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SM SF E ssentials 2012 Peter H ogan (L L B DipF P SSA ® ) ML C & J oanne H all (C F P® SSA ® DipF P B A pplE con) C or ner stone F G

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


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.

TOGETHER WE’RE

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


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.

TOGETHER WE’RE

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


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 TOGETHER WE’RE

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


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

TOGETHER WE’RE

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


SM SF E ssentials 2012

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

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


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

TOGETHER WE’RE

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


W hen a pension commences and ceases W hen an income stream ceases 12. 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 automatically entitled, to be paid a super annuation income stream benefit fr om a super annuation inter est that suppor ts a super annuation income str eam… 14. W hen a super annuation income stream ceases is deter mined by r efer ence to the relevant super annuation fund's tr ust deed, the r elevant r equir ements of the SI SR 1994 and the par ticular facts and cir cumstances of the payment of the member 's, or dependent beneficiar y's, benefits

TOGETHER WE’RE

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


W hen a pension commences and ceases 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

TOGETHER WE’RE

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


W hen a pension commences and ceases • 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

TOGETHER WE’RE

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


W hen a pension commences and ceases • 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

TOGETHER WE’RE

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


W hen a pension commences and ceases • 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?

TOGETHER WE’RE

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


W hen a pension commences and ceases Death of a member 24. 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 TOGETHER WE’RE

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


W hen a pension commences and ceases • 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 TOGETHER WE’RE

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


W hen a pension commences and ceases • 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 TOGETHER WE’RE

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


W hen a pension commences and ceases • Submissions were called for • SPA A and other industr y bodies have made submissions • Watch this space

TOGETHER WE’RE

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


SM SF E ssentials 2012

E xcessive contr ibutions tax r efund option C onsultation paper, 17th A ugust 2011

TOGETHER WE’RE

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


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

2008-09

Excess cc only

18,607

15,035

Excess ncc only

2,089

2,019

441

391

Both excess cc and ncc

TOGETHER WE’RE

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


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 M

Non-concessional (ncc) only

$75.0 M

$71.8 M

$146.8 M

Both cc and ncc

$17.5 M

$18.8 M

$36.3 M

TOGETHER WE’RE

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


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

TOGETHER WE’RE

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


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

TOGETHER WE’RE

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


SMSF 2012 Essentials