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Super Reforms – Anti-Detriment Abolished

From 1 July 2017, the Government will remove the anti-detriment provision which allows superannuation funds to claim a tax deduction for a portion of the death benefits paid to eligible dependants. A payment may still be made until 30 June 2019 provided the member died no later than 30 June 2017 This benefit was often the only...

December 16, 2016
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Super Reforms – Non Compliance

On 15 January 2018, Craig commences a $3 million superannuation income stream in his SMSF, Cormac Super Fund. Craig’s transfer balance account is $3 million and he has a $1.4 million excess transfer balance on this date. On 20 January, the Commissioner issues a determination to Craig stating his crystallised reduction amount as $1,401,765 ($1.4 million excess...

December 15, 2016
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Super Reforms – Pension Cap Breach

We do not yet have a process for notifying the ATO of the commencement of a pension but they are clearly assuming that this will occur within days of commencement as this type of example is common in their explanatory notes. Andrew has a personal transfer balance cap of $1.6 million. He starts a second pension worth...

December 14, 2016
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Super Reforms – Lumpy Assets

Consider Julian and Justine, both aged 70. They each have reversionary pensions and are the only fund members. Julian has a $4m balance and Justine, $2m. Fund assets comprise a $5m property plus assorted shares, fixed interest and cash. On 30th June 2017 they will reset the cost bases of selected assets. These will include the property...

December 13, 2016
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Super Reforms – Reversionary Pension or Not

There seems to be some confusion amongst commentators as to the virtues of reversionary v non-reversionary pensions from 1 July 2017. If the only issue to be considered is tax, reversionary pensions must win. Consider the following scenario; Jack & Rachel are both 66 with a $1.6m balance each in pensions. Jack dies in August 2017. By...

December 12, 2016
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Super Reforms – CGT Cost Base Reset

A previous article referred to the loss of exempt current pension income status to those pension accounts that must now be commuted to accumulation. Apart from the obvious tax ramifications for members who must now convert their accounts from pension to accumulation there is also a death benefit consequence that must be considered. If a member...

December 9, 2016
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Super Reforms – Account Minimisation Part 2

This is a continuation of the previous article which considered ways of reducing a member’s balance to maximise their ability to make non-concessional contributions. Asset Allocation In this financial year assets may be allocated to different member accounts. These are segregated assets. If the high return assets are segregated to the member with the smallest balance a degree...

December 8, 2016
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Super Reforms – Account Minimisation Part 1

Previously we discussed the usefulness of planning a reduced 30 June balance for the purposes of maximising non-concessional contributions. We also noted that even a minor reduction could have a major effect. The following possible strategies should be considered prior to 30 June. These are important where a trigger point is imminent but may also be...

December 7, 2016
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