Review of self-managed super funds encouraged by industry experts
Industry experts are encouraging Australians to review their self-managed super funds (SMSF) following recent changes to legislation.
Oncore CFO Grant Gee says ensuring your self-managed super fund is properly structured with the new changes will help ensure a happy retirement. He says there are ten key rules that people need to understand from the recent changes, before reviewing their finances with a trusted advisor to ensure they avoid heavy fines for non-compliance.
Rule # 1
From 1 July 2013, trustees must engage the auditing services of an approved SMSF auditor registered with the Australian Securities and Investments Commission (ASIC). You should ensure your auditor is registered with ASIC.
Rule # 2
The concessional contributions caps for over-60s have increased to $35,000, while the concessional cap for everyone else remains at $25,000. The cap on contributions is expected to rise to $35,000 from 1 July 2014 for those over 50. If you are currently in a salary sacrifice arrangement, you should review this with your employer.
Rule # 3
For most people, the superannuation guarantee (SG) rate has risen from 9 to 9.25 per cent, ensuring added security for the retirement years.
Rule # 4
Those superannuation funds members earning over $300,000 a year will pay an extra 15 per cent tax on top of the 15 per cent tax for concessional contributions into super. This will be applied to contributions from 1 July 2012.
Rule # 5
When excess contributions are withdrawn from a super fund, the tax rate will remain at the personal marginal tax rate, plus an interest charge for late payment. This is a reduction from the former high penalty of 46.5 per cent for excess contributions.
Rule # 6
Any SMSF assets must now be revalued at market value in the fund’s financial accounts and statements, starting in the year ended 30 June 2013.
Rule # 7
Trustees are now required to keep assets separate from other assets held by the trustees, members or their associates, with any non-compliance leading to penalties applied by the ATO.
Rule # 8
Trustees are now required to review SMSF investment strategies at least annually, or more often when there are significant changes in fund membership.
Rule # 9
Trustees are obliged to make decisions regarding the necessity of insurance policies for trust members.
Rule # 10
The SMSF annual levy payable to the ATO has increased from $200 to $321. This includes a $191 levy for the 2013 financial year and a 50 percent advance fee for the levy for the 2014 financial year ($130).
All rules came into effect on 1 July 2013, unless otherwise stated.
Grant Gee says while these new rules can seem overwhelming, it is important to take the time to understand their impact.
“SMSF’s are not suited to everyone, so this is a good time to review whether the new legislation reduces the value of your SMSF, or alternatively, whether a SMSF is a good option for you.
“It’s a decision that needs to be based many factors including your financial situation, your assets, and current and future income. We’re helping people daily to review and restructure their finances based on these changes.”
Oncore is a global outsourcing company specializing in contractor risk mitigation and payroll management services for corporate, recruiters and professional contractors. With key markets in Australia, the UK and New Zealand, Oncore is constantly monitoring financial developments in all regions, in particular legislative changes and the contractor management recruitment industry.