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Fund fees eating away at retirees’ cash

Posted on February 22, 2015 by admin


As interest rates plummet, retirees who are relying on interest from cash savings in their superannuation accounts may be losing out. The reason for this is that excessive fund fees can eat away at cash balances. Without decent returns from interest rates to offset these losses, the results for super funds can be grim. Despite the fact that the Reserve Bank reporting that cash deposits in banks returned between 3.3%-3.7% in 2014, returns on cash deposits in super funds were hovering down at around 2.5%. For retirees, who so often elect to invest their super in cash for stability and a lower risk profile, this lower rate of returns can add up to significant losses. You should always spend some time examining the fee structure of your superannuation fund and comparing it to similar funds. Do not be fooled by a fund that recently reported a year of high growth. To gain a comprehensive understanding of a fund’s performance, you should examine the returns from the past fifteen years, as there can easily be one-off flukes.


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Salary sacrificing into your super

Posted on February 18, 2015 by admin


Salary sacrificing part of your income into your superannuation brings about a lot of financial benefits. Employers in Australia are required to contribute the equivalent of 9.5% of an employee’s salary into a nominated superannuation fund. On top of these contributions, employees can request that their employer reduce their salary and direct the additional cash into their superannuation. There are a number of benefit to salary sacrificing into your superannuation: 1. Reduce your tax liability: Superannuation contributions are taxed at the low rate of 15% (or 30% for individuals earning over $300 000). Therefore, by making additional contributions from your before-tax income, you are likely to decrease your overall tax liability. 2. It won’t cost your employer anything: Your employer will not have to pay any fringe benefits tax on your additional superannuation contributions, so it shouldn’t be an issue for you to make an arrangement. 3. Compound interest! The more that you contribute to your superannuation early in life, the harder your money will work for you. Even a very small additional contribution each week when you’re young can make a big difference to the final size of your nest egg.


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ATO focusing on personal electronic devices

Posted on February 16, 2015 by admin


This financial year, the ATO has announced that it will be focussing on specific types of deductible claims. In previous years, the tax office has announced specific industries or professions that will be subject to particular scrutiny. The biggest announcement this year is that deductions for personal electronic devices such as smartphones, tablets and laptops will be closely examined. Last year, Australians claimed almost $19.5 billion in deductible expenses, and personal electronic devices represent the fastest growing sector in this area. In order to make sure that you are claiming the right tax deductions for a personal electronic device, you should make sure that you have a clear understanding of what qualifies as personal and professional use. Travel expenses are another area that will be a focus for the ATO this year, especially claims for transporting large or bulky tools.


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Income protection insurance: An often overlooked tax deduction

Posted on February 11, 2015 by admin


Many Australians overlook the fact that they can claim the premiums paid for income protection insurance as a tax deduction. Income protection insurance policies are designed to protect you in the event that you become unable to work due to illness or injury. Most policies will pay you a pre-determined portion of your previous income, meaning that you will be able to maintain necessities such as mortgage repayments and groceries. It is advisable for everyone to think about whether or not they can afford not to have income protection insurance. However, if you are the breadwinner in your household or have a significant amount of debt, then income protection insurance is an even more critical investment. The high premiums associated with income protection insurance policies can see a lot of people justifying not purchasing one. However, it is also common for taxpayers to be unaware that they can claim income protection insurance premiums as a tax deduction, thus making significant savings on their overall tax bill.


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Savings strategy for over 55s

Posted on February 10, 2015 by admin


If you are over the age of 55 and are still earning income through employment, then you may be able to make significant tax savings using the transition to retirement scheme. When you use the transition to retirement strategy, you have two superannuation accounts. One account receives your employer’s contributions and any additional contributions that you make (concessional or non-concessional). The other account is your retirement income account, where you place a portion of your savings and pay yourself a pension. The advantages to this strategy are that you can enjoy the tax benefits of making contributions to your superannuation while drawing on a tax-free pension from your retirement income account. You can use the transition to retirement strategy to grow your nest egg or to reduce the number of hours that you work without impacting your income.


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Superannuation balances boosted by international shares

Posted on February 1, 2015 by admin


Findings of a study conducted by research firm SuperResearch reveal that in 2014 investment in international shares provided superannuation accounts with impressive returns. Superannuation funds reported an average 7.5% return in 2014, with international shares providing a significant contribution. The falling Australian dollar, which tumbled almost 8% against the USD last year, has also benefited super balances. By contrast, the SuperResearch report found that investments in Australian shares had yielded modest returns, averaging just 1.4%.


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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.