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Check up on savings

Posted on April 11, 2014 by admin


Older individuals often forget to perform checks on their retirement savings. It is essential that individuals check that their retirement savings are on track to finance their planned standard of living in retirement. Otherwise, they could be left short when they are ready to retire. A common time to perform these checks is in the final decade before the date of intended retirement; however, it is a good idea to perform them throughout a person’s working life. Performing these checks can also allow an individual to focus on maximising their super in the countdown to their retirement. Policymakers are also interested in retirement savings checks as it allows them to gain an understanding of whether Australia’s retirement savings will be adequate, or if there will be strong demand for the age pension.


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Division 7a in detail

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Business owners sometimes borrow money from their own company for a variety of personal and financial reasons. However, there can be an issue with tax law compliance if the proper steps are not carried out in treating the transaction correctly. Division 7a is an integrity measure of tax legislation that comes into effect when there is a loan by a company to the business’ owners and associates, i.e. the shareholders of the company. Associates are broadly defined and can include family members and other related entities. Specifically, this tax law covers any monetary benefits including: -payments made to a shareholder (or associate) by a private company, including transfers or uses of property for less than market value -loans made without specific loan agreements -debt forgiveness These transactions may come under the Division 7a provisions and as such are treated as assessable unfranked dividends to the shareholder or associate, and are taxed accordingly. An assessable unfranked dividend means that there are no franking credits available to the recipient, so the franking tax offset will not apply and the recipient will have to pay tax on the dividends at the usual marginal rate. However, there a few instances in which Division 7a […]


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Tax certainty after death for super funds

Posted on April 3, 2014 by admin


Recent government amendments have provided tax certainty for superannuation funds upon the death of members in receipt of a superannuation income stream. This amendment effectively allows a superannuation fund trustee to dispose of pension assets on a tax-free basis to fund the payment of death benefits. Also, the meaning of ‘superannuation income stream benefit’ now allows the superannuation fund to continue to be entitled to the earnings tax exemption in the period of the member’s death until their benefits have been paid out by: -paying them out as a lump sum -and/or commencing a new income stream This is subject to the benefits being cashed as soon as possible following the member’s death. This amendment also allows the tax-free proportion of that superannuation income stream to be used in calculating the tax components of those benefits.


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Power of attorney and guardianship

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As people get older they need to make arrangements on how to handle their estate, and their personal interests in the event of sickness or death. These include: Enduring guardianship A guardian is essentially a legally appointed substitute decision-maker. A guardian is granted powers only as is necessary to accomplish what an individual cannot do independently. Individuals can choose to create a legal document called an ‘enduring power of guardianship’ that authorises a person to make personal, lifestyle or treatment decisions on behalf of themselves.  A guardian can also be appointed by the courts. Unlike the power of attorney, each state has a guardianship board or tribunal which supervises the guardian. The most common functions of a guardian are making decisions on accommodation, health care and medical and dental treatment. Enduring power of attorney (financial) A financial ‘enduring power of attorney’ is a legal document that remains valid if the nominator becomes mentally incompetent.  The agent who is appointed can make any legal or financial decisions on the nominator’s behalf. The appointed attorney is able to make a decision on property or financial affairs, for example, operate bank accounts, pay bills and purchase and sell property. Enduring power of attorney […]


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SMSF annual return for pension phase trustees

November 15, 2017

Self-managed super fund (SMSF) trustees who are in pension phase must lodge their SMSF annual returns if they remain active, or choose to wind up the fund.

The ATO is warning SMSF trustees about their regulatory obligations and is paying close attention to those SMSFs that are not meeting their lodgment obligations.

Trustees must lodge a Self-managed superannuation fund annual return 2017 if it was a self-managed super fund on 30 June 2017, or a self-managed super fund that was wound up during 2016-17.

Super funds that are not SMSFs at the end of 2016-17 must use the fund income tax return 2017 and, where required, a separate super member contributions statement.

Even if your fund does not have a tax liability, your SMSF must lodge an SMSF annual return.