News

Don’t Generate an Untaxed Element!

Our last Snippet focused on the future service benefit tax deduction. The example showed how a tax saving of about $87,000 could be made if a life insurance policy funded any part of the $1m payment to the member, or tax dependent, within the parameters described. The flip side is the consequence if the benefit is...

Future Service Benefit

Section 295-470 of the ITAA (Future Service Benefit) allows a Fund to claim an income tax deduction on the payment of: 1.     a superannuation death benefit; or 2.     a terminal illness benefit; or 3.     a disability superannuation benefit or 4.     a temporary incapacity income stream. The deduction, also known as the Future Liability deduction, is available irrespective of whether the benefit...

Important SMSF Borrowing News

Legislation is now going before Parliament on the contentious issue of the inclusion of the outstanding balance of a limited recourse borrowing in the calculation of a member’s total super balance. Though I remain totally opposed to the recasting of debt as an asset and believe that this measure is poorly considered and inequitable at least...

Planning Property Purchases

If an SMSF and a related party, including a related SMSF, plan to purchase an ungeared property the simplest and least expensive method may not necessarily be the best. If the property is acquired as tenants in common, and it is intended that the SMSF acquire the other party’s equity in the future, this would NOT be...

Super Budget

For a budget that has been relatively quiet on superannuation there have been quite a few tweaks of significance. To correct an unfair technical anomaly, it is proposed that reversionary transition to retirement income streams be subject to the same tax exempt treatment on earnings as reversionary pensions in the retirement phase. This would be a welcome...

Trustee Remuneration Trap

SMSF trustees can’t be paid by their fund for performing their trustee duties but they can potentially be paid for other activities. To be eligible, the trustee must be qualified to provide the service, offer the service to the market and charge at market value. It’s not uncommon for trustees to want to remain unpaid however...

Beware of Deemed Contributions

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 or a fund asset is improved for no consideration. Where the action can be attributed directly to a member or their spouse...