a quarter say they invest in at least four asset classes to achieve this.

The bias and significant allocation to domestic SMSF equities conversely may highlight the fact that SMSFs are not adequately diversified, especially across international markets and other asset classes.

So what can you do?

Some of the steps you, with the help of an SMSF Specialist, can take to diversify your retirement savings and control your investments in a disciplined and planned way include:

  • Ensuring there is a clear and demonstrable retirement purposes in the choices you make.
  • Ensuring you have an investment objective and a strategy to achieve that objective in place.
  • Reviewing your portfolio and assessing it against the objectives you have set as often as you feel is necessary.
  • Minimising concentration to any one asset class.
  • Ensuring your Australian share portfolio is sufficiently diversified.
  • Considering the benefits of geographic diversification.
  • Ensuring your cash allocation is appropriate.
  • Considering the benefits of exchange traded funds, listed investment companies and other digital investment platforms that allow low cost access to different markets.

Always remember to document your actions and decisions, as well as your reasons, and keep them as a record in order to demonstrate that you have satisfied your obligations as a trustee.

Given the importance of having an appropriately diversified portfolio and its impacts on quality of life in retirement trustees ought to consider professional assistance in managing this important aspect of an SMSF.

Source: SMSF Association

DOWNLOAD THIS ARTICLE

Superannuation death benefit limitations

Comments Off on Superannuation death benefit limitations

As an SMSF trustee, you need to take special care when paying death benefits as you are responsible for ensuring that the payment rules are met. Strict rules apply, affecting who can receive a death benefit, the form in which the death benefit can be paid and the timing of such a payment.

Firstly, death benefits can only be paid either to dependants of the deceased member or the estate of the deceased.

Second, the law limits the group of dependants who are eligible to receive a pension on the death of the deceased member.

Finally, trustees must pay a death benefit as soon as possible after the death of the member. Additionally, each death benefit interest can only be paid to each dependant as either:

  • a maximum of two lump sums (an interim and final lump sum), or
  • a pension or pensions in retirement phase, or
  • a combination of both.

It is the limit of a maximum of two death benefit lump sums per dependant that trustees need to keep track of to ensure that the cashing rules are not inadvertently breached, especially where the death benefit is being paid as a pension.

Given the account-based nature of death benefit pensions that can be paid by an SMSF trustee, an SMSF member is generally afforded the flexibility to nominate to convert a death benefit pension into a lump sum payment. This process is generally referred to as the commutation of a pension although may be subject to specific restrictions found in a trust deed.

A partial commutation is where the beneficiary requests to withdraw a lump sum amount less than their total pension entitlement, allowing their death benefit pension to continue. This is common where members withdraw their required minimum drawdown as a pension with any additional income needs met by accessing multiple lump sums from their pension account. This strategy allows the death benefit pension to continue without breaching the superannuation death benefit rules, despite payments in excess of the maximum two lump sum limit.

A full commutation will result in the death benefit pension ceasing at the time the member decides to withdraw their entire pension entitlement as a lump sum. Despite the number of lump sum death benefits previously received, the law allows the beneficiary to roll over the lump sum resulting from a full commutation to another superannuation fund for immediate cashing as a new death benefit pension.

However, where a lump sum resulting from the full commutation of a death benefit pension is paid out of the superannuation system, further clarity is being sought from the ATO to ascertain whether or not this will be treated as an additional lump sum death benefit that would count towards the maximum two lump sum cashing limit. Until further clarity is provided by the ATO, caution needs to be exercised before a death benefit pension is fully commuted and paid to the dependant, especially where the dependant has previously received a lump sum death benefit.  

As an SMSF trustee, you need to be aware of the restrictions placed on the payment of death benefits to eligible dependants of a deceased member. Trustees who ignore these limitations risk breaching superannuation standards and potentially being liable to be fined by the Regulator.

Source: SMSF Association

DOWNLOAD THIS ARTICLE

COVID-19: Providing concessions for the LRBA in my SMSF

Comments Off on COVID-19: Providing concessions for the LRBA in my SMSF

The economic impacts of the COVID-19 crisis are causing significant financial distress for many businesses and individuals.

If your SMSF has a related party loan and is impacted due to the financial effects of COVID-19, you may be able to provide your LRBA with relief under an agreed commercial arrangement.

Ordinarily, not paying market interest rates in an SMSF is usually a breach of superannuation laws. However, the ATO have provided guidance which allows SMSFs with an LRBA to negotiate a reduction in or waiver of interest payments because of the financial impacts of the COVID-19.

If the repayment relief reflects similar terms to what commercial banks are currently offering for real estate investment loans as a result of COVID-19, the ATO will accept the parties are dealing at arm’s length and the NALI provisions do not apply.

What do you need to do?

There are some important things you should ensure are in place when you are providing a loan concession, especially when this is a related party.

  • Ensure the relief only applies to the related party loan
    • Any relief offered on the loan can only relate to that loan agreement. The ATO concession does not extend to other loans.
  • Ensure that the concessions are temporary.
    • This means it should have an agreed period of time or agreed date where the concessions are reviewed in light of the economic circumstances.
  • The financial difficulty faced by the SMSF is linked to the financial impacts of COVID-19.
    • Any negotiated concession will need to be measured against the COVID-19 financial impact suffered by your SMSF.
  • Clear arrangements which detail the amount of discount, waiver or deferral of the concession.
    • In evidencing that the concession is reasonable, it would be best practice if it is consistent with an approach taken by an arm’s length loan.
    • For example, terms currently include temporary repayment deferrals for most businesses of up to 6 months, with unpaid interest being capitalised on the loan.
    • It is also expected that there is evidence that interest continues to accrue on the loan and that the SMSF trustee will catch up any outstanding principal and interest repayments as soon as possible.
  • Ensure you have proper documentation which allows your independent auditor to be satisfied that the concession satisfies all of the above.
    • This may take the form of a signed minute, renewed loan agreement or anything deemed appropriate to amend the terms of the loan.
    • The parties to the arrangement must also document the change in terms to the loan agreement and the reasons why those terms have changed.
    • Even if you are both the lessor and lessee, the above should all be documented.

These are extraordinary times and the ATO is providing this guidance to allow SMSF trustees to be flexible and agile.

If trustees act in good faith in implementing a reasonable and measured reduction concession because of the impacts of COVID-19 they should not fall foul of the law.

Source: SMSF Association

DOWNLOAD THIS ARTICLE

SMSF members who split can’t convert assets to cash

Comments Off on SMSF members who split can’t convert assets to cash

Self-managed superannuation fund (SMSF) members who are looking to split assets due to a divorce will not be allowed to convert their fund into a cash asset, according to Townsend Business and Corporate Lawyers.

The law firm said this was a common misconception and unless members had reached retirement or preservation age, any interest within the fund must not be paid out to a member, or any other individual.

The splitting order would depend on the type of super interest and whether it was in the growth phase or the payment phase.

Examples, it said, included:

  1. An order for a member to roll-over their interests into another fund (which also means the member leaving the SMSF);
  2. An order for a member to pay a percentage or dollar amount of their pension to the other member; or
  3. An order that one of the members give their superannuation interest in the fund to the other member.

Townsend warned that some super interests could not be split such as:

  1. Contributions you make with a personal injury election;
  2. Transfers from foreign funds;
  3. Government co-contributions; and
  4. Super interest that is subject to another unrelated payment split (previous divorce).

Another myth Townsend said were that it was incorrect and “dangerous” to believe that the parties could agree on what should happen to the super fund and simply sign resolutions giving effect to that agreement.

“The conversion of a member’s entitlements under a super split can only be undertaken pursuant to the provisions of Part 7A.2 of the Superannuation Industry (Supervision) Regulations 1994 which are lengthy and can be difficult to comprehend,” it said.

“Splitting couples should therefore always seek independent legal advice on how to give effect to super splitting orders and on the options for reinvesting their respective interests into another fund whilst ensuring that any action taken remains compliant within the law.”

Townsend noted that a failure to comply with regulations would likely cause material adverse tax consequences for the members and the fund.

“It is also imperative to remember that contribution splitting in accordance with a Family Court Order has no effect in reducing the amount counted towards the annual concessional contributions cap,” the law firm said.

“Contributions which fall outside the Australian Taxation Office’s contributions cap may result in extra tax.”

Source: Super Review

ATO clarifies stance on in-house asset breaches

Comments Off on ATO clarifies stance on in-house asset breaches

The Tax Office has sought to clarify how it will approach concerns from SMSFs that they may be breaching in-house asset rules due to the economic impact of COVID-19.

On its SMSF FAQ page updated on 8 May, the ATO addressed concerns from SMSFs that the recent downturn in the sharemarket may result in the fund’s in in-house assets being more than 5 per cent of the fund’s total assets, thereby breaching in-house asset rules.

The ATO updated its response on its SMSF FAQ page on 8 May, stating:

If, at the end of a financial year, the level of in-house assets of an SMSF exceeds 5 per cent of a fund’s total assets, the trustees must prepare a written plan to reduce the market ratio of in-house assets to 5 per cent or below.

This plan must be prepared before the end of the next year of income.

If an SMSF exceeds the 5 per cent in-house asset threshold as at 30 June 2020, a plan must be prepared and implemented on or before 30 June 2021.

However, we will not undertake compliance activity if the rectification plan was unable to be executed because the market has not recovered or it was unnecessary to implement the plan as the market had recovered.

This compliance approach also applies where the SMSF exceeded the 5 per cent in-house asset threshold as at 30 June 2019 but has been unable to rectify the breach by 30 June 2020.

Speaking at a recent webinar run by the ATO and the SMSF Association, ATO director Kellie Grant said the regulator has taken this approach because it understands that rectification plans may also be currently impacted in 2019–20 as a result of COVID-19.

Further, Ms Grant said it also means the ATO will also be updating its 2020 Auditor/Actuary Contravention Report (ACR) instructions to let auditors know not to report these sorts of in-house asset breaches as well.

Cooper Grace Ward Lawyers partner Scott Hay-Bartlem said that, in his experience, the ATO usually enforces in-house requirements quite strictly.

“If the trustee does not implement the rectification plan and reduce the in-house asset level below 5 per cent before the end of the following financial year, the SMSF has compliance issues,” Mr Hay-Bartlem said.

Source: SMSF Adviser 

The SMSF audit post-COVID-19: Related commercial tenancies

Comments Off on The SMSF audit post-COVID-19: Related commercial tenancies

The SMSF industry is experiencing rapid change in the wake of COVID-19. The goalposts of commerciality have shifted, as have the reporting requirements for SMSF auditors dealing with tenancies affected by COVID-19 in the 2020 and 2021 financial years.

The SMSF audit is critical to the decisions trustees and their advisers make today.

No one wants a train wreck with their SMSF auditor.

Notwithstanding the ATO’s decision not to devote compliance resources to this area, SMSF auditors have certain reporting obligations and the ATO has made its expectations clear.

So, what is required to navigate post-COVID-19 tenancies with the auditor’s green light?

What the auditor must do

For engagements in the 2020 and 2021 financial years, the SMSF auditor must:

  • Form an opinion as to the commerciality of a post-COVID-19-related tenancy. 
  • Request sufficient appropriate audit evidence from SMSF trustees to support this opinion.
  • If the tenancy is not conducted on commercial terms, recognise a contravention of SIS Act section 109 and communicate this to the trustees in the management letter.
  • If the contravention of section 109 is material, modify the Part B Compliance Audit Opinion.
  • If the contravention is reportable under the regulator’s reporting criteria, report the section 109 contravention (and any other contraventions) as usual to the ATO.

Hold on — isn’t there compliance relief?

Yes. Provided the post-COVID-19 tenancy reflects an arm’s-length standard of dealing, the SMSF auditor is not required to report any contraventions arising from this tenancy to the ATO.

The fact is, the Superannuation Industry (Supervision) Act 1993 was not drafted to work in the current environment. Even where a post-COVID-19 tenancy is being conducted on an arm’s-length basis, an SMSF could find itself in breach of other provisions. For example, by extending rent relief to a related-party tenant, the fund may provide indirect financial assistance to its members or their relatives. The SMSF will therefore contravene section 65. In the current environment, this breach is not reportable.

Important note: The auditor is required to modify their Part B compliance report where such unavoidable contraventions are material — but the matter will go no further.

It is clear that section 109 is an extremely important provision when dealing with post-COVID-19-related tenancies.

Let’s have a look at the new audit landscape and how section 109 will apply.

What does the Mandatory Code of Conduct mean for SMSFs?

The federal government’s recommendation for tenancies impacted by COVID-19 was for the parties to “sit down, talk to each other and work this out”. The Mandatory Code of Conduct for SME Commercial Leasing Principles During COVID-19 is both a safety net and a starting point for these discussions.

The code applies to commercial tenancies that are eligible for the JobKeeper program. In the SMSF environment, this relates to small businesses that have experienced a reduction in turnover of 30 per cent or more due to COVID-19. The principles of the code are requirements for any SMSF related-party tenant that qualifies for the JobKeeper program. For these severely impacted businesses, the code is a mandatory standard of arm’s-length dealing.

This does not mean that commercial tenants suffering a 20 per cent downturn cannot reach an arm’s-length agreement with their landlord for the reduction of rent. However, they are not covered under the Mandatory Code.

The golden rules — related commercial tenancies with downturn of less than 30%

What about those related-party tenants impacted to a lesser extent by COVID-19? While not directly applicable, the code provides a good yardstick for the new normal in commercial practice.

There are three golden rules for the SMSF landlord:

  1. Reduction in rent must be proportionate to the negative impact of COVID-19 upon the business and may take the form of a rent waiver.
  2. A freeze upon all rent increases may apply until the economic situation improves.
  3. Where possible, reduce any unnecessary burden for the tenant. Are there overheads that no longer have utility? Don’t charge the tenant and (if possible) switch off the service altogether.

There is one golden rule for the related-party commercial tenant:

  1. Stick to the lease, including any specific amendments relating to COVID-19. If the tenant fails the lease conditions, the arrangement may be considered non-arm’s length and in breach of section 109.

This is important. It bears repeating.

The tenant has one job: ensure compliance with the lease.

What does the auditor need to see?

If your SMSF has a related-party tenant that qualifies for the JobKeeper program, the auditor will require the following:

  • Evidence that the tenant is eligible for the JobKeeper program.

This should include confirmation of the successful JobKeeper application, together with evidence supporting the decline in projected turnover.

This evidence is critical, not only for audit purposes, but also to substantiate the business’s claim for the JobKeeper payment. The Treasury has advised that tolerance will be exercised where a good faith estimate of turnover reduction proves slightly inaccurate. To benefit from this goodwill, the evidence of a good faith calculation must be retained.

  • A current executed lease agreement, together with any amendments contained in an addendum to the lease. The lease arrangement should comply with the principles of the Mandatory Code.

If your SMSF has a related-party tenant that has experienced a significant downturn of less than 30 per cent as a result of COVID-19, the auditor will need to see:

  • Evidence that the tenant has been negatively affected by COVID-19.

This should take the form of a letter from the related-party tenant addressed to the SMSF trustees, describing the negative impact of COVID-19 upon the business. You must substantiate the estimated reduction in turnover and retain this evidence. The letter should request a reduction in rent proportionate to the virus’s financial impact upon the business.

The SMSF trustee should reply to this letter, confirming their acceptance of the new lease terms. A series of emails may take the place of letter writing, if convenient.

  • A current executed lease agreement, together with any amendments contained in an addendum to the lease. The lease arrangement should reflect with the golden rules outlined above and must be complied with as though it were an arm’s-length commercial arrangement.

Remember, this is a temporary agreement. There should be a trigger point for a return to normal commercial dealings. Where the Mandatory Code applies, this event would be cessation of JobKeeper payments. Finally, if the lease agreement has expired or requires review, this should be attended to as soon as possible.

What about related-party tenancies within a Reg 13.22C entity?

Where an SMSF holds business real property via a non-geared entity subject to Div 13.3A in Superannuation Industry (Supervision) Regulations 1994, the requirement for arm’s-length dealing in related tenancies is paramount.

Non-geared unit trusts and companies must deal continually on an arm’s-length basis or lose their status as Reg 13.22C vehicles — which generally precipitates the SMSF’s disposal of its shares or units as in-house assets. Beware the spectre of non-arm’s-length dealing for these entities. If the lease agreement is not legally enforceable or if rent accrues to create a borrowing in the non-geared entity, this will compromise the entity’s status.

The ATO has stated that the deferral of rent for commercial tenancies within a non-geared trust or company due to the impact of COVID-19 will not cause these investments to be treated as in-house assets. It is uncertain whether a waiver of rent enjoys the same immunity. However, the standard of arm’s-length dealing has changed as a result of COVID-19 and non-geared entities are not exempt. Based on the information available, the above principles will apply equally within a Reg 13.22C environment. Given the high stakes of non-compliance, a legal review of the lease and any amendments is recommended.

Conclusions

The goal posts for commercial dealing have changed significantly post-COVID-19.

While the ATO’s decision not to apply compliance resources to related commercial tenancies for the 2020 and 2021 financial years is welcome, fund administrators must keep in mind a few basic rules, or risk a reluctant collision with their SMSF auditor.

Action now will determine the audit ramifications later. It is always worth a question to get it right!

Naomi Kewley, managing director, Peak Super Audits

Reduced minimum pension – Planning Opportunity

Comments Off on Reduced minimum pension – Planning Opportunity

As part of the Federal Government’s economic response to COVID-19, the minimum percentage withdrawals from superannuation pension accounts were reduced by 50% as from 24/3/2020 and this is to apply for the 2019-20 and 2020-21 financial years.

This will enable self funded retirees to potentially reduce their pension withdrawals for a period in order to preserve asset values and avoid selling growth assets in a depressed market.

However, there may be cases where the member still requires a higher pension amount and in those cases, consideration should be given to taking the extra amount as a commutation/lump sum. This has the advantage of reducing the member’s Transfer Balance Cap, thus providing space for potential further transfers into pension mode in the future. The advantage of pension mode accounts is that all income and capital gains derived in those accounts will be tax free.

Example:

Mary is aged 68 and currently has a sole member SMSF with a retirement phase pension account balance of $1,550,000. Her Transfer Balance Cap is $1,600,000. Her minimum pension was previously 6% or $93,000 but under the changes, that minimum is reduced to 3% or $46,500. For various reasons, Mary does not wish to reduce her pension withdrawals and therefore will withdraw $93,000 in the current financial year – $46,500 was withdrawn in December and she plans to withdraw a further $46,500 in June 2020. If Mary treats the full $93,000 as a pension, her Transfer Balance Cap will not change and she will have no further ability to transfer additional amounts into pension mode. On the other hand, if Mary decides to take the June payment as a commutation from her pension account and then as a lump sum from the accumulation account, her Transfer Balance Cap will reduce by $46,500 and that amount could be re-contributed in the future and then transferred to pension mode, thus increasing the actual superannuation amount in pension phase.

Note that commutations need to be properly documented and reported to the regulator in the appropriate way.

The information provided in this article is general in nature and does not take into account your personal circumstances, needs, objectives or financial situation. This information does not constitute financial or taxation advice. Before acting on any information in this article, you should consider its appropriateness in relation to your personal situation and seek advice from an appropriately qualified and licensed professional.

BOB LOCKE – CHARTERED ACCOUNTANT & SMSF SPECIALIST

Mr Locke has been an accountant and taxation expert for 35 years. His company, Practical Systems Super, provides an all-in-one SMSF solution with a full administrative service, SMSF management software, and independent, licensed advice, tailoring their package to meet the individual needs of trustees and SMSF professionals.

To find out more about Practical Systems Super, visit www.pssuper.com.au, or call 1800 951 855.

DOWNLOAD THIS ARTICLE

TIME TO TRANSFER SHARES TO YOUR SMSF?

Comments Off on TIME TO TRANSFER SHARES TO YOUR SMSF?
TIME TO TRANSFER SHARES TO YOUR SMSF?

One of the few exceptions where personal assets can be transferred “in-specie” to a Self-Managed Superannuation Fund, is listed shares. These, of course, have to be transferred at market value and therefore a potential barrier to these transfers is often the capital gain that may be generated by the individual as a result of the transfer.

With the significant downturn in markets as a result of the COVID-19 crisis, it may be a good time to consider transfers as there may be minimal capital gains tax effect on the transfer. It may also be possible to treat some or all of the in-specie transfer as a concessional contribution and therefore improve the overall tax effectiveness. Obviously, where transfers are to be treated as contributions, it will be necessary to ensure that you take account of relevant contribution caps applying to the member.

The information provided in this article is general in nature and does not take into account your personal circumstances, needs, objectives or financial situation. This information does not constitute financial or taxation advice. Before acting on any information in this article, you should consider its appropriateness in relation to your personal situation and seek advice from an appropriately qualified and licensed professional.

BOB LOCKE – CHARTERED ACCOUNTANT & SMSF SPECIALIST

Mr Locke has been an accountant and taxation expert for 35 years. His company, Practical Systems Super, provides an all-in-one SMSF solution with a full administrative service, SMSF management software, and independent, licensed advice, tailoring their package to meet the individual needs of trustees and SMSF professionals.

To find out more about Practical Systems Super, visit www.pssuper.com.au, or call 1800 951 855.

DOWNLOAD THIS ARTICLE

© Practical Systems Super | All Rights Reserved

Privacy Policy | Disclaimer | Financial Services Guide | Sitemap

Practical Systems Super Pty Ltd is a Corporate Authorised Representative of PSA Super & Financial Services Pty Ltd.

AFSL no. 488562 | ABN: 72 626 268 237