If a fund increases in value for any non-investment related activity the increase will be a deemed contribution. Most commonly this occurs when an expense is paid on behalf of the fund without reimbursement. Where the action can be attributed directly to a member or their spouse it is a non-concessional contribution by default but the...
We all know that the level of in-house assets cannot rise above 5% of the fund value at the end of the financial year but what value is that? What is often not appreciated is that it is the gross value. That means that a fund with a $500,000 balance generally has an in-house asset limit...
Recently I was asked if an employee, offered discounted shares in her unlisted employer under an employee share purchase scheme, could acquire them via her SMSF. Quite apart from any ownership restrictions contained in the employee share plan offer, from an SMSF position, the answer is no. As the rights to acquire the shares attach to the...
On occasion, SMSF members illegally access preserved benefits. Even though this constitutes a breach, if the amount is repaid quickly, and with interest, and it’s the first time it’s happened there will generally be no consequence. If inaction and the passage of time demands it be processed as a benefit payment then it will be included...
The SMSF Association has released a report prepared by the University of Adelaide which has overturned some established SMSF myths. The report was largely in line with the previous findings of Rice Warner but involved a huge sample of over 300,000 funds. Essentially the report found that ASIC’s view that SMSFs holding less than $500k are uncompetitive...
Our last week's summary of the changes to super legislation avoided discussing the pension choices that apply in this financial year. We will consider them now. SMSF trustees can now choose from 2 alternative methods of calculating how much pension fund income is exempt from tax. For some the choice is easy. If a fund contains nothing but...
Even though the 12.5% CGT withholding regime was introduced to catch foreign transactions it requires the satisfaction of procedural obligations to exclude its application to any sale or acquisition of real property (vacant land, buildings, residential and commercial property) with a market value of at least $750,000. It may also include transfers of share or units...
SMSF residual reserves are a challenge to trustees wishing to distribute them. It is expected that, when the regulations allow the rollover/cessation of legacy SMSF defined benefit pensions, the number of funds with this issue will increase. One solution is to make a reserve distribution to member accounts. Provided the distribution is prorated across all eligible members,...
A new government death notification initiative facilitates contact with multiple organisations using a single online notification. It’s intended to minimise the paperwork involved in estate administration. Once a notification is lodged, it is sent to all participating organisations who will then make contact to begin their processing. Currently all state and territory governments are signed up to...
Children who are financially dependent on a deceased parent will pay no tax on receipt of the taxable component of the parent’s superannuation benefit. There is a view that otherwise independent children can qualify as financial dependents simply by being in receipt of regular payments from their parents and arranging suitably worded declarations This is simply not true....