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New law enacted to prevent dividend washing

A new law that prevents taxpayers from benefiting from dividend washing has been enacted. The new integrity rule is intended to help taxpayers understand their tax responsibilities and comply with the legislation.

Dividend washing occurs when a shareholder seeks to claim two set of franking credits. This is done by selling shares after a dividend payout has been announced ex-dividend, meaning that both the dividend and the franking credit remain with the investor. The investor then repurchases shares in the same company that have both the dividend and the franking credit attached. Thus, they have come to be in possession of two sets of franking credits for one set of shares.

Investors who have entered into dividend washing in the past few years should have received written correspondence from the ATO requesting that they amend their tax returns for the relevant income years. If amendment requests are received by the ATO before the date specified in the letter no penalties will be applied. Individuals who have engaged in dividend washing but have not received correspondence from the ATO will be offered the same penalty remission if amendments are made by 22September 2014.

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Understanding various kinds of super fees

February 16, 2018

No matter the kind of superfund you opt for, you will be subject to super fees. Understanding how these fees work and the difference they can make to your next egg is vital.

When it comes to superfund fees, there are two factors you need to get your head around; the kinds of fees you are being charged and the rate of fees you pay. Opting for a superfund based on these two factors can see you retire with hundreds of thousands more money.

You should be aware of the various types of fees you are being charged. If you would like to find out the fees you are being charged, you should do two things. Firstly, Google your fund’s product disclosure statement and scroll through to the fees section. You should see a list of different types of fees, with an explanation of what they are, how they are applied, and how often they will be incurred. Secondly, you should log in to your superfund account and take note of all the fees being charged to you. Investigate how closely these correspond and correlate with the product disclosure statement.

If you feel there are discrepancies, do not hesitate to contact your superfund or financial advisor and ask for clarification. It is worthwhile doing your research and comparing the fees you are being charged against other super funds and what they charge. Being complacent and not paying attention to your super is extremely irresponsible; the dividends you will receive later in life for being diligent now outweighs the burden of taking time to be informed today.

Some of the common super fees across the board include:

Another major factor contributing to how much you accumulate in your super account throughout your working life is the rate of fees you pay. Plain and simple, some funds offer much lower fees than other, creating a difference of hundreds of thousands of dollars when it comes time to retire.

Generally, funds are categorised into three groups; low super fees, medium super fees and high super fees. Ultimately, you want to be in a fund that charges low super fees. In saying this, it’s not only about super fees, as some funds have medium-high super fees but also perform better based on investment strategy, meaning you will get more back from your investments.