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Take the worry out of life, there's enough already without expanding it.
Superannuation, the ultimate government cash cow?
- Thread starter drsmith
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There is a lot to be said for that, especially as you get older.
If you run a smsf, it has to have two members, which is fine when you and the missus are youngish, or if you only have one child. IMO
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one of the key reasons I have no SMSF
Single person, corporate trustee. No to kids in a SMSF in my view. Can lead to a whole world of pain such as this list
- Trustee decisions must be made in the best interests of all beneficiaries not just those with a majority balance. Members may have competing priorities, and this affects the implementation of an investment strategy for the SMSF that suits everyone. Ideally, you should segregate your benefits from those of your children – i.e. maintain separate bank and investment accounts in the SMSF – however, running separate investment portfolios and allocating earnings to the specific account balances supported by a particular portfolio can bring additional administrative complexities.
- Your children will have access to the resources of the fund. Perhaps an extreme example of where this went wrong was the Triway Superannuation Fund which was established with three family members: Mum, Dad and son, where the son had a drug addiction and withdrew virtually all the monies of the SMSF. This left the parents with a non-complying SMSF and no super.
- What happens if your children’s marriages or de-facto relationships breakdown? Superannuation is vulnerable to Family Court disputes. Imagine having to sell the property used in the family business to free up cash to pay out your child’s ex-partner. If your children are members of your SMSF, you should consider asking them to enter into binding financial agreements with their partners or spouses (read more here and here for more about BFAs).
- All members of the fund must be a trustee or director of the trustee company. By including your children as members of your SMSF you risk being out voted by your children in the running of the SMSF, unless you introduce adequate controls. Your SMSF will need a workable dispute mechanism for the SMSF. This may require a trust deed amendment.
- Illiquidity of assets may be a problem. If your child wishes to leave the SMSF, rolling out a child’s balance into another fund if your SMSF has assets such as a property rather than cash or shares, could prove difficult. To be able to do this, you need to ensure that the SMSF has cash available when the time comes.
- What happens when a member dies or loses capacity? Who will control of the fund and how will benefits be dealt with when a member/trustee dies? In the notorious case of Katz v Grossman a father and daughter were members and trustees of the SMSF. The father completed a non-binding nomination requesting the trustee to split his super balance 50/50 to his daughter and son. The son was not a member or trustee of the SMSF at the time of his death, so the daughter appointed her husband as a trustee and proceeded to pay 100% of her father’s benefits to herself. In the ensuing dispute, the Court found in her favour – as trustee she (and her husband), in the absence of a binding death benefit nomination, had the sole discretion as to whom the deceased’s superannuation death benefits should be paid.
By the by, I am not saying don't have your children as members of your SMSF. Just think very carefully about it before doing so. In my view, one of the unstated tasks of a Trustee is to manage each and every risk. Probably 95% of the time it's all hunky-dory but it's the remaining 5% which is the issue.
One reason we established the SMSF using a corporate trustee. If an error is made what penalty could apply was one thought. If joint trustee, each trustee gets hit with the penalty whereas only the corporate trustee, not each Director, is up for it. A simple error, possibly inadvertent, could incur 10 penalty units and, presently, each penalty unit is $275. And it may be cumulative i.e. each error attracts a penalty.
It was those sorts of matters which decided us upon the corporate trustee arrangements. And, although it is morbid, on the death of one member, there is no requirement to change all share holding details which can be arduous, time consuming and involve a cost. However, it is a matter of only changing the Director details which isn't so bad, especially at that particular time.
One reason we established the SMSF using a corporate trustee. If an error is made what penalty could apply was one thought. If joint trustee, each trustee gets hit with the penalty whereas only the corporate trustee, not each Director, is up for it. A simple error, possibly inadvertent, could incur 10 penalty units and, presently, each penalty unit is $275. And it may be cumulative i.e. each error attracts a penalty.
It was those sorts of matters which decided us upon the corporate trustee arrangements. And, although it is morbid, on the death of one member, there is no requirement to change all share holding details which can be arduous, time consuming and involve a cost. However, it is a matter of only changing the Director details which isn't so bad, especially at that particular time.
Check out the latest wailings from the Gratten Institute on ABC's website ( Just in )
Among other things , the socialist mob is calling for a lowering of the concessional / pre-tax contrib cap from $27,500 p.a. to $ 20,000.
Well , that's better than the 15 grand limit they were calling for about 8 years ago.
What about abolishing the tax free super fund Pension Account ( $ 1.9 Mill from 1st July 2023 ) ? Are you hearing all this , Jimbo ?
I wonder what the Gratten lot think of the half a $Trillion ( at least ) to be blown on persuading the Chinese to become very afraid of us?
Among other things , the socialist mob is calling for a lowering of the concessional / pre-tax contrib cap from $27,500 p.a. to $ 20,000.
Well , that's better than the 15 grand limit they were calling for about 8 years ago.
What about abolishing the tax free super fund Pension Account ( $ 1.9 Mill from 1st July 2023 ) ? Are you hearing all this , Jimbo ?
I wonder what the Gratten lot think of the half a $Trillion ( at least ) to be blown on persuading the Chinese to become very afraid of us?
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inflation , unreliable returns rising pension age .. could be worse the Gratten mob could be running the Treasury ( instead of spitting out opinions for media consumption )
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Isn't that mob now actually running the treasury?
Or is labour not left enough for them ..
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@barneyThanks for that Homer. It was helpful for sure.Im getting close to retirement age but never had super so its a total unknown for me. Curiously are you able to say who you use for your Super. If you'd rather not I totally understand.
Cheers M8.
I just accidentally bumped into this thread and noticed there are a few good suggestions.
You may also consider these :
Call the Australian Super Customer line - they do have dedicated advisers. The hurdle will be you are not a member. So play the game asking the call receiver, if you are planning to join and would like to speak with one of their planners (advisers) first.
Secondly, take an appointment with Centrelink planners - no harm and I am not suggesting that you take any kind of government help. End of the day, those planners are paid by you and I through our taxes and they do provide advice to thousands of retirees.
Thirdly, go to a planner only recommended by someone you trust. I have had appointed a planner from BT at the recommendation of the Westpac Bank Manager in 2008 or so. He misguided me and I fxxxx my super even after paying a few grand for advice and rolling over the whole super into BT- that was a super mistake. Lessons learned - never go with any planning adviser associated with a bank. They are rogue
There are some outstanding ASF members - so long you do not use the word 'advice' or 'recommendation' you would get plenty of suggestions for you to dive into.
Finally, the tax office has a super helpline - call them. My experience with ATO phone lines has been they are quite good and not like the old days.
Good luck.
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Mr Divs no thanks enough idiots already have control without even more being there.
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well the ALP ( and union groups ) i had contacts with had factions , some even oppose the 'Green ideals ' ,
am not in close contact with these people in recent years , but there was a rise of influence of Fabian Socialists ( normally tertiary educated , as opposed to rising through the union ranks from the workshop floor )
the Gratten Institute implies members who are currently in academia , one would need further research to discern whether members spent their adult entire life in the hallowed ivy league halls , or had retired there from the commercial world
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hard to imagine some sane and going leftist after a life in commercial world, I mean real commercial, not workplace laws or Health and safety consultancy
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have known some ( mid-ranking ) union members become realists in their 50's
and some younger ones to go hard conservative after a union shafting ( houses for their officials and limos , but empty promises for you )
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A good move by the Government, people get their super paid fortnightly(sic) and the Govt gets the contribution tax fortnightly.
www.theage.com.au
Millions of workers will be thousands of dollars better off in retirement under federal government plans to require all businesses to pay their employees’ superannuation on payday.
The proposed update to laws that allow businesses to pay super quarterly will also make it tougher for employers not to pay the super guarantee at all – an issue that costs workers billions in unpaid super each year.
Millions to be better off in retirement under compulsory payday super plan
The proposed update to laws that allow businesses to pay super quarterly will also make it tougher for employers not to pay the super guarantee at all.
The proposed update to laws that allow businesses to pay super quarterly will also make it tougher for employers not to pay the super guarantee at all – an issue that costs workers billions in unpaid super each year.
A good move by the Government, people get their super paid fortnightly(sic) and the Govt gets the contribution tax fortnightly.
Millions of workers will be thousands of dollars better off in retirement under federal government plans to require all businesses to pay their employees’ superannuation on payday.Millions to be better off in retirement under compulsory payday super plan
The proposed update to laws that allow businesses to pay super quarterly will also make it tougher for employers not to pay the super guarantee at all.
The proposed update to laws that allow businesses to pay super quarterly will also make it tougher for employers not to pay the super guarantee at all – an issue that costs workers billions in unpaid super each year.
Yes, the ATO would modify its SuperStream systems to accommodate it which makes it a tad more difficult for employers avoiding paying superannuation. Here is the link to a brief description of it. Basically real-time data.
SuperStream
Explains SuperStream - the way business must pay superannuation guarantee contributions to super funds.
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is that 'allow to ' , or ' make it compulsory ' ( a BIG difference in salary/wage world ) , what about casuals , and those aid weeklyA good move by the Government, people get their super paid fortnightly(sic) and the Govt gets the contribution tax fortnightly.
Millions of workers will be thousands of dollars better off in retirement under federal government plans to require all businesses to pay their employees’ superannuation on payday.Millions to be better off in retirement under compulsory payday super plan
The proposed update to laws that allow businesses to pay super quarterly will also make it tougher for employers not to pay the super guarantee at all.
The proposed update to laws that allow businesses to pay super quarterly will also make it tougher for employers not to pay the super guarantee at all – an issue that costs workers billions in unpaid super each year.
watch this bite in the long run ( won't make the super-manager's job any easier either ) .. expect fees to creep higher
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It sounds like it will be compulsory.
It will also add administration and cashflow issues to business, but IMO it is good for the worker and the Govt.
The worker because their super owed by their employer is upto date and the Govt because they get the 15% tax sooner.
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yep ! poverty by a thousand increases
will be interesting to see how fund managers handle this ( say portfolio rebalances/top ups every month , perhaps
Dona Ferentes
A little bit OC⚡DC
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You have no idea, I'm guessing.
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speculating , since i hold several fund managers , it might support some bottom lines
some of those managers are facing some out-flow issues , maybe a more attractive approach might soften the incentives ( to exit )
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