News

Progress on excess non-concessional contributions changes: SPAA

refund excess non-concessional contributions, associated earningsAccording to SPAA progress is being made in the consultation process for the changes to allow for the withdrawal of excess non-concessional contributions.

These changes were announced in the 2014 Federal Budget, and according to the Government statement would mean:

“If an individual chooses this option [withdrawing excess non-concessional contributions], no excess contributions tax will be payable and any related earnings will be taxed at the individual’s marginal tax rate.

Individuals who leave their excess contributions in the fund will continue to be taxed on these contributions at the top marginal rate.”

Though the change is meant to apply from 1 July 2013 the consultation process is still proceeding. According to SPAA the legislation is “being drafted”, and meetings are being held between Treasury and “representatives of the superannuation industry, including the SMSF Professionals’ Association of Australia”.

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SPAA announces pilot technical mentoring program

SPAA Technical Mentoring ProgramThe SMSF Professionals’ Association of Australia (SPAA) has announced a pilot program of a ‘online technical mentoring program’ for SPAA specialist members.

Once passed the pilot state this new educational program will be available to SPAA members holding either the SMSF Specialist SSA or SSAud designation. However as the service is “over and above the current membership” there will be an additional fee.

According to SPAA the program “will assist in enhancing and raising the standard of professional advice and skills and will give members the opportunity to ask SPAA technical staff for assistance on a range of complex technical issues”.

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Report links industry super fund performance with governance

Industry super fund, retail super fund, governance and performance - independent directorsThe fight between industry and retail super funds appears to be moving to a new battleground, this time over the appointment of directors of super funds.

The McKell Institute, an “independent, not-for-profit public policy institute”, has released a report investigating the governance structures of retail and industry super funds, and comparing this to investment returns.

However the real purpose of this report seems to be to build an argument against an increase in the appointment of independent directors to industry super funds.

This comes as the as the federal government moves to increase the number of independent directors on superannuation fund boards, which was the topic of a discussion paper released by the treasury department shortly after the 2013 election.

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ATOs stance on 0% LRBAs reinforced by more private rulings

ATO Private Binding Rulings - 0% LRBAs and non-arm's length incomeThe ATO has issued a number of new Private Binding Rulings with the view that 0% limited recourse borrowing arrangements by SMSFs will result in non-arm’s length income.

In April the ATO surprised some when it issued a Private Binding Ruling (PBR)  that said a 0% LRBA arrangement would result in the income earned from the asset being non-arm’s length income, and so taxed at 45%.

Since then the ATO has issued a number of further rulings with the same finding, indicating that it is a broader view held by the ATO rather than one only applicable to the individual situations of a particular case. Some of these private rulings seem to be for arrangements already in place, perhaps by SMSF trustees concerned that their strategies might not have the desired result?

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First SuperStream transactions successfully processed

SuperStreamAccording to the ATO the first successful SuperStream transactions have been successfully processed, which “represents a significant milestone for SuperStream implementation”:

“The transactions were processed during the second week of August 2014 as part of the first group participating in the SuperStream induction process. The experience of this first group highlights the benefits which SuperStream will bring with an end-to-end flow of data and payments from employers to super funds.”

The ATO says that the SuperStream contributions data has been reconciled by the recipients, and that “there are no reported outstanding issues”.

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ATO approach to super funds: “Prevention over Correction”

ATO super funds: “Prevention over Correction”, ECPI, apportionment of expenses, claiming imputation credits and carried-forward capital gainsThe ATO has used a recent speech to highlight some of superannuation issues in its sights, including ECPI, apportionment of expenses, claiming imputation credits and carried-forward capital gains.

Titled ATO audits and reviews of super funds in 2014, the speech was given last week to the Tax Institute National Superannuation Conference by the ATO Assistant Commissioner for Public Groups and International, Peter O’Reilly. Though the speech was aimed at APRA funds, much of it is also relevant for SMSFs.

ATO Reinvention program

O’Reilly says that the ATO is currently undergoing a ‘Reinvention Program’, which is intended to “improve the tax and superannuation experience for Australians”, by “designing systems for the majority of taxpayers who do the right thing, not for the small minority who don’t”.

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Challenges and opportunities for pension systems, EY report

Global pension systems challenges and opportunitiesErnst and Young, known as EY, has released a report arguing that aging populations is a “global challenge” which will require more reliance on self-funded retirement in the future.

The report, Building a better retirement world: insights for better outcomes in the global pension and retirement market, highlights the “inevitable need for rapid reform and greater transparency in international pension and retirement systems”.

This need for reform is driven by “increasing fiscal pressure on budgets due to ballooning health and pension costs and the demands of baby boomers wanting to maintain a dignified lifestyle in their retirement”, said Graeme McKenzie, EY’s Global Pension Leader.

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ASIC fines SMSF administrators for misleading statements

ASIC has imposed penalties on two SMSF administrators for ‘false or misleading’ statements, Esuperfund and Your Super Accountant. Esuperfund ASIC imposed a total of $ 30,600 in penalties on SMSF administrator Esuperfund for “false or misleading online advertising”. The three penalties, each for $10,200, relate to statements on the Esuperfund website during… Read More »ASIC fines SMSF administrators for misleading statements

Superannuation system “middle of the pack” internationally

Financial Services Council (FSC)/Deloitte Access Economics - International comparison superannuation systemThe Australian superannuation system has been described as “middle of the pack” in terms of investment returns and fees in an international comparison conducted by Deloitte Access Economics.

Titled Financial performance of Australia’s superannuation products, the report was recently released by the Financial Services Council.

Superannuation Returns

According to the report “Australia’s system appears to be ‘middle of the pack’” compared to overseas pension systems. The analysis included twelve pension systems worldwide and found that “Australia has the third highest returns”.

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