If the SMSF is being run as a 'pooled' fund then they could simply reduce the pension balance to $1.6mill and retain the rest as accumulation, and therefore retain all properties. If there is more than 1 member, remember it's $1.6mill per person, so $3.2mill in total for a couple.
If the assets are 'segregated', i.e. each asset is assigned to a particular member then it can be more complicated.
In W.A they are even talking about taking the seniors card off self funded retirees, why would you bother saving for retirement?
If a blue collar working couple saved and paid of their house, then went without to save $800k, they get no pension. But earn approx $24,000 from interest.
If the same couple pay off their house, then have holidays to Bali, buy the HSV, Ford Ranger and caravan, but only save $300k for their retirement.
That's o.k because they get $9,000 interest and $34,000 pension.
It's a no brainer, unless I've got something wrong.
But retaining the properties in the accumulation phase, means any income is taxed at 15% and you can't improve the property.
Sounds a bit like a hole for money, unless the land value is a raging bull.
In the accumulation phase, all profit is taxed at 15%, from my understanding.
Yes it did. If a member in the SMSF has a total superannuation balance over $1.6mil and is receiving a pension in any Fund then the segregated method cannot be used to calculate the exempt current pension income for any Fund in which they are a member.Quick qustion if I could.
I think I read somwhere that they were proposing that if a SMSF had a member with funds above the cap in retirement phase the SMSF would not be able to use segregation method. An integrety measure.
Did that get implemented?
Yes it did. If a member in the SMSF has a total superannuation balance over $1.6mil and is receiving a pension in any Fund then the segregated method cannot be used to calculate the exempt current pension income for any Fund in which they are a member.
However, there is probably an argument that you could still allocate specific assets to each member in order to calculate member earnings in the Fund's accounts if the trust deed allows it. Which would be handy for SMSFs with members that have different investment profiles etc.
Interesting example: If a member has a total superannuation balance exceeding $1.6 million (most of it in his/her own SMSF) and is receiving a pension from any Fund, but they had a nominal accumulation balance of say $1,000 in another family member's SMSF, then that SMSF would not able to adopt the segregated method to calculate ECPI, even if the pension member's balances were all under $1.6 million in that SMSF.
This is probably academic though, as in my experience, most SMSFs just get an actuarial certificate and don't bother with segregation if they have a mix of accumulation and pension, as it is quite complicated and/or expensive to administer.
The only other option to create 'segregation' for tax purposes is to house different assets in multiple SMSFs (ie. pension up to cap in one SMSF and accumulation assets in another). That option doesn't help those who are only in accumulation phase and are stuck with large unrealised CGT burdens though because any sort of restructuring is most likely going to trigger CGT events. Although, if you have a crystal ball, and are just starting out from a fresh CGT position, it might work somewhere down the track, but most people won't ever exceed the cap so it's a niche strategy.Thanks Ves
As an Integrity measure its quite effective.
Kills any idea of having those assets with large unrealised capital gains make up the assets below the cap.
No transition arrangement to reset cost base for those not of yet of retirement age. So historical capital gains will be taxed under new regime. retrospective?????
The joys of being the wrong demographic.
How much you need for retirement varies greatly between individuals, based on your circumstances, and also with an unknown element (i.e. how long will you live for?).
Some couple only need $375,000 in savings and a debt-free home (income of say $20k from super and $34k age pension = enough to get by).
Other couples will say they need income of $100k per annum to be comfortable, plus want to help out the kids, buy a new car, do home reno's and a big o/s holiday. In that case they might need $3mill.
Careful planning is key.
Yes, a good financial adviser will do this.
A qualified & competent financial adviser will put together a comprehensive plan which takes all factors into account. This plan then needs to be monitored and reviewed every year.
Many on this forum would prefer to DIY.
The other alternative is what most aussies do, don't really think about it until it's too late, run out of savings a few years into retirement and then get by on Centrelink Age Pension!
sptrawler, if you have the time, inclination and knowledge to DIY then go for it. Many aren't capable or would prefer to outsource to a professional and have a 3rd party who they can bounce ideas off of along the way.
You are right in regards to finding the right adviser. It can be very very costly if you get this wrong!
They told me an e-mail was sent regarding the changes. I received no e-mail regarding admin. fee and brokerage increases. I noticed the transaction charges on the last two purchases were higher than usual so I called and they guided me online through some secret doorways to where the information lay in black and white.Who is that with Wysiwyg?
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