smsf 2012 essentials

FPA 2011 NATIONAL CONFERENCE. 16 – 18 November. Brisbane Convention & Exhibition Centre.

TOGETHER WE’REraising THE BAR.

SM SF E ssentials 2012

Peter H ogan (L L B DipF P SSA ® )M L C

&J oanne H all (C F P® SSA ® DipF P B A pplE con)

C or ner stone F G



Peter ’s disclaimer

T his infor mation has been prepared by M L C L imited (A B N 90 000 000 402) 105-153 M iller Street, Nor th Sydney NSW 2060, a member of the National A ustr alia B ank group of companies. T his infor mation was produced as an infor mation ser vice and without assuming a duty of care. T his infor mation is for adviser use only. I t contains gener al infor mation only. I t does not constitute financial advice and should not be relied upon as a substitute for financial or professional advice.

I n prepar ing this infor mation, M L C L imited did not take into account the investment objectives, financial situation or par ticular needs of any par ticular per son. B efore making an investment decision, a per son needs to consider (with or without the advice or assistance of an adviser ) whether this infor mation is appropr iate to their needs, objectives and circumstances.

T he infor mation in this presentation is based on our inter pretation of relevant laws as at 1st November 2011 and is subject to change. No responsibility is taken for per sons acting on the infor mation provided. Per sons doing so, do so at their own r isk.



J o’s disclaimer

T he infor mation in this presentation is of a gener al nature only and may contain advice that is not based on your per sonal objectives, financial situation or needs. A ccor dingly you should consider how appropr iate the advice (if any) is to those objectives, financial situation and needs and before acting on the advice or investing in any product, you should read the cur rent product disclosure statement for any financial product available from your F inancial Planner or A M P.

Your presenter J oanne H all is an A uthor ised R epresentatives of A M P F inancial Planning Pty L td, A F S L icence No. 232706.

B efore making any investment decision, you are strongly advised to take advice on your par ticular situation from an exper ienced A dviser or F inancial Planner.

I f you did not receive a F inancial Ser vices & C redit G uide from J o and would like to receive one, please let her know. You can contact A M P by phoning 1300 301 194. You can also contact C or ner stone F G on 07 5444 0035. T he infor mation in this presentation is cur rent as at 1st November 2011.



2011 in review

• C ooper R eview, H enr y review, Stronger super• C ollectibles & Per sonal use assets owned by SM SF s• C hanges to the deductibility of “ own occupation” T PD

premiums• A bility for commutations of A sset test exempt pensions and

conver t to a Ter m A llocated Pension within the SM SF without incur r ing a Social Secur ity debt



2011 in review – the bigger issues for 2012

• W hen a pension star ts and ceases- C G T & other issues• C ontr ibutions and the E xcessive C ontr ibution Tax (E C T )

refund option • L imited R ecour se B or rowing A r r angement (L R B A )

changes• SM SF s & I nsur ances




W hen a pension commences and ceasesDr aft r uling T R 2011/D3



W hen a pension commences and ceases

• T R 2011/D3• W hen an income stream commences• W hen an income stream ceases• W hen an income stream is payable




W hen an income stream ceases12. A super annuation income stream ceases when there is no longer a member who

is entitled, or a dependent beneficiar y of a member who is automaticallyentitled, to be paid a super annuation income stream benefit from a super annuation interest that suppor ts a super annuation income stream…

14. W hen a super annuation income stream ceases is deter mined by reference to the relevant super annuation fund's tr ust deed, the relevant requirements of the SI SR 1994 and the par ticular facts and circumstances of the payment of the member 's, or dependent beneficiar y's, benefits




15. T he common circumstances in which a super annuation income stream ceases are outlined below:– F ailure to comply with pension r ules and the payment standar ds of

SI SR 1994– E xhaustion of capital– C ommutation– Death




• F ailure to meet payment standar ds• I ncome stream is said to have ceased at the beginning of

the financial year• I f the income stream requirements are met in the following

income year, then this results in a new pension being created




• Points to note if payment standar ds are not met:– A ssets are sold in the year- no capital gains tax free sale– Tr ansition to retirement income streams- ear ly access?– I f rolled back will there be a combination of

super annuation interests thus combining of tax free and taxable components




• W hat if the income stream is considered continued– R uling is clear about a pension commencing when the

ter ms and conditions are agreed by the tr ustee and member

– SI SA section 10, and SI SR 1.06 – H ow will this wor k in ter ms of paper wor k?




Death of a member24. A super annuation income stream ceases as soon as the

member in receipt of the super annuation income stream dies, unless a dependent beneficiar y of the deceased is automatically entitled under the super annuation fund's deed, or the r ules of the super annuation income stream, to receive an income stream on the death of the member




• Pension is rolled back to accumulation immediately on the death of the member, unless an automatic rever sionar y is in place

• A utomatic rever sionar y must be in the ter ms and conditions of the pension at commencement

• I f you are going to restar t, remember other consequences, ie. C entrelink deductible amount, tax free vs taxable, etc




• Points to note upon death of a member :– I f assets are to be sold in accumulation- no capital gains

tax free sale– I f rolled back will there be a combination of

super annuation interests thus combining of tax free and taxable components- unfavour able estate planning outcome




• Submissions were called for• SPA A and other industr y bodies have made

submissions• Watch this space




E xcessive contr ibutions tax refund optionC onsultation paper, 17th A ugust 2011



C ontr ibutions- E xcessive contr ibutions tax (E C T )

• H ow many people have been effected?• I mpact of E C T• Total number of E C T assessments issued

Type of assessment 2007-08 2008-09Excess cc only 18,607 15,035Excess ncc only 2,089 2,019Both excess cc and ncc 441 391



C ontr ibutions- E xcessive contr ibutions tax (E C T )

• Total value of E C T liabilities:

Type of excessive contribution

2007-08 2008-09 Total

Concessional (cc) only $85.4 M $72.5 M $157.9 MNon-concessional (ncc) only $75.0 M $71.8 M $146.8 MBoth cc and ncc $17.5 M $18.8 M $36.3 M



C ontr ibutions- under standing the cur rent r ules

• W hen a contr ibution is made; and• W hen a tax deduction is claimed; ver sus• W hen a contr ibution is applied to a member s account



C ontr ibutions- cur rent r ules

• T iming of the contr ibution- T R 2010/1• C ommissioner s views of:

– Or dinar y meaning of a contr ibution– H ow and when a contr ibutions could be made– Deductions available

smsf 2012 essentials

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