Getting ready for year end

May 6, 2015

Effective planning and preparation is critical for all taxpayers as the end of financial year approaches. The good news is that your tax professional is here to support you, so you don’t have to do all of the heavy lifting yourself. This is the perfect time of the year to seek advice from your accountant […]

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Good news for SMSFs and bankruptcy comes with a caution

April 14, 2015

A 2015 Supreme Court decision is both good news and a caution for contributions to super and SMSFs and bankruptcy.  A recent court decision demonstrates what can happen when a business borrows from a bank to make large super contributions to an SMSF, and then the business folds.  The Court of Appeal division of the […]

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Another binding death benefit nomination fails due to poor SMSF documents

April 8, 2015

Munro v Munro [2015] QSC 215 is the latest case involving a binding death benefit nomination (‘BDBN’) that was held not to be binding. This case is a very important decision as it confirms that BDBNs for self managed superannuation funds (‘SMSF’) can last indefinitely.  The facts Mr Barrie Munro practised as a solicitor during […]

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SMSF: How and why to diversify

March 10, 2015

Knowing exactly what needs to be considered before getting your asset allocation right inside (or outside!) a Self-Managed Super Fund (SMSF) is not just a smart move in terms of obeying strict SMSF regulations. It is also a fantastic exercise in developing a broader investment discipline. No matter your age, gender, risk profile, objective or […]

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Addressing problem SMSF’s – Are there reasons to help the tax man do his job?

February 16, 2015

Once it is clear that an SMSF has run into problems, it seems counter intuitive to some trustees to assist the ATO in investigation or in prospectively rectifying issues. However, a Federal Court case just made public, along with recent ATO comments, suggest this can assist in mitigating the consequences. 2015 Federal Court case The […]

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Honey, I lost the trust deed

February 10, 2015

Introduction  The question seems simple enough — what should you do when the trust deed for a self-managed superannuation fund (‘SMSF’) is lost? The answer to this question is becoming increasingly important as more and more trust deeds are being misplaced or lost.  This article offers a solution that may be appropriate for some SMSF […]

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Paying a pension in kind using the partial commutation strategy

February 5, 2015

Generally, a pension must be paid in cash. However, not every SMSF has ready cash to satisfy the minimum. Thus, it provides much needed flexibility when a pension can be satisfied in kind, eg, by way of an off-market transfer of listed securities, to ensure the pension exemption can continue and the minimum annual payment […]

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Draft legislation released: limited recourse borrowing arrangements

January 30, 2015

Treasury released draft legislation recently that will impact limited recourse borrowing arrangements. For full details see http://www.treasury.gov.au/ConsultationsandReviews/Consultations/2015/Look-through-treatment-for-instalment-warrants  We consider the major changes for SMSFs and limited recourse borrowing arrangements.  Background Naturally, in order for a trustee of a superannuation fund to be allowed to borrow, the asset must be held on trust for the trustee of […]

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Recent case provides valuable SMSF insight

January 23, 2015

Introduction The recent decision of Deputy Commissioner of Taxation v Lyons [2014] FCA 1353 provides various insights for SMSF trustees, as explained in this article. Facts of decision On 6 June 2008, the Lyons Family Superannuation Fund (‘Fund’) was registered as a self managed superannuation fund. At all relevant times, Mr Lyons and his now […]

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Neglect SMSF liquidity at your peril

January 14, 2015

In this article, we look at the liquidity risk associated with holding fixed property in SMSFs, as well as some of the factors to consider when investing in these types of assets. Fixed property holdings in SMSFs can have distinct advantages: – Capital appreciation of the property is taxed at an effective rate of 10 […]

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SMSF borrowing — ATO ID 2014/39 and ATO ID 2014/40 both confirm that nil interest borrowings from related parties can cause non-arm’s length income

January 4, 2015

  Two ATO Interpretive Decisions (ie, ATO ID 2014/39 and ATO ID 2014/40 both published on 12 December 2014) address the question: Will ordinary or statutory income derived by an SMSF under a limited recourse borrowing arrangement (‘LRBA’) be non-arm’s length income (‘NALI’) of the fund pursuant to s 295-550 of the Income Tax Act […]

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SMSFD 2014/1: Latest from the ATO on commuting a TRIS

December 31, 2014

The ATO has recently released self managed superannuation fund determination SMSFD 2014/1. SMSFD 2014/1 builds on taxation ruling TR 2013/5 and SMSFD 2013/2 and provides some important insights regarding the ATO’s views on commuting transition to retirement income streams (‘TRIS’). This article discusses some key points arising from the determination. What is a ‘commutation’? Although […]

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Can an adult child be a tax dependant – ATO ID 2014/22 says yes!

December 27, 2014

ATO Interpretive Decision 2014/22 addresses the question: ‘Can an adult child be a 'death benefits dependant' of his or her deceased parent for the purposes of section 302-195 of the Income Tax Assessment Act 1997 (Cth)?’ The adult child was considered to be a death benefits dependant for the purposes of this section. Tax definition […]

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SMSF succession strategies

December 22, 2014

There are many strategies put forward on how to provide smooth and effective succession for a self managed superannuation fund (‘SMSF’) members. Fortunately, while there is no ‘one size fits all’ solution, there are a number of strategies that are simple and cost effective that can substantially bolster your position and set the ‘foundation’ for […]

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New ATO view on cross-insurance within an SMSF

December 19, 2014

There has been much conjecture as to whether a self managed superannuation fund (‘SMSF’) trustee can implement a cross-insurance strategy after 1 July 2014. The ATO recently addressed this question; which is discussed below. However before discussing the ATO’s view, we begin by briefly discussing what cross-insurance is. What is cross-insurance in an SMSF context? […]

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Two ways for an SMSF to acquire residential property from a related party

December 17, 2014

A recent AAT decision further illuminates when residential property can fall within the definition of business real property. Many would say that the trustee of an SMSF is prohibited from ever acquiring residential property from related parties of the SMSF (including members). However, there are two main circumstances where it could happen without contravening superannuation […]

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FSI final report recommends banning borrowings – but a window of opportunity exists!

December 8, 2014

The FSI final report — chaired by David Murray — was recently released. The full text is available at http://fsi.gov.au/publications/final-report/ As expected, it has recommended that limited recourse borrowing arrangements (‘LRBAs’) in superannuation funds be banned. This gives rise to a certain window of opportunity. What the FSI final report actually said The final report recommended that […]

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Do You Have Undisclosed Offshore Income?

December 2, 2014

ATO's DO-IT amnesty comes to an end 19th December Project DO-IT (Disclose Offshore Income Today) is an ATO initiative that is coming to an end on the 19th December 2014. This initiative or amnesty is giving taxpayers an opportunity to voluntarily declare undisclosed or incorrectly reported offshore financial activities. There are considerable benefits of making […]

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SMSF penalties and sole purpose test illuminated by the Federal Court

November 26, 2014

Two mysteries that loom large on the SMSF landscape are the issues of SMSF penalties and the sole purpose test. However, a recent Federal Court case sheds some light on the uncertainties in these areas. Facts of the case The decision in Deputy Commissioner of Taxation (Superannuation) v Graham Family Superannuation Pty Limited [2014] FCA […]

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Excess contributions tax – the good news continues

November 13, 2014

Introduction True to its word, on 10 October 2014 the Government introduced draft legislation, which proposes practical and long-awaited changes to the treatment of excess non-concessional contributions (‘NCCs’). This article outlines the tips and traps associated with the proposed changes. Details of the draft legislation The draft legislation takes the form of the Tax and […]

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Deducting super contribution by passive investment trusts

November 6, 2014

In 2013, DBA Lawyers released an article that considered the ability to deduct superannuation contributions for directors of trustees of ‘passive’ investment trusts. The article proved to be quite controversial. However, a recent ATO decision impact statement confirms that the ATO agree with DBA Lawyers’ position in that article. This article seeks to recap on […]

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Latest on excess non-concessional contributions

October 16, 2014

The latest official word on the status of excess non-concessional contributions was a positive one, but caution is still needed. The latest official word The ATO published on Friday 26 September 2014 the official minutes of the most recent Individual Taxpayer Liaison Group Minutes. In it the ATO stated: Under the new measure for non-concessional […]

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Trouble in paradise – Can an SMSF member be forcibly removed?

October 10, 2014

Often self managed superannuation funds (‘SMSFs’) are created with the best of intentions, whether to provide for a second spouse, create a contingency for a child, entering property ventures with a business partner, etc. But the most important question — which is almost always overlooked — is what happens if it all goes wrong? Can […]

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Transition to retirement in SMSF – ATO provide key clarification on TRIS strategies

September 29, 2014

ATO issues TRIS confirmation of key commutation strategy The ATO in SMSFD 2013/2 confirmed that an account-based pension can be partially commuted to a lump sum to enable a member to take advantage of their low rate cap. (The low rate cap for the 2014/15 financial year is $185,000.) However, the ATO in paragraph 11 […]

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Cut the cost of insurance

September 15, 2014

Many of us often look at what we pay for our insurance cover over a year and wonder if there are ways we can cut the cost of insurance without jeopardising the cover. One option is to facilitate the insurance cover via your superannuation fund. Mike’s case Mike and Terri are both aged 38 and […]

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