SMSF Strategies

[sinic]

Hi Tom,

Thank you for your detailed and informative reply.

I had intended to recontribute back as an undeducted contribuion, and immediately start up a new pension which would be 100% tax free in nature.

I think that means the old pension (somewhat depleted) will retain its original character regarding the percentage of "good" to "bad" money.

The new pension would be based on 100% "good" money. Next year I would have to take 4% of its value out, but my understanding is that this would not be taxable or even declarable even if I am still under 60.

I guess a slight messiness is that one could end up with a few pensions - although all new ones would be tax free effectively.

In all this I am assuming it is OK to have mutiple pension accounts for one member within a SMSF.

Cheers,

 

[Julia]

Tom Ronalds:

It's very good of you to offer your knowledge and expertise on the forum, Tom.

I'm sure I'm not the only one who has much appreciated your contributions.

Thank you.

Julia

 

[Julia]

Could someone who knows please discuss the reasons for registering (or not) for GST with a SMSF?

Some people seem to be registered, and have an ABN, whilst others have just a TFN.

Is there any advantage to the holder of the SF to be registered for GST?

 

[sinic]

Hi Julia,

I mentioned this in posts #20 and #21 on the the thread about "Esuperfunds SMSF brokers ".
Basically you get back 75% of the GST on the brokerage if you register for GST - the downside is you have to do the 3 monthly BAS statements and claim it back. Probably only worth the bother if you pay a lot of brokerage.
Cheers,

 

[Julia]

Hi Julia,

I mentioned this in posts #20 and #21 on the the thread about "Esuperfunds SMSF brokers ".
Basically you get back 75% of the GST on the brokerage if you register for GST - the downside is you have to do the 3 monthly BAS statements and claim it back. Probably only worth the bother if you pay a lot of brokerage.
Cheers,

OK, many thanks, Sinic.

 

[Tom Ronalds]

Hi Tom,

Thank you for your detailed and informative reply.

You're welcome.

I had intended to recontribute back as an undeducted contribuion, and immediately start up a new pension which would be 100% tax free in nature.

If your re-contribution is fully non-concessional (undeducted), then yes, you are correct.

I think that means the old pension (somewhat depleted) will retain its original character regarding the percentage of "good" to "bad" money.

That's right, provided you are over 60 or it is an "account based", as opposed to "allocated" pension.

Be aware that pensions started under the old rules - i.e. "allocated" - have not automatically converted to account based unless a "trigger condition" has been reached.

The new pension would be based on 100% "good" money. Next year I would have to take 4% of its value out, but my understanding is that this would not be taxable or even declarable even if I am still under 60.

I guess a slight messiness is that one could end up with a few pensions - although all new ones would be tax free effectively.

True, but as I said earlier - you can consolidate them. You just need to make sure that it is beneficial to do so.

In all this I am assuming it is OK to have mutiple pension accounts for one member within a SMSF.
Cheers,

You can have as many interests (accounts) as you like. Including a reserve - which is something that can be quite useful and yet not seen too often any more nowadays. Probably because the current crop of advisers do not know what it can be used for, given the term "RBL compression" means nothing to those young turks...!

T. R.

 

[Tom Ronalds]

Tom Ronalds:

It's very good of you to offer your knowledge and expertise on the forum, Tom.

I'm sure I'm not the only one who has much appreciated your contributions.

Thank you.

Julia

No worries Julia.

Superannuation is a minefield and successive governments just seem to make it messier and messier. It's as bad, if not worse, as the general tax field - even the ATO will typically not give you a straight answer, if you have a complex question.

So if I can assist a few people through spending a few minutes here at ASF from time to time, I'm happy to do so.

Cheers.

T. R.

 

[hangseng]

Your SMSF is under attack by "The superannuation industry"

I would suggest if you are currently in a SMSF that you seriously consider joining the Self Managed Superannuation Members Association (SMSMA) http://www.smsma.asn.au/

If you don't you will have little or no voice and be drowned out by the large managed funds. I for one have joined this morning, I don't want my money to go back to the very people who have mismanaged my retirement funds and ripped us off with fees for years that eroded both my wifes and mine capital.

To have incompetent (and in one case downright deceitful) fund managers and "Financial Advisers" stating they can do better than I can, is something I will have a lot to say about and can prove they are wrong.

The latest article in the Eureka Report is of real concern and should be for anyone in a SMSF.

Have you voice heard through the SMSMA or have no voice at all! I responded to the Govt survey and didn't even get the courtesy of a response.

In part:

"Big funds target DIY By Trish Power"
"The superannuation industry is playing hardball against DIY funds to protect its shrinking market share."

"To put it bluntly, the superannuation industry is playing hardball in a panicked attempt to protect its shrinking market share from the spectacular growth in self-managed funds.

Industry associations have asked for DIY super fund trustees to be licensed, for DIY funds to have minimum account balances, for the government to do something – anything – to stop independent-minded Australians from taking responsibility for their own retirement savings.

The associations making the loudest noise are the Association of Superannuation Funds of Australia (which purports to be the “only peak body that can truly claim to represent all sectors of our industry and its service providers” but obviously not DIY fund trustees), the Australian Institute of Superannuation Trustees (which makes it clear it does not represent DIY super funds, but claims to have authority on how DIY funds operate) and, surprisingly, the Financial Planning Association (FPA)."

"Member interests first"

"The whispering (some may argue shouting) campaign against DIY super funds orchestrated by the larger super industry – both retail and not-for-profit super funds – has been a sad, disappointing display from a sector that seems to have forgotten that the super industry only exists because of fund members, including DIY fund members. The important question is: what serves the best financial interests of the individual? "

 

[Julia]

Thanks for the link Hang Seng.

I've had a look at the website. It's all a bit vague. Lists committee members but provides no information about the background of any of them.

At this stage, anyway, I don't feel my Fund is under any threat and don't feel inclined to pay $55 to a bunch of people about whom I know nothing.

Also, under their heading "Policies" it is blank!

 

[hangseng]

Thanks for the link Hang Seng.

I've had a look at the website. It's all a bit vague. Lists committee members but provides no information about the background of any of them.

At this stage, anyway, I don't feel my Fund is under any threat and don't feel inclined to pay $55 to a bunch of people about whom I know nothing.

Also, under their heading "Policies" it is blank!

It is all very new Julia but they are on the right track. I for one do believe SMSF is under threat as the fund managers are speaking as if they are the voice for the whole of the supperannuation industry including SMSF. The quite deliberate attack on SMSF displays another agenda.

The Federal minister Nick Sherry has a past alignment with the fund managers (check his background). The erroneous statements coming out of the fund managers and Nick Sherry is listening to them.

Did you know that SMSF make up the smallest number of members in the superannuation total numbers. However the SMSF also make up around 25% of all super funds held and it is increasing rapidly. The fund managers know this and are protecting themselves, nothing to do with governance or any other "concern" they have over SMSF. They have no concern for anything but themselves and their fees. If they concentrated on their own governance and a desparate need for financial advisers to be more controlled and better educated before handing out advice, I would be more inclined to believe they have any guenuine "concern" for SMSF.

You may not feel under threat, but the white ants are busily working behind the walls and I can see the writing on the other side of the wall. SMSF are under threat and even the writer on the Eureka report saw fit to write an extensive article on this very subject.

This may help you. The website is obviously undergoing change and it is voluntarily run. For mine $55 is not a lot to pay to get heard and to find out more of what is really going on.

From the website:

SMSMA Board - Who Are They?

Brief Board member profiles are:

Bill Banks (Chair): Bill is a former federal public servant who retired to pursue his interest in golf. He has one several amateur seniors' championships throughout Australia over the last five years. Bill has operated his own SMSF since retiring from the public service and has taken up the role of chair of SMSMA because he supports the aims and objectives of the Association.

Brian Banyard (Director): It was Brian who first came up with idea to register the SMSMA and try to establish a body representing SMSF trustees (SMSMA would prefer to be known as a “SMSF Trustees’ Association" but there is a law against having the word “trustee” in any Association without the approval of the Federal Attorney General). Brian is the former CEO of Perpetual Trustees (ACT) and has held positions on associations representing the interests of trustee companies. Brian is also now retired and has been operating his own SMSF for over a decade.

Bob Samarcq (Director): Bob is the current CEO of Clubs ACT, a body representing the interests of registered clubs throughout the ACT. He was formally employed as a senior officer in the Federal Public Service. Bob has been operating his family SMSF for about seven years.

Peter Bishell (CEO); (Me): I have been working in the field of superannuation and related areas since 1979. I am a regular speaker at professional events on superannuation matters. I have been involved in the development of superannuation policy on behalf of the Self Managed Superannuation Professionals Association of Australia, worked for CPA Australia in developing resources for members wishing to be involved in financial planning, and have written many articles for various newspapers and magazines, mainly in regard to consumer protection and consumer interests in the field of superannuation and financial planning. In June 2008 a book I have written entitled “The SMSF Trustees’ Handbook” will be published by Wiley Books Australia.

Until 31 May 2008 I will continue to operate a professional practice specialising in the area of SMSFs. From 1 June 2008 until the end of this year my attention will focus on my role at SMSMA. I have made a commitment to SMSMA to make sure it gets off to the best possible start and is in a sound position to continue its role in representing SMSF trustees and members for many years to come.

All members of the current Board are working in a voluntary capacity. As CEO I am also working in a voluntary capacity although that cannot go on forever. Both the Board and myself will be undertaking significant work to increase the profile of SMSMA throughout the remainder of 2008 as the one thing hindering us from meeting our objectives at this point is a lack of funds as we await all those who have indicated their support for the Association to join and pay membership fees.

The sections of the website where the above information ought to appear can only be updated by the website developer at present. We will publish this “question and answer” on the website in the news section.

 

[Julia]

OK, thanks for the background on the committee members, Hang Seng.
Hope you get some value for your subscription.

 

[Duckman#72]

Your SMSF is under attack by "The superannuation industry"

I would suggest if you are currently in a SMSF that you seriously consider joining the Self Managed Superannuation Members Association (SMSMA) http://www.smsma.asn.au/

If you don't you will have little or no voice and be drowned out by the large managed funds. I for one have joined this morning, I don't want my money to go back to the very people who have mismanaged my retirement funds and ripped us off with fees for years that eroded both my wifes and mine capital.

To have incompetent (and in one case downright deceitful) fund managers and "Financial Advisers" stating they can do better than I can, is something I will have a lot to say about and can prove they are wrong.

Hi Hang Seng

I agree. Unfortunately it seems that Sherry is in the pocket of superannuation at the "big end of town".

It wouldn't be a surprise to see legislation brought in over the next few years that continues to tighten and restrict SMSF. The licensing of SMSF trustees being just one of these.

With SMSF being such a fast growing sector - it must be really concerning to those that think that their share of the wealth will be diminishing. I think it is very interesting that the Financial Planners are in on the act. Goes to show who they are really concerned about - Trustees or themselves?

Duckman

 

[Julia]

Hi Hang Seng

I agree. Unfortunately it seems that Sherry is in the pocket of superannuation at the "big end of town".

It wouldn't be a surprise to see legislation brought in over the next few years that continues to tighten and restrict SMSF. The licensing of SMSF trustees being just one of these.

With SMSF being such a fast growing sector - it must be really concerning to those that think that their share of the wealth will be diminishing. I think it is very interesting that the Financial Planners are in on the act. Goes to show who they are really concerned about - Trustees or themselves?

Duckman

Hi Duckman,

Why would it necessarily be a problem if Trustees were required to be licensed?

I don't see that having a SMSF neeeds to eliminate the value of financial planners. Still room for them to advise on structural alternatives, moving to pension phase etc.
In an ideal world (!) financial planners would regard the growing number of SMSF's as an opportunity to offer genuine advice, on a fee for service basis, instead of lazily depending on trails from managed funds.

 

[Duckman#72]

Hi Duckman,

Why would it necessarily be a problem if Trustees were required to be licensed?

I don't see that having a SMSF neeeds to eliminate the value of financial planners. Still room for them to advise on structural alternatives, moving to pension phase etc.
In an ideal world (!) financial planners would regard the growing number of SMSF's as an opportunity to offer genuine advice, on a fee for service basis, instead of lazily depending on trails from managed funds.

Hi Julia

What we are talking about here is - control. Nothing more or nothing less. The superannuation industry wants to retain control and regain access to a large and growing portion of the superannuation sector. And they are doing it in the disguise of "helping the DIY sector".

They are not interested in educating Trustees, they are interested in making it difficult and problematic to become a trustee. The more difficult it is to establish a SMSF the more likely it will be that members will leave their accounts with large superannuation account providers. At present SMSF represent only 3% of all super accounts yet they make up a whopping 25% of the total super balances.

Some of the ideas have merit (I agree that some people start up a SMSF with way to little account balances) however do we want to regulate everything? For example, starting a fund with a small balance is fine if you have the ability to make regular and significant contributions. Far too many people start with a small balance and hope to "trade it up" without access to large contributions. Some do but a great many don't. If the super industry had its way it would make the minimum starting balance $300,000. Why? So that it could keep you in their grasp for longer.

I agree with your view on financial planners. Yes there will always be a need. I also agree that fee-for-service is the ideal. However it is still a long way off from being the norm. As a general rule - SMSF members are more investment savy. They can also invest in direct property, straight cash and direct shares. These are all investment classes that financial planners don't make money from. They have no vested interest in making sure that their clients can get access to cash to buy a rental property at Rainbow Beach, or Fortescue Metal shares. No trails, no upfronts and more work.

The other issue being - tax. With the explosion of "pension phase" accounts, the SMSF sector has moved in leaps and bounds ahead of the superannuation industry at large in terms of flexibility, tax planning and the products being offered.

Hope this explains a little more. I realise that there are ratbag trustees out there. But I am a little too cynical to think that the ASFA and FPA are holding their hands on their hearts and saying to SMSF trustees "Hi, we're Kevins, and we're here to help."

Duckman

 

[Julia]

But I am a little too cynical to think that the ASFA and FPA are holding their hands on their hearts and saying to SMSF trustees "Hi, we're Kevins, and we're here to help."

Duckman

Hi Duckman,
The above comment conjures up a pretty amusing picture, but, thanks, I understand what you are saying. Very useful comments, as always.

 

[Dezza]

Recent changes now allow them to borrow, however, not too many providers in the market at the moment.

I know Macquarie Bank offers such a product, but yeah, they can now. However, lenders only have access to the secured assets only and not the entire fund.

 

[hangseng]

If you believe any one of these people has the interest of SMSF as their core interest you should think again. Even the Self Managed Super Fund Professionals' Association of Australia is representing the SMSF 'professional' advisory group not the SMSF trustees/members.

SMSF's desperately need a voice to government.


source: http://www.treasurer.gov.au/Display...08/031.htm&pageID=003&min=njs&Year=&DocType=0

Superannuation Advisory Group Members
Senator the Hon Nick Sherry (Chair), Minister for Superannuation and Corporate Law.
Ms Jo-Anne Bloch, Chief Executive, Financial Planning Association of Australia.
Associate Professor Marilyn Clark-Murphy, Head of the School of Accounting, Finance & Economics at Edith Cowan University.
Mr Richard Gilbert, Chief Executive, Investment and Financial Services Association and Chairperson of the International Investment Funds Association.
Mr John Maroney, Chief Executive, Institute of Actuaries of Australia.
Mr Terry McCredden, Chief Executive, Telstra Super Pty Ltd.
Professor John Piggott, Associate Dean Research, Australian School of Business, University of New South Wales.
Ms Andrea Slattery, Chief Executive, Self Managed Super Fund Professionals' Association of Australia Ltd.
Ms Pauline Vamos, Chief Executive, Association of Superannuation Funds of Australia.
Ms Rosemary Vilgan, Chief Executive, QSuper Board of Trustees, QSuper Limited and Government Superannuation Officer.
Mr Garry Weaven, Chair of Industry Funds Management.
BRISBANE
10 June 2008

 

[hangseng]

Be concerned.

http://www.treasurer.gov.au/Display...08/006.htm&pageID=005&min=njs&Year=&DocType=1

This misinformation in this alone has me concerned.

 

[Julia]

Hang Seng, do youhave another link to that?
This one brought "page unavailable".

 

[hangseng]

Hang Seng, do youhave another link to that?
This one brought "page unavailable".

It is a problem with the http://www.treasurer.gov.au/ website Julia.

The link is public and correct.