In episode 40 of the Smarter SMSF podcast, Aaron is joined by Jeevan Tohki, Product Manager at BGL to discuss the changes to the SMSF Annual Return (SAR) for 2017-18. The new superannuation reforms from 1 July 2017 has meant a raft of amendments to the current SAR that impacts member information such as total superannuation balances, and transition to retirement income streams (TRISs), along with updates to regulatory data including limited recourse borrowing arrangements and CGT relief information where a fund chose to defer under the transitional CGT relief provisions.
Aaron and Jeevan explore the impact of these specific changes, including what practitioners should be aware of when looking at the preparation of the financials and SMSF Annual Return for this income year.
In episode 39 of the Smarter SMSF podcast, Aaron shares his views into the evolving SMSF sector today. Back in 2014, Aaron created the inaugural Future of SMSF report, the first time ever that we gained insights into how practitioners are servicing the needs of trustees, and how their business model operates. Throughout the past few years, we have seen the continued shift to cloud-technology within the SMSF sector, huge legislative change from 1 July 2017 and ongoing regulatory reform that impacts how professionals engage with trustees.
Aaron discusses these many challenges and opportunities within the sector and talks about why he is again undertaking the Future of SMSF survey again in 2018. Whilst there is more competition within the sector than ever before, including through an 'índustrialised' focus at the bigger end of town, this is far from the demise for the smaller practitioner. However, how you respond in the evolution of your SMSF business model will fundamentally determine you success in the future. In reality, there's never been a more exciting time, and Aaron not only explains why, but aims to explore these further through this year's survey.
The Future of SMSF survey launches on Monday, 2 July 2018 and will be available at https://smartersmsf.com/futureofsmsf
In this week's episode of the Smarter SMSF podcast (episode 38), Aaron is joined by Kevin Bungard, CEO of Class Limited to discuss insights from the March 2018 Benchmark report. In this quarterly report, Class looked at the continued growth of ETFs within SMSF as part of the fund's investment strategy. Both Aaron and Kevin discuss some of the rationale for the popularity of ETFs, not only as a low-cost solution, but also providing exposure to markets that trustees typically don't invest in directly (e.g. emerging markets).
In addition, Kevin and Aaron discuss some of the insights from the updated benchmark data around membership, account balances, member phases and more with a focus on understanding what shifts are occuring in the data since the introduction of the new super reform measures from 1 July 2017.
In episode 37 of the Smarter SMSF podcast, Aaron explores the fantastic opportunities presented by the downsizer contribution rules than commence from 1 July 2018. Whilst the policy intent and explanatory memorandum appear to design the downsizer contribution rules for those who sell their house to 'downsizer', this in practice in not where the strategy considerations end - rather they simply start with the rules in Section 292.102 of the ITAA 1997 provide far wider scope for downsizer contributions that first thought, with opportunities extending to in-specie asset contributions and more.
Aaron discusses the key conditions of the downsizer rules, the requirements of the fund's deed to allow such contributions, and the strategic opportunities that these new measures present.
As we move ever so closer to the first due date with SMSFs for event-based reporting, the transfer balance account reporting (TBAR) framework within a practice has very quickly become the most topical issue for practitioners dealing with SMSFs. With the Australian Taxation Office (ATO) indicating additional reporting being required within the TBAR for pension members with accumulation accounts, it is the impact of the technical nuances with this reporting framework that may see some practitioners come unstuck. Whilst the ATO will take an educative approach in the early stages of rollout, the failure to effectively implement a system a process within a practice is likely to lead to inefficiencies, but also leakage of events to report in a timely manner.
In this week's podcast, Aaron discusses the recent commentary about reporting accumulation phase values as part of the TBAR, the requirements for reporting 2017-18 events and how practices intend on handling TBAR within their practice moving into the new quarterly / annual reporting framework from 1 July 2018.
It is fair to say that we weren't expecting anything too dramatic when it came to superannuation and SMSFs in 2018-19 Federal Budget and the most part we were right. The Treasurer, Scott Morrison delivered a budget that looked to hand back some of the more than expected revenues generated since the mid-year economic report. Given that this was most likely the Government's last opportunity to present a budget before the next Federal election, it was always going to have a few 'sweeteners' included. This extended to SMSFs too...
In this podcast, Aaron discusses the proposed measures from the Federal Budget that impacted superannuation and SMSFs more specifically. This included the announcement to extend the membership of an SMSF from 4 to 6, expanding the work test for certain individuals 65-74 where their total superannuation balance is <$300k, tightening the integrity of claiming tax deductions for personal super contributions, and the change to tri-annual SMSF audits for funds with a clean bill of health and meeting their lodgement obligations.
The Opposition Leader, Bill Shorten has announced a plan today for the Labor Government (if elected) will change the dividend imputation system to only allow for franking credits to be applied to offset tax on taxable income, rather than act as refundable tax credits.
For many SMSFs, this refundable credit measure introduced back in 2000 under the Howard/Costello Government has played an important role in the vast sums of superannuation monies remaining invested within the Australian share market. For some SMSFs, this franking credit refund added as much as 2% of the fund's rate of return each year and ensured that the attributable tax rate on the income reflected the rate of tax payable by the taxpayer - i.e. accumulation phase 15%, pension phase - 0%.
The ALP would not release the costing, but said the (Parliamentary Budget Office) PBO found:
- The policy would save $11.4 billion in 2020-21 and 2021-22
- The plan would affect about 200,000 SMSFs
- Some SMSFs received cash refunds of up to $2.5 million in 2014-15
- Of credits refunded to SMSFs in 2014-15, half the benefits went to the top 10 per cent of funds (which all had balances exceeding $2.4 million)
As you can see from the above historical statistics don't represent the current state of cash refunds post super reforms from 1 July 2017.
The implications of this change can expand far and wide... firstly, the targeted audience of the Labor Party less than 12 months ago have already seen the benefit of imputation credits slashed in half due to the introduction of the transfer balance cap, with excess amounts either being rolled back to accumulation (subject to 15% tax rate) or have left the superannuation system and taxed at a marginal tax rate (although could be 0% personally where under the tax-free threshold of $18,200).
If Labor was elected and if this policy was introduced it could have significant ramifications on the investment profile of SMSF investors. Whilst I wouldn't see older Australians necessarily allocate greater amounts into property due to liquidity reasons, I could see more focus on international markets which means more capital moving off the balance sheets of Australia companies.
The Coalition have been quick to jump on this, so we will watch this with keen interest...
In episode 33 of the Smarter SMSF podcast, Aaron is joined by Kevin Bungard, CEO of Class Limited to discuss the release of the December 2017 - Class SMSF Benchmark Report which explores the topic of pensions and whether they match their SMSF stereotype.
With pension-paying funds now representing half of the SMSF sector today, the characteristics vary significantly from the average and median data typically outlined by the ATO each year in their SMSF statistical overview. Aaron and Kevin discuss some of the insights from the report, including areas for practitioners to be focused on and how these fund's act and operate differently from those SMSFs with a far younger member profile.
In the podcast, Aaron and Kevin also talk about the value of what this data is telling us and why it is so critical today in helping to shape the conversation of the SMSF industry with policy settings into the future - in particular with the creation of the SMSF Association's think tank created in conjunction with the Regulator and several foundation members.
The SMSF Association's National Conference is always a 'must attend' for those working within the SMSF industry. It is an event that shapes the future of the SMSF sector, draws industry stakeholders from Treasury, ASIC, ATO and more, along with a high calibre of technical experts to share their views of the latest strategies and issues impacting SMSFs. It is a conference where you continue to learn through engagement with your peers and once again the conference provided a wonderful platform to showcase the skills of its members.
In this week's episode 32, I discuss some of my key takeaways from the conference, which included:
- Why practitioners need to re-think compliance - how Adam Goldstein in my session on 'thriving or surviving' with the super reforms discussed the approach of 'compliance as a strategy' post 1 July 2017;
- How well we've evolved our understanding of the super reforms in 12 months from the last conference, but we still have many lingering problems to resolve and/or seeking further clarity; and
- the ATO's challenge with TBAR requirements in trying to be everything to everyone and why I can see it creating future problems for the regulator.
This week is a watershed moment, with the rebrand of The SMSF Academy into Smarter SMSF. Any brand decision you make is an important one as it represents who you are and want to be, in particular in the eyes of your customer. In episode 31, Aaron is joined by Darren Taylor, Managing Director of Taylor & Grace who has worked exclusively to develop the brand that is now Smarter SMSF. They discuss in this podcast:
- the rebrand journey - helping to find your 'why' and what you want the brand to stand for;
- building a brand model; and
- what it really means to live your brand
This session talks about the journey to Smarter SMSF, but importantly will help you to understand the key ingredients for you business to live your brand everyday and in everything you do.
We have seen ASIC recently fire a warning shot across the bow of professionals regarding the appropriate completion of binding death benefit nominations for their clients (http://bit.ly/asic-dbn). This media release by ASIC highlighted the importance of a carefully constructed death benefit nomination.
In this week's episode 30, Aaron discusses the topic of death benefit nominations to raise the point that they are all not the same, in particular when it comes to SMSFs. Understanding the fund's governing rules and process required for a DBN to be valid is critical to ensure the most appropriate and effective way of distributing death benefits. He is joined by Chris Hill, Lawyer and SMSF Specialist from Hill Legal to discuss the issues raised by ASIC with DBNs, how this translates for SMSFs and what practitioners need to focus on with their deeds and DBNs as a result of the super reforms.
How members look to take their benefits post 1 July 2017 has become a key strategy to be employed as a result of the introduction of the transfer balance cap. Where a member intends on taking more than the minimum pension, there are a range of important factors to consider. In episode 29 this week of The SMSF Academy, Aaron explores some of these primary considerations to deal with the benefit payment amounts that will ordinarily be more than the minimum pension obligation.
Importantly, in this session Aaron discusses the importance of documentation around these decisions and what should be put in place and by when to ensure the right outcomes are achieved.
As we hit the ground running in 2018, the year ahead provides plenty of opportunities for practitioners to contemplate with their SMSF clients (and clients more broadly). This time of year is traditionally full of optimism as we assess our goals, what we would like to achieve and put in place action plans to go out and achieve them. All sounds good in theory anyway, right?
In this week's episode, Aaron talks about the 8 key things to focus on in 2018 - many of these items are discussed not only to relate to you, but Aaron discusses how he is utilising these key focus areas himself within his business as we advance into the year ahead and beyond. He provides some personal challenges for you and things you need to put some real prioritisation into to ensure that you have a successful 2018.
So, what are your key focuses in 2018? Tell us through social media via @thesmsfacademy
In this week's episode, Aaron looks at the super reform changes that have had a profound impact on partial commutations. Prior to these new measures, members had a far greater level of flexibility with both TRISs and Account Based Pensions where benefit payments could be re-characterised for income tax purposes, including having these amounts count towards minimum pension obligations. The legislation even extended as far to allow for 'in-specie pension payments' through the appropriate process of making elections under the Income Tax Regulations.
Now with the new superannuation measures in play, times have changed and Aaron explains just how these strategies have been impacted, but discusses new ideas and concepts for consideration with partial commutations for transfer balance cap purposes.
In this week's podcast (Episode 26), Aaron discusses the ongoing confusion within the SMSF industry about the decisions being made to apply CGT relief under the segregated method, but where the trustee switches the the proportionate method for income tax purposes on 30 June 2017 to avail the fund to apply CGT relief on any or all of the fund's assets (as they are no longer segregated current pension assets).
Aaron explores the legislative requirements to comply with the object of the relief, but importantly whether a fund needs to obtain an actuarial certificate for the income year where it adopts the proportionate method on 30 June. This session highlights the importance of how the documentation of applying CGT relief can impact on the approach that needs to be taken within the fund.
In episode 25 of The SMSF Academy podcast, Aaron Dunn discusses with the CEO of Class Limited, Kevin Bungard the release of the September 2017 Benchmark Report.
This report provides key insights to a specific industry feature, benchmark data on SMSF members and investment insights on how SMSFs invest from the more than 145,000 funds currently administered through the Class Super software.
The primary focus of the September 2017 report looked at whether the super reforms are set to close the gender gap within SMSFs, including the some of the areas of opportunity for practitioners to deploy strategies in dealing with the differences between male and female SMSF members.
As we head towards the six month mark post super reforms, Aaron and Kevin also discuss some of the key challenges within the SMSF sector and what lies ahead.
The Australian Taxation Office (ATO) has recently finalised the approach for SMSFs to comply with the introduction of reporting various debits and credits against a member's transfer balance cap. It has been a process of going back and forward with the industry, with the ATO having initially landed on a decision, only to be taken to task over the additional cost and compliance burden that was being imposed, not only on trustees, but the professionals who have endured enormous workloads due to the reforms, in addition to the ongoing problems with stability of ATO systems.
One of the biggest advocates for the SMSF sector pushing back on the ATO throughout this process was Ron Lesh, Managing Director of BGL Corporate Solutions. In this week's webinar, I discuss with Ron about the outcomes of TBAR reporting for SMSFs, why the fight was so important to get this outcome and what it means for trustees and professionals. Aaron and Ron discuss the impact of the changes, what they mean, the risks and benefits of the ATO's final position for transfer balance cap reporting.
In this week's episode, Aaron explores how the introduction of the total superannuation balance definition impacts a range of measures including the ability to make non-concessional contributions, eligibility for determining tax exemption using the segregated method and the catch up concessional contribution measures starting on 1 July 2018.
This new definition impacts a range of strategies employed across SMSFs, and in this podcast Aaron discusses how to navigate around key strategies such as recontributions, contribution reserving and the catch up concessional contribution rules. In addition, he discusses the ATO's approach to the use of reserves as a tool to try and circumvent a member's transfer balance cap and total superannuation balance.
In episode 22 of The SMSF Academy podcast, Aaron Dunn talks with CEO of Class Limited, Kevin Bungard about the key insights from the recent release of the Class SMSF Benchmark Report - June 2017.
They talk in detail about the key issues highlighted from within the quarterly data, including the expected surge in commutations under the super reforms from 1 July 2017 and how this contradicts some of the key messaging from the Australian Taxation Office about the level of expected reporting with an individual's transfer balance account (TBA).
In addition, Aaron & Kevin discuss the increasing role that technology is going to play around the Transfer Balance Account Reporting (TBAR) into the future and whether these measures are the first legislative catalyst for a shift to cloud based technology for the SMSF industry.
Changes from 1 July 2017 have put a greater spotlight on the requirements of an individual needing to satisfy the condition of release of 'retirement' that provides the ability for a member to move their accumulation benefits or transition to retirement income stream into retirement phase.
In this week's podcast, Aaron explores the key issues and what a member needs to satisfy where they are under age 60 to be 'retired', against the requirements a meeting the retirement definition within within SISR 6.01(7) for someone who has attained age 60.
Aaron analyses the views expressed by the ATO within a case study of a closely-held arrangement for an individual under 60 and what a member will need to satisfy around their intent or never seeking gainful employment again on either a full-time or part-time basis.