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Excess Transfer Balance Determinations from January 2018

The Australian Tax Office will start sending Excess Transfer Balance (ETB) Determinations from January 2018.

ETB determinations will be sent to any individuals who have exceeded their transfer balance cap and have not taken any steps to correct this error.

If you manage a SMSF and have exceeded the balance transfer cap by less than $100,000 on 1 July 2017 as a result of income streams in existence prior to 20 June 2017, you have until 31 December 2017 to commute the excess capital, under transitional rules.

If you manage a SMSF and have exceeded the balance transfer cap by more than $100,000, under the transitional rules, you may receive the ETB determination. The ATO becomes aware of transitional balance cap breach based on information APRA funds pass on.

If you receive an ETB determination from the ATO, remember the following:
– The quicker the member rectifies the amount owing set out in the ETB Determination from the retirement phase, the lower the amount of excess transfer balance tax they will be required to pay.
– The SMSF trustee must report information relevant to the member to the ATO, so that they have all the relevant information needed. It is important to do this straight away, if it has not already been done.
– You must commute the amount owing as listed on the ETB Determination from retirement phase. If you choose to remove the amount by making a large pension payment, you will still be in excess of your transfer balance cap as the large pension payment will not, under the circumstances, result in a debit on your transfer balance account.
– You may keep the excess amount determined in the ETB Determination in an accumulation phase account, unless you are commuting a death benefit income stream. If you are, the amount needs to be removed from the super stream.
– Ensure minimum pension payment standards are met at the time of commuting money into your income stream.

If you have any questions or queries regarding Excess Transfer Balance Determinations and how this may affect you, please do not hesitate to contact our office.

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Protect yourself from early super release scams

August 7, 2018

When it comes to protecting your nest egg, avoid getting caught out by a promoter of an illegal early release super scheme.

Early release super scheme scams will involve a promoter contacting you and offering to help you access your super early. They usually target individuals under significant financial pressure or those who are not knowledgeable about super laws and the repercussions and penalties involved in illegally accessing your super.

You can only access your super when you meet a condition of release.

Generally, when you:
– Are 65 years old (even if you have not yet retired).
– Reach your preservation age and retire.
– Reach your preservation age and begin a transition to retirement income stream while still working.

There are special circumstances where you may be able to access your super early.

These special circumstances include:
– Severe financial hardship
– Temporary or permanent incapacity
– Compassionate grounds
– Temporary residents leaving Australia
– Super death benefits (inheriting super)
– Super less than $200
– Terminal medical condition

To avoid falling for an illegal early super release scam, be wary if the promoter:
– charges high fees and commissions;
– requests identity documents;
– claims you can access your super and put the funds towards whatever you wish;
– and tries to persuade you to transfer or rollover your super from your existing fund to a self-managed super fund (SMSF) in order to access your super before you are legally entitled.