The ATO SMSF statistical report for March 2013 has been released

Posted on May 25, 2013 by smsfinformer

The ATO publish regular statistical reports for the self-managed super fund (SMSF) market. The contents of this report have been worked out following valuable feedback from the super industry.

The information in this report includes:

SMSF population and asset allocation tables
- population of SMSFs and members
- asset allocation (break-up of assets into various classes).
Annual SMSF population analysis tables
- asset allocation by asset value of the fund
- membership sizes (SMSFs with one, two, three or four members)
- demographics (state break-up of SMSFs, members and assets)
- member demographics (age and income of members)
- total asset ranges (distribution of the size of SMSFs)
- average and median assets (per member and per SMSF)
- flow of funds (contributions, transfers, benefits and expenses).
SMSF quarterly establishment tables
- demographics (state break up of SMSFs)
- member demographics (age of new members)
- member demographics (income range of new members).

Click here to view the ATO Self-managed super fund statistical report – March 2013

ATO SMSF News – edition 26

Posted on May 25, 2013 by smsfinformer

The ATO has released their latest SMSF News which provides regular information for trustees of self managed super funds, tax agents, approved auditors, financial planners and administrators around key regulatory and administrative topics.

Edition 26 covers and the following topics:

1. Paying benefits from a self-managed super fund
The ATO have produced a new publication called Paying benefits from a self-managed super fund (NAT 74124). This publication provides more specific information to assist trustees if they have members who will soon be entering or have entered retirement.
The rules and regulations that apply to your self-managed super fund (SMSF) in the accumulation phase continue when a member retires. However, paying retirement benefits brings additional regulatory and taxation requirements. This publication provides topical information about the issues you need to understand to meet the regulations that govern the payment of benefits.
In conjunction with the release of this new material, our publication, Running a self-managed super fund, has been modified to focus on the regulatory requirements of managing an SMSF in the accumulation phase.
Paying benefits from a self-managed super fund is the latest addition to the existing suite of SMSF lifecycle publications, which includes:
Thinking about self-managed super (NAT 72579) – provides you with the steps you need to consider before setting up a self-managed super fund.
Setting up a self-managed super fund (NAT 71923) – provides basic information about how to set up an SMSF.
Running a self-managed super fund (NAT 11032) – highlights your responsibilities and obligations as a trustee when operating an SMSF.
Winding up a self-managed super fund (NAT 8107) – details the process you need to follow to wind up an SMSF.
Paying benefits from a self-managed super fund will help trustees understand their increased responsibilities when making payments out of their SMSF.

2. Changes to contribution reporting for rollovers from 1 July 2013
From 1 July 2013, the Rollover benefits statement (RBS) is changing. You must use the new RBS for all rollovers from this date. The new RBS has no current year contributions information.
The 2014 SMSF annual return (SAR) is also changing. From 1 July 2013, all contributions received by a super fund during a financial year must be reported to us by the fund that originally receives the contribution, and not by another fund, when the contributions are transferred in a rollover.

For example, as an SMSF trustee, in the 2014 SAR you report at Section F or G contribution labels A to M all contributions received directly by the SMSF during the financial year, even where some of those contributions have been rolled out to another fund before the end of the 2013-14 financial year.
Changes being made in the 2014 SAR section F and G member information include renaming labels P and Q to reflect the changes to the contribution reporting requirements for rollovers.

The new RBS and instructions are now available – for more information, refer to Rollover benefits statement and instructions for transactions on or after 1 July 2013.

3. Changes to the 2013 SMSF annual return
A number of changes for SMSFs apply for the 2012-2013 year.

Click here to view a full summary of those changes.

4. Limited recourse borrowing arrangements by self-managed super funds
With many SMSF trustees entering into limited recourse borrowing arrangements (LRBAs), it appears there is still some uncertainty with respect to associated taxation issues.
A super trustee who enters into a LRBA for the purpose of purchasing an asset, as permitted under subsection 67A of the SIS Act, will be treated as the owner of the asset for income tax purposes. This approach supports the government’s policy objectives in allowing fund trustees who enter into LRBAs to be the owners of the relevant asset.
In essence, the SMSF will be assessed on the income earned on the underlying asset, such as rental income, and will be able to claim any relevant deductions. In addition, it is the SMSF which should account for any relevant GST amounts on income and expenses associated with the LRBA.
This rationale confirms that where the LRBA is set up in accordance with SISA requirements, there will be no need for the holding trust to lodge an annual return with us.
SMSFs entering into LRBAs need to do so carefully because an arrangement that does not meet all the SISA requirements would contravene the borrowing prohibition and place at risk the compliance status of the fund.

For more information on limited recourse borrowing arrangements, refer to Limited recourse borrowing arrangements by self-managed super funds – questions and answers

5. Lodging auditor contravention reports
From February 2013, the Tax Agent Portal functionality to support online lodgment of auditor contravention reports (ACR) has been unavailable. The ATO have been advising SMSF auditors to download the electronic Superannuation Audit Tool (eSAT) or access the Business Portal to complete online ACR lodgments.

6. Version 6 (2013) of eSAT will be released in June.

The ATO will advise existing eSAT users when the update is available and will also issue a bulletin. The ATO have updated reference material and enabled the 2013 period, to allow for ACR lodgment.
The ACR for 2013 will also reflect that the obligation for keeping fund assets separate from members or associated employers assets is now outlined in Regulation 4.09A (previously S.52(2)(d)) of the Superannuation Industry (Supervision) Regulations (1994).

7. The revised Self-managed superannuation fund (SMSF) independent auditor’s report will be available from 1 July.
Changes to this report include the addition of the SMSF auditor number (SAN) for approved SMSF auditors and expanded audit scope for part B of the report to include the following regulations:
R4.09A – SMSF assets must be held separately from any assets held by the trustee personally.
R8.02B – Fund’s assets must be valued at their market value when preparing accounts and statements.
The audit report now also includes information that the auditor has complied with the auditor independence requirements prescribed by the Superannuation Industry (Supervision) Regulations (1994) (SISR) and the competency standards set by ASIC.
Audits completed after 30 June 2013 will be required to be signed off by an approved SMSF auditor, and the SMSF Auditor Number (SAN) quoted on the audit report.

The SMSF auditors Super Professional to Professional (SP2P) support service is being extended to the 300 largest SMSF auditors from July 2013. This unique, free service provides technical assistance to high-volume professional SMSF auditors.
The SP2P will provide your practice with direct access to our senior technical officers, who will provide:
responses to queries about technical issues you identify in the course of audits with SMSFs
guidance on SMSF regulatory and legislative requirements
support to resolve any SMSF administrative issues where other channels do not exist.
You can expect to receive a telephone call from a subject matter expert within two working days to discuss your query, provide general advice and to negotiate a response date, where required.

8. SMSF auditor registration with ASIC
SMSF auditors must be registered with ASIC by 30 June 2013 in order to conduct SMSF audits from this time.
Auditors can apply for registration using ASIC Connect, a new online service available through the ASIC website.
ASIC has now registered over 3,543* SMSF auditor applications since the launch of the new SMSF auditor register on 31 January 2013.
The transitional period for the SMSF auditor registration reform ends on 30 June 2013. If applicants do not apply by this date, they will not be eligible for any transitional arrangements and will be required to complete a competency exam and demonstrate they have the prescribed experience. ASIC strongly advises anyone wishing to become an approved SMSF auditor to lodge their application as soon as possible.

9. Check your SMSF auditor is registered
From 1 July 2013, SMSF trustees should confirm that their appointed auditor is registered with ASIC. Trustees should ensure they have the auditor’s SMSF auditor number (SAN), which is provided by ASIC to the auditor on registration. SMSF trustees will need to include the SAN on SMSF annual returns from 1 July 2013.
Trustees can check whether their auditor is registered with ASIC by searching the register of approved SMSF auditors using ASIC’s online service ASIC Connect. This service provides free information about approved SMSF auditors, as well as the option to purchase current and historical extracts.

For more information about the SMSF auditor reforms and the requirements for registration, visit asic.gov.au/smsf-auditor
*Figures correct as at 09/05/2013

10. Valuation of SMSF assets
For the 2012-13 and later years of income, SMSF trustees are required to value their fund’s assets at market value when preparing the financial statements and accounts of the fund. The ATO have published Valuation guidelines for self-managed superannuation funds to assist trustees and advisors to comply with this requirement.

11. New powers to address non-compliance
Legislation was introduced into the House of Representatives last November to give the ATO more flexible and proportionate powers to address non-compliance by SMSF trustees. These new powers include administrative penalties and education and rectification directions. If passed by parliament, they will apply to contraventions that occur on or after 1 July 2013.
Illegal release of super will be further curtailed when new civil and criminal powers to prosecute people who promote IER schemes are introduced. Promoter penalty provisions will begin on royal assent. A bill has also been introduced into parliament to tax illegally released benefits at 45% from 1 July 2013.

12. Caps on super contributions
Caps apply to contributions made to your member’s super. Any super contributed over the cap is subject to extra tax. The cap amount and how much extra tax your member may need to pay depends on whether the contributions are concessional (before-tax) or non-concessional (after-tax).
For contributions received in the 2012-13 financial year, everyone’s concessional cap is $25,000, regardless of their age. Any excess contributions may be taxed an additional 31.5%. The higher concessional contributions cap for people aged 50 years and over ended on 1 July 2012.
On 5 April 2013, the government announced it would bring forward the start date of a higher concessional contribution cap of $35,000 to 1 July 2013 for people aged 60 and over. Individuals aged 50 and over will be able to access the higher cap from 1 July 2014. The government will also allow individuals to withdraw any excess concessional contributions made from 1 July 2013 from their super fund and have the excess amount taxed at the member’s marginal tax rate. These changes are yet to be legislated.
Concessional contributions are generally made to a super fund for or by your member in a financial year and include;
most employer contributions, such as compulsory super guarantee,
the amounts members salary sacrifice to their super
amounts for which an income tax deduction is allowed
other amounts included in the assessable income of the super fund.
If a member of your SMSF exceeds the concessional super contributions cap by $10,000 or less for the first time, they may receive a once-only offer to have their excess concessional contributions refunded and taxed at their marginal tax rate.
If they decide they want to accept the offer, their excess concessional contributions will be withdrawn from their super fund and added to their assessable income and taxed at their marginal tax rate for the year the contributions were made.
The non-concessional (after-tax) contributions cap for 2012-13 has remained at $150,000.
Non-concessional (after-tax) contributions generally include:
personal contributions from a member’s after-tax income which are not claimed as an income tax deduction
amounts not included in the super fund’s assessable income.

13. From ASIC
Australian Government bonds
Buying Australian Government bonds is a low-risk way for retail investors to diversify their portfolio and familiarise themselves with bonds. They provide a steady income stream and can be traded on the Australian Securities Exchange (ASX).
If you are looking for a low-risk way to diversify within your investment portfolio, consider Australian Government bonds, also known as Commonwealth Government Securities (CGS). They will soon be available on the Australian Securities Exchange (ASX).
Issued by the Commonwealth of Australia, CGS are highly secure investment products and will give you a predictable cash flow paid on a periodic basis, with a specified maturity date. The government guarantees the interest paid and that your loan will be repaid in full at maturity.
The bonds will be listed on the ASX as either ‘Exchange-traded Treasury Bonds’ or ‘Exchange-traded Treasury Indexed Bonds’. The difference is:
Exchange-traded Treasury Bonds have a fixed face value (the amount you will get back at maturity) and carry the same annual rate of interest over the life of the security, payable every six months
Exchange-traded Treasury Indexed Bonds have a face value that is adjusted for movements in the Consumer Price Index. Interest is paid quarterly at a fixed rate, on the adjusted face value – so the amount of interest you receive will vary from one quarter to the next.
Australian Government bonds have several features that may appeal to you. They are low risk – that is, you will always receive the face value of the bond if you hold it until maturity. You will also receive a regular income, via quarterly or half-yearly interest payments. These bonds are also easy to buy and sell – you can trade them on the ASX like shares, through your financial adviser, stockbroker or via an online trading account.
There are some risks to consider – Exchange-traded Treasury Bonds are affected by inflation (although Exchange-traded Treasury Indexed Bonds are not). In addition, if you want to sell the bonds before they reach maturity, they will be subject to market value – the price people are prepared to pay – which will vary over time, depending on what’s happening in the economy and with interest rates.
Try the online courses on the ASX website to learn more about Australian Government bonds and read the information statement on each product. You should also consider getting financial advice if you are not sure if these products are right for you.

The Australian Securities & Investments Commission has amended existing market integrity rules and related guidance to help with the introduction of retail trading of these bonds on the ASX – see asic.gov.au for information about the regulatory framework, and moneysmart.gov.au for information about retail trading of these bonds.

Click Here to view the full details on the ATO website

Tagged with: ATO, self managed super fund, self managed super funds, SMSF, valuation of smsf assets
Posted in ATO and Government

Changes to the 2013 SMSF annual return

Posted on May 22, 2013 by smsfinformer

A number of changes for SMSFs apply for the 2012-2013 year. The most important to note are:

Section A: Item 6 has been changed from Fund Auditor to SMSF Auditor. An SMSF Auditor is a registered auditor under the Australian Securities & Investments Commission (ASIC) who has been assigned an SMSF Auditor Number (SAN). From 1 July 2013, an auditor must be registered with ASIC in order to perform an SMSF Audit. In addition, Item 6 now requires that where a trustee reports that the auditor has qualified the audit due to a compliance issue, they also need to report whether the issue or issues have now been rectified.

Section A: Item 10 Exempt current pension income, now requires trustees to answer whether the fund paid an income stream to any of its members in the income year and, if so, to list the exempt current pension income amount and the method used to calculate it.

Section B: Item 11 Income, now includes a question on whether a trustee has applied an exemption or rollover in that year.

Section C: Item 12 has been renamed Deductions and non-deductible expenses, and includes additional labels.

Section D: Item 13 Calculation Statement, includes changes to the supervisory levy amount. The timing of the annual payment of the supervisory levy has been brought forward so that SMSFs pay the current year’s levy at the time of lodgement of the previous year’s annual return. This begins for the payment of the 2013-14 income year supervisory levy. However, the levy for this year is payable over two years, meaning SMSFs will pay half of the 2013-14 levy with the 2013 annual return, and the other half with the 2014 annual return.
There is also a new label for a supervisory levy adjustment for wound-up funds. This label is to be used only by funds that have wound up during the 2012-13 income year because they are not required to pay the supervisory levy for the 2013-14 income year.

Section F: Member information, now includes room for up to eight members to be listed in an SMSF (past and present, because an SMSF can only have four members at one time).

Section H: Item 15b Australian direct investments, now requires the value of each type of asset that is held under a limited recourse borrowing arrangement to be reported at the appropriate label. For example, Australian shares or Australian residential real property amounts would need to be reported here if bought under a current limited recourse borrowing arrangement. An amount reported in this area should not be reported again at any other asset labels in Section H.

New Item 15d, In-house assets (also in Section H), requires trustees to clarify whether the fund held a loan to, lease to, or investment, in related parties as at the end of the year, and well as the value of the assets.

Section J: Regulatory information has been removed from the SMSF annual return, streamlining SMSF reporting.

Click Here to view further details

Tagged with: ATO, self managed super funds, SMSF, smsf annual return, smsf tax return, superannuation tax
Posted in ATO and Government, SMSF and Taxation

SMSF nuances biggest hurdle in education: Financial Observer

Posted on May 19, 2013 by smsfinformer

Advisers and accountants looking to move into the self-managed superannuation fund (SMSF) space are challenged by the specific nuances and complexities of the structure when it comes to education and training.

SMSF Academy managing director Aaron Dunn said while there were not necessarily any large gaps in SMSF education in terms of topics, what had been most difficult to comprehend were the general differences in an SMSF structure compared to a standard superannuation fund.

“People moving into the SMSF area are finding challenges around the complexities that relate specifically to running an SMSF,” Dunn told financialobserver.

“I think, broadly speaking, most people have the general concepts down reasonably well, but when you start to get into some of the specific investment rules that deal with SMSFs, the payment requirements and obligations – those nuances that are very specific to SMSFs – that’s where they tend to have to spend more time on.

“They need to really flesh out those specific areas further, but I think the education piece will grow over the next few years.”

Within the accounting space, however, he said there was a lack of understanding around SMSFs in the pension phase.

“The biggest [education] gap is in the benefit payments in terms of the pension phase and that area is obviously growing by necessity because of the type of client,” he said.

“Through a lot of the courses and training, that’s the area where people need to step their skills up because it’s not just simply structuring a pension on a set-and-forget basis.

“They’ve got to do a lot of work around the structuring of it, but then also the ongoing maintenance and taking advantage of the strategies off the back of that, such as taxation at their level, using one or more pensions and whether you run an anti-detriment payment.”

He said the Australian Taxation Office was now starting to focus more on those areas.
There was a growing focus and push from all professional industry bodies on SMSF specialisation, but he said unless there was an obligation for practitioners to attach themselves to the designation, they would remain in the status quo.

“It’s slowly changing and there are certainly those moving into the area that recognise the importance of that specialisation, but there’s still a large group of people that won’t move to specialisation until they’re forced to,” he said.

“But the move to specialisation shouldn’t just be seen as a [requirement] because it’s what the law says you must do, it must be done because you believe that specialisation is going to put you in a better position to advise your clients and also potentially grow your client in that space.

“Off the back of that, we are seeing a range of businesses grow that are very niche in the SMSF space to take advantage of that, and that goes through from audit, administration and lending itself to specific advice as well. The growth in the sector suggests that if you’re going to play and be competitive in this space, you actually need to have that level of specialisation.”

Click Here to view entire article

Tagged with: ATO, ato and superannuation, ato smsf, ato superannuation, self managed super fund, SMSF, smsf education, superannuation ato, superannuation education
Posted in SMSF Education and Training

Rollover changes delayed for self-managed super funds: The Age

Posted on May 19, 2013 by smsfinformer

The introduction of the new electronic processing system and performance standard for transfers of superannuation from one fund to another was originally due to start from July 1, 2013. Instead, because of perceived risks associated with rollovers to self-managed superannuation funds, it is now being introduced in stages. The original start date will now only apply to rollovers between Australian Prudential Regulation Authority-regulated industry and commercial funds.

Under the current system some super funds hold on to members’ money longer by delaying the process under the anti-money-laundering regulations demanding proof of identity documents. Currently a rollover from one super fund to another can take up to more than a month.

Under the new system the old proof of identity requirements will no longer apply and super funds must use the new electronic rollover system. This will enable a fund to establish the identity of a member through the ATO’s tax file number integrity checking system. This system allows a fund to establish electronically that it is dealing with the right person and enables it to complete a rollover request under the new time limit of three days.

The reason rollovers to SMSFs are not part of the new system from July 1, 2013 is because the regulators believe people could fraudulently access their super by rolling it into a personal bank account rather than an SMSF bank account.

Before the rollover standard can apply to SMSFs, a system must be developed that enables super funds to validate electronically that the SMSF bank account nominated to receive the rollover is legitimate. The ATO is currently working with financial institutions to create an electronic SMSF bank account validation service.

Once in place APRA funds must first establish the identity of a member using the TFN validation register and then verify the nominated bank account with the SMSF bank validation register. This will mean, as long as the two registers are in place by January 1, 2015, APRA-regulated funds must meet the three-day processing standard for superannuation transfers to SMSFs.

In addition to the rollover standard, all super funds must have systems in place to receive employer funds and contribution information electronically. The start date for this is staggered. Where funds, including SMSFs, receive contributions from large and medium-sized employers, the electronic systems must be in place by July 1, 2014.

Large APRA funds should have the electronic systems they have been developing in place before the deadline. SMSFs will more than likely have the choice of three options. If an SMSF currently uses an external service provider for administration service this electronic transfer facility should be incorporated into their systems.

Where an SMSF doesn’t use an administration service, and instead uses a bank account or cash management account, these financial institutions are currently looking at developing the service. This will mean as well as receiving the funds electronically from employers, as happens now, the information identifying the makeup of the contribution will also be received electronically.

Click Here to read entire article

Tagged with: APRA, ATO, rollover, self managed super funds, SMSF
Posted in ATO and Government

10 things to know about estate planning in SMSFs: CPA

Posted on May 16, 2013 by smsfinformer

However unpleasant it might be to contemplate, death is one of life’s realities, which makes estate planning an important consideration when it comes to self-managed superannuation funds (SMSFs).Often people want to know about how and when benefits are paid as well as the tax that might apply to these benefits.

Read on for 10 estate planning tips for SMSFs:

1. Estate planning isn’t only about death

Estate planning technically involves making sure your family’s finances will be in good shape if you die or are incapacitated in some way — either temporarily or permanently disabled —and unable to work.
While this article focuses on death benefits, planning for different types of disability is vital.

2. Super is not part of your will

In the first instance, your super benefits don’t automatically form part of your estate. This can mean that your benefits might be paid out before probate is granted on your estate. This aspect can be important to make sure your family isn’t worse off financially. Getting probate can sometimes be time-consuming and complex.

Your super can be paid to your estate. You just need to know how to make this happen.

3. Your super fund’s trust deed is paramount

The key to knowing how your death benefits will be paid is governed by your SMSF’s trust deed. You must carefully review this document and operate within its rules.

The more explicit the trust deed is, the less likely that disgruntled survivors can challenge who is going to receive your death benefit.

4. Pay attention to super fund laws and death benefits

Apart from your estate, the laws allow an SMSF to pay a death benefit to a spouse, a child (this includes a biological, adopted, step- or surrogate child) or any person with whom you’re in an inter-dependency relationship.

Your SMSF trust deed can specify fewer people than this list of potential beneficiaries but it can’t allow a wider range.

Click Here to view entire article

Tagged with: estate planning, self managed superannuation funds, SMSF
Posted in SMSF Administration

Social media joins SMSF community: ASX

Posted on May 14, 2013 by smsfinformer

here were 909,188 members of self-managed superannuation funds (SMSFs) at June 2012, Australian Tax Office data shows. Also, SMSFs held the largest proportion of superannuation funds – 31.5 per cent, or $474 billion – at December 2012, according the Australian Prudential Regulation Authority (APRA).

Whichever way you look at it, there has been an extraordinary boom in SMSFs in the past decade as more investors seek greater control of their retirement savings. Based on ATO and APRA data, SMSF growth has been especially strong in the past three years and shows no signs of slowing.

As more SMSFs are established, it is likely that new models of investment information will emerge to help trustees with their investment strategies. Although a range of service models for SMSFs are available, investment information for SMSFs has tended to follow the traditional path of costlier full-service advice, or much cheaper online service with limited or no advice.

Andrew Ward, managing director of SelfWealth, a new information tool for SMSFs and any self-directed investor, believes social media can radically change how SMSFs determine and implement their investment strategy.

As the SMSF community grows ever larger, Ward says more trustees should be able to share their strategies and ideas, just as other communities or user groups do by using social media tools. The same applies for share investors who want to compare portfolios.

SelfWealth essentially has three parts: the first is providing a portfolio report based around an SMSF’s existing stock holdings. For example, a fund that holds a dozen stocks through a discount broker will get a report showing the portfolio’s holdings, risk profile and a comparison with similar SMSFs, in turn helping the SMSF to better understand its relative performance and profile.

Second, the SelfWealth community allows users to compare themselves to peers. For example, a 70-year-old SMSF trustee could compare their fund with information from members with a similar demographic and risk profile, and common investment goals. The service is anonymous; members do not divulge their personal details but rather provide high-level data that creates sample portfolios for the community.

The third part is being able to follow SMSF trustees and professional investors through the SelfWealth community. A trustee might, for example, like a particular SMSF’s investment strategy and holding, and think it would be useful for them. Or they could follow what two professional investors are buying and selling for their SMSF. Again, it is an example of a community using social media to help other users, without divulging personal details.

ASX Investor Update consulting editor, Tony Featherstone, asked Andrew Ward about some of the main problems with current SMSF information models and how social media can help an SMSF or any self-directed share investor.

Click Here to view entire article

Tagged with: ASX, self managed super funds, SMSF, social media
Posted in In the Media

Super reform to be set in stone before election: The Australian

Posted on May 14, 2013 by smsfinformer

SUPERANNUATION savers over the age of 60 should be early beneficiaries of the government’s move to raise the concessionary contribution cap from $25,000 to $35,000, with Superannuation Minister Bill Shorten planning to table the new measure in parliament today.

While every significant super measure in the budget had already been announced by Mr Shorten and Wayne Swan in April, when they unveiled their plan to put a 15 per cent tax on earnings for funds making more than $100,000 a year, most industry experts believed that none of the new measures would become law before the September 14 election.

“I also intend to table the reform of the penalties for excess contributions very shortly,” Mr Shorten told The Australian yesterday.

Currently, savers who break the $25,000 annual concessionary contribution limit are taxed on the excess at the top marginal tax rate of 45 cents in the dollar.

The Shorten plan will allow excess contributors to pull the money back without penalty or pay tax at their marginal rate, plus interest.

The $10,000 lift in the $35,000 cap for people aged 60 and older is intended to take effect from July 1, allowing them to put away an extra $10,000 a year at a tax rate of 15 per cent, rather than at their normal tax rate.

That is well below the $50,000-a-year cap that was taken away three years ago by the Treasurer, but it will be well received, as making concessionary contributions at lower tax rates is the single most popular element of super for most wage earners.

The government plans to offer the same benefit on July 1 next year to savers aged 50 and older.

The executive director of the Self-Managed Super Fund Owners Alliance, Duncan Fairweather, welcomed the move, saying “current voluntary contributions caps are too low to allow the majority of Australians to save enough to be financially independent throughout their retirement”.

He added that even a cap of $35,000 would not suffice to keep most Australians in their retirement and the new higher caps should be indexed.

Click Here to view entire article

Posted in In the Media

Budget 2013: Government to raise over $800 million through superannuation reform suite :SmartCompany

Posted on May 14, 2013 by smsfinformer

The government is set to raise $820 million over the next four years through a suite of changes to the superannuation system, including higher concessional contribution caps and changes to retirement income streams.

But the government will also spend $60 million in alleviating the rules regarding excess super contributions.

The changes, which were originally announced in April, are part of a suite the government believes will help make the tax system fairer.

In his budget speech tonight, Treasurer Wayne Swan said the government will begin “better targeting superannuation tax concessions to improve the system’s fairness, sustainability and efficiency”.

Tonight’s budget clarified several of the government’s superannuation measures:

High-income contributions

The budget will make an amendment to a previously announced measure which will reduce tax concessions for very high income earners.

In the 2012-13 budget, the government said it would reduce certain tax concessions for the rich. In addition, it will exempt federal judges from these concessions.

The government will also use a similar definition of income for limiting these concessions in line with the Medicare levy surcharge and will refund former temporary residents the tax paid under the measure.

Over the next four years, these changes are expected to raise $25 .2 million.

Excess contributions

In the only measure in which the government is spending money on superannuation changes, $60 million will be provided to change current excess contributions rules.

These rules have been controversial among superannuation industry members for some time as they usually target anyone who contributes over their annual caps, regardless of intention.

Any superannuation member hit by excess contributions tax is charged 46.5% regardless of their marginal tax rate. Now, the changes will see excess contributions taxed at an individual’s marginal tax rate, plus an interest charge.

However, individuals will be allowed to withdraw any excess concessional contributions from their fund.

The government estimates the changes will affect 41,000 people in 2013-14, by about $1,500 on average.

Deferred lifetime annuities

The government will attempt to encourage the adoption of deferred lifetime annuities by providing them with the same concessional tax treatment which applies to investment earnings on super assets supporting retirement income streams.

A deferred lifetime annuity is an annuity which is bought for an up-front premium, although payments don’t begin immediately.

However, because these payments aren’t made annually, they don’t qualify as income streams and so don’t have access to the same concessional tax treatment.

The new change will amend this.

Higher concessional contributions caps

The government will raise $366 million over the next four years through the administration of higher concessional contribution caps.

A new $35,000 cap will apply to anyone in certain age requirements. Anyone aged over 60 from July 1 2013 will be subject to the new cap, although anyone aged over 50 will be subject from 1 July 2014.

The government says the higher cap won’t be limited to individuals with balances below $500,000. The general cap is expected to reach $35,000 by July 1, 2018.

Retirement income streams

Current tax exemptions for earnings on super accounts supporting retirement incomes will be better targeted, the government says.

Future earnings on assets supporting income streams will be tax-free up to $100,000 a year from July 2014, with earnings above the $100,000 threshold to be taxed at the same concessional rate of 15% as in the accumulation phase.

Currently all earnings on assets supporting income streams are tax-free. Under the changes, the $100,000 threshold will be indexed to the Consumer Price Index, and then increase in increments of $10,000.

For assets which were bought before April 2013, the changes will only apply to capital gains which accrue after July 2024.

Both of these changes will earn the government $313 million over the next four years.

Lost member accounts referred to the ATO

The government will increase the threshold below which inactive accounts and those accounts with uncontactable members are required to be transferred to the Australian Tax Office.

The threshold will be increased from $2,000 to $2,500 from December 2015, and will increase to $3,000 from December 2016. This change will raise $118.4 million over the next four years.

The ATO is also set to receive $4.6 million over the next four years in order to administer the changes.

“Together with the strategies the ATO has in place for reuniting lost members with their super, the measure is expected to see a further reduction in the number and value of lost accounts,” the government said in the budget.

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Budget 2013 – Changes made to tax for superannuation: SkyNews

Posted on May 14, 2013 by smsfinformer

New superannuation rules increasing taxes for the wealthy and reducing tax for those on lower incomes have been confirmed in the federal government’s budget.

There will be a new 15 per cent tax on super fund earnings above $100,000 per year from July 1, 2014, the first time a tax has been introduced on superannuation earnings.

Australians with superannuation income above $300,000 will also have with their tax concession halved to 15 per cent.

The tax free threshold on superannuation contributions has been increased to $35,000 from $25,000, but only for Australians aged above 60 from July 2013, and for those aged above 50 from July 2014.

No mention was made of previously announced plans to make the levy available to all fund members whatever their age from 2018.

For low income earners, those who earn up to $37,000 a year will effectively pay no tax on super, thanks to a tax cut of up to $500.

As previously announced, all 8.4 million working Australians will have 9.25 per cent of their income paid into super from July , 2013, and that guaranteed rate will rise to 12 per cent by 2019

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Tagged with: Budget, self managed super funds, SMSF
Posted in In the Media