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ATO developing online trustee test

The ATO has announced it is developing an online SMSF trustee test that individuals would have to complete before they can legitimately establish an SMSF.

Speaking at the recent SMSF Trustee Empowerment Day 2019, ATO SMSF segment assistant commissioner Dana Fleming said: “We’ve been trying to think how can we get some more visibility or messaging around how important it is [for trustees] to do some education so you actually understand your risks and your obligations and that the penalties sit with you if something goes wrong.

“And so we are going to think about creating an online test where you complete a course or watch our videos [and afterwards] you could just do a simple test which will give you some comfort that you really are across the key risks and things you have to do.

“That’s in progress and when we’ve got that finalised we’ll probably introduce an upfront declaration for new trustees that they’ve read the material on our website and they’ve done the test.”

She stressed the test is being designed to give the SMSF regulator greater comfort that individuals embarking on running their own super fund are conscious of what is involved in doing so.

“This is not [going to be] a pass-fail situation. We’re just trying to raise people’s awareness and provide opportunities and easier ways for them to do that,” she noted.

The initiative is in line with one of the findings of the recent Productivity Commission review into the efficiency and competitiveness of Australia’s superannuation system, she pointed out.

“It did consider mandatory trustee education as an option, so if you want to be a trustee, you’d have to go and do an approved course, but decided to hold off on that for the time being and it put in place a couple of other measures,” she said.

“But it didn’t reject it out of hand and said if those recommendations don’t have an impact, potentially mandatory trustee education would be on the cards.”

Source: www.smstrusteenews.com.au

Practical Systems Super – June Newsletter

In this bi-monthly newsletter we examine SMSF strategies surrounding contribution caps and we showcase the statistics recently released by the ATO which outlines the continued growth of the SMSF industry.

Younger SMSF clients seeking transparency, ethical investment focus

While ATO statistics indicate a slight rise in the number of younger SMSF trustees, advisers looking to attract and retain these younger clients may need to tailor their current service offering, according to a wealth management platform.

Shannon Bernasconi, the managing director and co-founder of Wealth O2, a wealth management platform for advisers, said advice firms looking to target a younger a demographic of SMSF clients should ensure their service has a focus on ethical and sustainable investments, high-touch content and transparency.

Statistics released by the ATO in May indicate there has been a slight rise in the number of younger individuals setting up SMSFs, with 79.8 per cent of the individuals establishing new funds below the age of 55. Around two-thirds of SMSF entrants are now under the age of 50.

Ms Bernasconi explained that younger clients have a much bigger focus on ethical and sustainable investments, so advice firms looking to target this segment of the market will need to be able to cater to this in how they manage client funds.

“You need to be able to override or substitute different assets, so if a client has an ethical issue with oil or mining, for example, it can be substituted with another investment,” she said.

Having transparency around the investments in their portfolio is also critical to younger clients, she added.

“They’re not as trusting as older generations. They like the idea of having transparency and that everything is clear in terms of where their assets are and how you’re managing them,” she said.

Having this transparency, she said, provides them with a greater sense of control over their own money and portfolio.

They also want to hear from their adviser more than once a year, she explained, so advisers may want to look at providing automated newsletters and communication on a regular basis.

“They should be looking at providing high-touch content with low administration. To be honest, the older generations also like this, but the younger generations demand it,” she explained.

“It’s important to keep them constantly updated, even if it’s just a bit of news. There’s so much going on in the world these days and they want to know that you’re going to look after their portfolio if something happens with Trump in a particular week.”

She also stressed that younger clients want to have instant access to their portfolio and client portal through their phone and other devices at all times.

“That digital connectivity is a huge must,” she said.

Source: SMSF Adviser

53% unaware of changes to insurance in superannuation on 1 July

Over half of Australians are unaware of changes which could mean they lose insurance cover they have in their super fund from 1 July.

A study conducted for the Association of Superannuation Funds of Australia (ASFA) found that 53% of those surveyed were unaware of the changes to insurance in superannuation coming into effect on 1 July 2019.

As part of the Government’s ‘Protecting Your Super’ package of laws, insurance cover will be stopped for superannuation accounts which are classified as ‘inactive’ because they haven’t received contributions for 16 months or more.

The Protecting Your Super package is aimed at reducing erosion of superannuation balances though unwanted insurance, though it also has a net boost to the Federal Budget bottom-line. There has also been concern from industry about the short deadlines involved. 

ASFA says the change could impact over 3 million Australians. The survey found that 38% said they had a super account that hadn’t received any contributions in the last 16 months, including both people with a single account and people with multiple accounts.

While 47% of those surveyed said they were aware of the changes, only 19% thought they had a good understanding, while 28% said they had heard of the changes but didn’t know any details.

Super funds have been trying to contact members, but the research found that 34% of respondents rarely or never open communications from their super fund. This rises to 52% for Australians aged 18 to 34.

When informed about the changes, 63% said they were likely to seek out more information. The superannuation industry has launched a website to provide information about the changes: timetocheck.com.au

ASFA CEO Dr Martin Fahy said the research echoed industry concerns about the impact of the changes.

“This legislation has been introduced for very good reasons, however the time frame for implementation has meant it has been challenging for superannuation funds to engage their members to ensure they understand the consequences of the changes in just a few short months.”

“We already know Australians are not highly engaged with their superannuation – from the balance to the insurance products they hold – however this study demonstrates that the problem only becomes more acute when looking at those Australians most likely to be impacted by the changes.”

The research was conducted by YouGov Galaxy, based on a “nationally representative sample of 1,026 Australians aged 18 years and older,” according to ASFA.

Source: www.solepurposetest.com/news

SMSF sector continues to grow

Latest annual stats show the SMSF sector continues to grow

The ATO has released the ninth edition of their annual statistical report on self-managed superannuation funds (SMSFs). The overview provides high-level observations and commentary on 2016–17 statistics gathered from SMSF annual returns, SMSF registrations and auditor contravention reports.

Highlights include:

  • 596,000 SMSFs holding $750 billion in assets, with more than 1.1 million SMSF members, as at 30 June 2018
  • in 2016–17, the average assets of an SMSF were just over $1.2 million. This is an increase of 10% from 2016, and 27% over the last five years
  • 55% of SMSFs have been established for over 10 years
  • 48% of SMSFs had assets between $200,001 and $1 million. This accounts for 21% of total of SMSF assets
  • the median age of SMSF members of newly established funds in 2017 was 48, compared with 59 for all SMSF members as at 30 June 2018
  • at 30 June 2017, the average member balance for females had increased by 32% over the past five years, while the average balance for males increased by 25% over the same period

Click here for infographic of the key figures in this report

Click here for the SMSF statistical overview 2016-17

 

Source: www.ato.gov.au

ATO statistics contain “positive story” for SMSFs

The SMSF Association says new superannuation statistics from the ATO “tell a positive story” about the SMSF sector.

The ATO has recently released its statistical overview of SMSFs for 2016/17, based on SMSF Annual Returns, registrations and auditor reports.

SMSF Association CEO John Maroney said: “These statistics reveal an SMSF sector that has not only performed well but provides a positive outlook for its future growth and strong performance.

“In the year under review, SMSFs made an average return of 10.2 per cent compared with a 9.1 per cent return for the APRA-regulated funds.”

“At the same time the total expenses for all SMSFs fell by nine basis points, of which five basis points can be attributed to lower administrative and operating expenses, highlighting the increased use of technology and software in SMSF administration services.”

Maroney said that the impact of improved adviser standards and trustee education could be seen in the statistics, pointing to an increase in SMSF assets at establishment. In 2015/16 new SMSFs had an average of $379,000, but by 2016/17 this had increased 38% to $521,000.

“From the Association’s perspective, this demonstrates that SMSF trustees are getting quality SMSF advice and that they understand the need for an appropriate-sized SMSF to ensure they get the full benefits from their fund.”

Maroney said the statistical releases by the ATO helped present an accurate picture of the SMSF sector.

“These statistics provide an important antidote to the many misconceptions about SMSFs, especially in relation to their performance and costs, as well as providing highly relevant information that can be used to improve our superannuation sector.”

Source: www.solepurposetest.com/news

Labor v Liberal: The key election policies impacting SMSFs

With the Federal election now just days away and superannuation and tax among the key policy issues, what is each major party proposing and how will it impact the SMSF sector?

LABOR POLICIES

Removal of refundable Franking credits

Labor is set to push ahead with its proposal to remove refundable franking credits, despite a recommendation by Standing Committee on Economics not to proceed with the policy, following the completion of its inquiry.

The policy is intended to apply from 1 July 2019 and based on estimates by the Parliamentary Budget Office, will impact 840,000 individual taxpayers, 210,000 SMSFs and 2,300 Australian Prudential Regulation Authority (APRA) regulated funds in the 2019/20 financial year.

The Financial Services Council has estimated that around 2.6 million Australians in APRA-regulated funds will be negatively impacted by Labor’s franking credit policy.

Industry and retail superannuation funds will generally be able to offset any franking credits received against the tax payable in each financial year. However, Colonial First State executive manager of technical services Craig Day points out that public offer funds and super wraps with a larger proportion of members in retirement phase would also be adversely affected.

“For example, a combination of a greater proportion of retirement phase members, a lower inflow of assessable contributions and increasing deductible costs combined with negative or reduced investment returns could result in a fund being in an overall net refund position in a particular year,” Mr Day explains.

In the SMSF context, SMSFs with member balances below $1.6 million, pension phase members only and no pension recipients will likely see the greatest impact from this policy.

While shadow treasurer Chris Bowen has framed the policy as one that will target the wealthy, analysis by SuperConcepts has suggested otherwise.

Following the introduction of the transfer balance cap, any excess pension balance above $1.6 million had to be transferred to an accumulation interest in the fund.

Given that investment earnings from assets supporting an accumulation interest are taxable, the existence of an accumulation interest results in the fund having some taxable income to use its franking credits rather than those credits being refunded, which means the policy will have less impact on those with larger balances, according to the analysis by SuperConcepts.

Labor has announced a pensioner guarantee for the policy which will enable every recipient of an Australian Government pension or allowance to still receive cash refunds for franking credits. This includes individuals receiving the Age Pension, Disability Support Pension, Carer Payment, Parenting Payment, Newstart and Sickness Allowance.

It has also announced that SMSFs with at least one pensioner or allowance recipient before 28 March 2018 will be exempt from the changes.

GEM Capital adviser Mark Draper says SMSF professionals and clients should be careful about overreacting to the proposed franking credits too early, with Labor still yet to win the election and their ability to pass the policy through both houses still very uncertain.

“What’s said in the lead-up to an election is not necessarily what gets legislated, and they’ve firstly got to win the election and whilst they’re favourite, it will still be a fair election for them to lose, so I wouldn’t be making changes right now based on what they’ve promised,” Mr Draper warns.

Reinstating the ten per cent test

If elected, Labor also intends to reintroduce the 10 per cent rule to restrict personal contributions.

The 10 per cent test, which has been scrapped since 1 July 2017, meant that individuals were only eligible to claim a tax deduction for personal super contributions if less than 10 per cent of their income was earned from employment.

The proposal to reinstate the ten per cent test has been meant with considerable backlash by the SMSF sector, as it will limit the ability of some members to contributed to super and cause additional complexity.

SuperConcepts non-executive director Stuart Forsyth said the removal of the 10 per cent test was very much welcomed by the ATO and everybody else because it essentially put everybody in the same position in terms of being able to make a concessional contribution provided you’ve got assessable income.

“I think it’s a policy that would be a retrograde step. I don’t see why it matters whether assessable income is from salary or wages or from other sources. It doesn’t seem to be material and it seems to be a decision to be motivated by the desire to reduce the cost of the concession,” Mr Forsyth said.

Mr Forsyth noted that it was difficult for the ATO to administer and that many people were inadvertently caught by the test.

“People would think they were under the 10 per cent but would just tip over, which meant that amounts that were put into super weren’t deductible which can have a big effect,” he said.

The reintroduction of the ten per cent test would be especially problematic now given he total superannuation balance rules.

It could lead to situations, he explained, where a member is forced to take an amount out of super because they don’t have a concessional cap, and because they’ve gone over the 10 per cent, it’s no longer a concessional contribution.

“It worries me because, from a policy point of view, it’s step in the wrong direction,” he said.

$3000 cap on deductions for tax affairs

Labor has also proposed a $3,000 limit on deductions for managing tax affairs, which is also expected to apply to SMSF trustees.

While Institute of Public Accountants (IPA) chief executive Andrew Conway said there has been little detail released about the measure, its likely that the cap on deductions for managing tax affairs would apply to SMSFs in much the same way it will to individual income taxpayers.

“It’s a concern for the integrity of the tax system because what we believe this measure would do is potentially restrict a taxpayer’s ability to engage the best possible advice they can and obtain private tax rulings. Private tax rulings are complex and time-consuming and generally best managed through a tax agent or specialist,” Mr Conway warns.

“If you’re going to restrict a person’s ability to get something like a private tax ruling, that actually then brings into question the integrity of the tax system itself.”

Insyt chief executive Darren Wynen agreed that the limit on the deductions available for tax advice will unfairly impact those in difficult or complex situations requiring tax advice with a high fee.

“They may have a situation where they need specific advice such as contesting an ATO audit claim or an objection,” Mr Wynen told SMSF Adviser.

“I think in those situations where there’s a lumpy claim in a particular year, I don’t think they should be capped, because I think, generally, individuals, small businesses and SMSFs are up against it anyway with the ATO because the ATO has unlimited resources at their disposal and often what’s needed if they’re going to have any chance of success is a well-constructed argument.”

Mr Wynen said that taxpayers, small business owners and SMSF trustees need the ability to be able to contest, and limiting the amount that can be claimed as a deduction makes it more expensive to contest.

“You don’t know if you’re going to be successful, so you’re taking a punt anyway, and removing the amount of tax advice that can be claimed as a tax deduction just increases the costs and also the likelihood that they might just decide to put up with what the ATO [is] saying or what they’ve issued,” Mr Wynen said.

DBA Lawyers director Daniel Butler notes that Australia has a reputation for being one of the most complex tax systems in the world and probably ranks second to the USA.

The constant ongoing complex changes to superannuation and tax rules will keep Australia as a leader in complexity, he says.

“In particular, responding to a relatively straight forward ATO review or audit can easily exceed a $3,000 threshold which is becoming increasingly likely for many,” he cautions.

Limiting pension exemption

In the policy document released in January, Positive Plan to Help Housing Affordability, Labor stated that it would look to moderate concessions for Australians with superannuation balances in excess of $1.5 million.

This aligns with a policy it announced back in April 2014 to tax superannuation earnings above $75,000 a year at 15 per cent.

At the time, Labor said that the measure would affect approximately 60,000 superannuation account holders with superannuation balances in excess of $1.5 million.

SMSF chief executive Aaron Dunn says that if the Labor government does win legislative control, they may might adjust the threshold at which the general transfer balance cap operates.

“We [could] see a reduction from $1.6 million to $1.5 million – maybe even lower,” says Mr Dunn.

Given that the total superannuation balance threshold is linked to the general transfer balance cap, Mr Dunn explained says if Labor does change the general transfer balance cap amount, this could also have flow-on effects for a range of other measures.

“When we think about the total superannuation balance, it has such a profound impact across a range of measures. At $1.6 million, [members] are limited in their ability to do things such as make non-concessional contributions, [for example],” he explains.

Contribution changes

Labor has also announced a raft of changes relating to contributions, including cuts to the contribution caps and rolling back the Liberal party’s carry-forward contributions.

If elected, Labor plans to lower the annual non-concessional contributions cap from $100,000 to $75,000. This will also see the bring-forward cap fall from $300,000 to $225,000.

The party has also stated that it will remove the five year catch up concessional contribution cap. Catch up contributions enable members who have a total superannuation balance of less than $500,000 and have not utilized their full $25,000 concessional contribution cap, to carry forward the shortfall for up to five years.

SuperConcepts executive manager of SMSF technical services Mark Ellem explained how they operate with an example.

“If you earnt $100,000 for the 2018/19 financial year and your employer contributed the compulsory super guarantee contribution of $9,500 (9.5 per cent of $100,000) you would have an unused catch-up concessional contribution of $15,500 ($25,000 – $9,500) which you can carry forward for the next five years,” said Mr Ellem.

“Assuming your total super balance at 30 June 2019 was less than $500,000, your concessional contributions cap for 2019/20 would be $40,500 (i.e. the standard $25,000 concessional contributions cap for the income year plus the carried forward amount of $15,500 from the previous income year.”

Labor also has some policy changes aimed at boosting the superannuation balances of women, particularly low-income earners.

It plans to remove the $450 minimum monthly income threshold for eligibility for the superannuation guarantee (SG). The $450 threshold will be gradually reduced by increments up to $100 each financial year between 2220 and 2024, Mr Ellem explained.

It has also announced another policy to pay superannuation guarantee contributions to parents while they are on government-paid parental leave. Recipients of Dad and partner payments will also receive super contributions under the measure.

BDO partner Mark Wilkinson said while these are both positive policies, he is concerned by about the impact of removing catch-up contributions on women’s superannuation balances.

“A lot of women have balances less than $500,000 and they can use those catch-up contributions where they receive an inheritance, a windfall gain, a gift from their partner or when they return to the workforce,” Mr Wilkinson said.

This may provide her the opportunity to top up her superannuation and return herself to a position of her male counterpart, he explained.

“There is no other piece of legislation that facilitates that anywhere else in the Labor Party policy announcements. I suspect that the Labor Party feels that by allowing the catch-up, it’s only the rich that are going to take advantage of it, but I think that misses the point as well,” he said.

“If the annual concessional contribution limit is $25,000, and we know that certain groups of society are leaving the workforce in order to provide care to children and ageing parents, then why wouldn’t you allow legislation to remain in place to enable them to take advantage of the ability to catch up, and if it’s only some women who can do it, then so be it, it’s better than removing the ability to be able to do it at all.”

Superannuation guarantee payments

Labor also plans to increase the rate of superannuation guarantee (SG) from 9.5 per cent to 12 per cent. It will also implement measures aimed at ensuring compliance with SG by employers.

One of these measures is to include the right to superannuation within the National Employment Standards, which will enable workers to pursue their unpaid superannuation through the Fair Work Commission and Federal Court.

Labor will also strengthen the ATO compliance regime and increase penalties for employers for underpayment or non-payment of superannuation.

Employers who underpay superannuation to their staff because of a false or misleading statement will face fines equal to 100 per cent of the unpaid super. Employers who fail to tell the ATO about unpaid superannuation when asked will face fines equal to 300 per cent of the unpaid super.

LRBA ban

Back in April 2017, Labor made it clear that if elected it would restore the general ban on direct borrowing by superannuation funds, as recommended by the 2014 Financial Systems Inquiry, as part of its plan for housing affordability.

The SMSF Association and some of the lenders in this space have flagged concerns about the impact the removal of borrowing could have, particularly for small business owners.

While Thinktank chief executive Jonathan Street acknowledged that there have been some issues in the residential LRBA area which was in genuine need of tighter regulation, limited recourse borrowing arrangements (LRBA) are an “important debt instrument that allow SMEs and self-employed owners the opportunity to dovetail their commercial and superannuation ambitions to very positive effect”.

The SMSF Association pointed out that LRBAs can be an important retirement savings strategy for small business owners who accumulate most of their retirement nest egg through their small business,” the association said in a submission.

“Any loss to the flexibility of business real property CGT exemptions through the funding of LRBAs, which allows small business owners the opportunity to work on premises owned by their SMSF, would significantly impact the ability for those individuals to save for retirement,” it said.

However, regulators have identified risks with SMSF borrowing, particularly in light of changing market conditions and the rise of on-stop shops.

A report assessing the risk of LRBAs was handed down by the Council of Financial Regulators and the ATO earlier this year. The Council of Financial Regulators is a non-statutory body comprising the Reserve Bank of Australia, APRA, ASIC and the Australian Treasury.

While the report ultimately found that borrowing by SMSFs was unlikely to pose systemic risk to the financial system, the regulators’ preferred option was still to remove the exemption allowing LRBAs.

LIBERAL POLICIES

Contribution measures

In the lead up to the election the Liberal party announced a number of small measures for superannuation contributions.

Treasurer Josh Frydenberg announced a change to the work test, which will enable Australians, aged 65 and 66, to be able to make voluntary superannuation contributions. There is no draft legislation for the measure yet, which was announced just before the Federal Budget in early April.

Currently individuals can only make voluntary contributions if they meet the work test, which requires that they work a minimum of 40 hours over a 30-day period.

Under the proposed measure, Australians aged 65 or 66 years who don’t meet the work test, because they may only work one day a week or volunteer, would be able to make voluntary contributions to their superannuation.

“This will align the work test with the eligibility age for the age pension, which is scheduled to reach 67 from 1 July 2023,” said Mr Frydenberg.

The Liberal party also announced that it would increase the age limit for spouse contributions from 69 to 74 years.

Currently, those aged 70 years and over cannot receive contributions made by another person on their behalf.

It also plans to extend access to the bring-forward arrangements to those aged 65 and 66. The bring-forward rules currently allow those aged less than 65 years to make three years’ worth of non-concessional contributions, which are capped at $100,000 a year, to their super in a single year.

 Increasing SMSF member limit

The Liberal Party has also stated that it intends to push ahead with its proposal to increase the SMSF member limit, despite the removal of the measure from the bill in which it was contained shortly before Parliament was dissolved.

The Morrison government first introduced the six-member bill into Parliament in mid-February this year, after announcing the measure in the lead-up to the budget last year.

In early April, however, the Morrison government agreed to remove the measure from the bill it was contained in, in order to pass other measures including an amendment to extend concessional rates of excise to craft beer brewers.

The measure to increase the SMSF member limit had mixed opinions, with some experts flagging the potential risks that additional members pose in terms of disputes between members and estate planning.

ECPI changes

The Liberal party also announced a couple of administrative changes with exempt current pension income (ECPI) in the Federal Budget this year, aimed at reducing some of the complexity in this area.

One of these was a proposal to allow superannuation funds with interests in both accumulation and retirement phases during an income year to choose their preferred method of calculating ECPI.

It also announced plans to remove a redundant requirement for superannuation funds to obtain an actuarial certificate when calculating ECPI using the proportionate method, where all members of the fund are fully in the retirement phase for all of the income year.

Chartered Accountants Australia and New Zealand (CA ANZ) has lobbied extensively for a return to the previous industry practice for ECPI that was in place prior to the ATO establishing that funds that have segregated assets at any point in the year must calculate their ECPI using the segregated method for that period.

Fitzpatricks Private Wealth head of strategic advice Colin Lewis said that the measure to remove the need to obtain an actuarial certificate when all members are in pension phase is a sensible, common sense outcome.

“It was a ridiculous requirement to have that anyway; it was a cost and burden on the fund,” he said.

It is unclear exactly how the first measure will operate, with the government having released very little detail so far.

Promises of “no new taxes for superannuation”

It has also guaranteed “no new taxes on superannuation”. However, there is no specified timeframe for this promise.

The Liberal party has implemented major changes to superannuation tax during its time in power, including the introduction of the transfer balance cap, total superannuation balance and changes to contribution caps. It also previously proposed a $500,000 lifetime cap for non-concessional contributions, which was later dropped.

The transfer balance cap, introduced as part of the 2016 Federal Budget, has applied from 1 July 2017 and limits the total amount of superannuation money that can be transferred into retirement phase. While the cap is currently set at $1.6 million, it is indexed periodically in $100,000 increments in line with CPI.

The total superannuation balance, currently set at $1.6 million, restricts those with balances higher than $1.6 million from making non-concessional contributions or using bring-forward arrangements.

It also determines whether an SMSF has disregarded small fund assets and therefore is prohibited from using the segregated method to claim exempt current pension income in the annual return.

The Liberal party reduced the concessional contribution cap from $30,000 or $35,000 for members aged 49 or over to $25,000 per year for all individuals regardless of age. It reduced the non-concessional contribution cap from $180,000 per year down to $100,000.

Source: https://www.smsfadviser.com/latest-issue/feature-articles

Average age for establishing SMSFs sitting at 48.9

The latest SMSF Benchmark Report from Class indicates that there is a continuing trend towards younger age groups setting up SMSFs, which follows similar findings from recent ATO statistics.

In its latest SMSF Benchmark Report for the March quarter, SMSF software company Class analysed 26,100 funds comprising 46,943 members, which were newly established on Class within a five-year period spanning from 2014 to 2018.

Analysis of the data found that the average age of members establishing SMSFs was 48.9, with a small difference occurring between gender.

While the average establishment age based on the data set did increase from 48.6 in 2014 to a high of 49.5 in 2017, it has now fallen back to 48.9, the report said.

“There is a continuing trend for members of new SMSFs to be from younger age groups,” the report said.

“One factor that may see this trend continue is the proposal to increase the superannuation guarantee from its current rate of 9.5 per cent by half a percentage point from July 2021, until it hits 12 per cent in 2025.”

This will enable the younger workforce to accumulate greater super balances at a younger age over time, Class said.

SMSF statistics released by the ATO last week similarly indicated that around two-thirds of all new SMSF entrants are under the age of 50. 

The Class report also showed that the while the average individual member balance of a newly established fund is around $225k, the average fund balance is nearly $406k, ranging from $355k for a single member fund, to over $500k for four member funds.

The analysis also indicated that males have a 42 per cent higher balance on average compared with females when funds are established.

However, the gap it significantly lower across all SMSFs at 21 per cent, indicating that the gender gap does narrow over time, the report said.

Source: https://www.smsfadviser.com/news

SMSF Association professional members learn to maximise super contributions and deconstruct the 2019 Federal Budget.

With over half a million self-managed super funds (SMSF) in Australia, accountants and other advisers are struggling to ensure their clients comply with constant changes to superannuation legislation.

Over the past two weeks Practical Systems Super has been proudly supporting a series of events held by the SMSF Association in a range of locations across New South Wales including Sydney, Port Macquarie and Newcastle.

Francis Waddell, Business Development Manager for Practical Systems Super has been speaking at these events to articulate how the company is dedicated to reducing the administrative and compliance burden of self-managed super funds.

“It’s been a pleasure to attend these events and support the SMSF Association and its professional members. Superannuation legislation is constantly changing and the recent Royal Commission has focused attention on compliance and the need for professional and trusted administration”, said Mr Waddell.

Francis joined Peter Hogan, Head of education and technical of the SMSF Association as he deconstructed the 2019 Federal Budget in these sessions and also provided an outlook on the Australian Liberal Party’s superannuation policy as we head to a federal election on the 18th May 2019.

The most significant policy change is ending the refunding of franking credits. SMSFs that receive franking credits for the tax paid by Australian companies will often receive a refund of the tax paid at the corporate level.

Under Labor’s proposed policy, SMSFs with a member receiving the age pension on March 28, 2018 will still be able to get a refund for franking credits received by the fund under Labor’s “pensioner guarantee”. Those who begin to receive the age pension after this date will not be eligible.

If elected, Labor has signaled it will cut the after-tax annual contribution limit to superannuation from $100,000 to $75,000.

Further, with Labor proposing to ban new LRBAs if elected, SMSF trustees who believe that a geared investment strategy is right for their fund should consider pursuing this before the next election. This should always be done with specialist SMSF advice and with a long-term investment strategy.

No one understands a clients’ needs like their accountant or financial adviser. Practical Systems Super employs SMSF professionals to support those professionals in ensuring their clients comply with superannuation legislation. Importantly, Practical Systems Super leaves that existing relationship in their hands.

To find out more about Practical Systems Super, contact us on 1800 951 855.

ATO issues reminder on upcoming TBAR deadlines

The ATO has reminded SMSFs that there are two upcoming deadlines for transfer balance account reporting over the next month.

In an online update, the ATO said that the next transfer balance account report (TBAR) deadline for SMSFs that report quarterly will be 29 April 2019.

The ATO explained that SMSFs will need to lodge a quarterly TBAR if their fund has any member with a total super balance (TSB) greater than $1 million and any member had a transfer balance account event occur between 1 January and 31 March 2019.

Annual TBARs, it said, are due at the same time as the SMSF annual return, which may be 15 May.

“You must lodge a TBAR for the 2018–19 financial year if all members of your SMSF have a TSB less than $1 million and any member had a transfer balance account event occur in the 2018–19 financial year,” the ATO said.

“You do not need to lodge a TBAR to report an accumulation phase value or a retirement phase value. If you need to report this information to us, you should include this information on your annual return. This information does not affect your member’s transfer balance account.”

The ATO also reminded SMSFs that if no transfer balance account event occurred, then there is nothing to report.

“Different reporting time frames will apply if your member has exceeded their transfer balance cap,” it said.

The ATO added that tax agents now have access to online TBAR lodgement.

“Online lodgement offers a number of advantages including prefilling of details and inbuilt verification rules to reduce reporting errors and reverse workflow,” it said.

It also said that it would continue to take an educative and supportive approach where routine quarterly or annual TBARs are lodged late.

“If you’re in this situation and can’t lodge by the due date, but are working towards lodging as soon as possible, you don’t have to seek a formal extension of time,” the ATO said.

“Be aware that late lodgement may affect your member’s transfer balance account and cause reverse workflow.”

Source: https://www.smsfadviser.com/news/17536-ato-issues-reminder-on-upcoming-tbar-deadlines