Beware segregated pension traps

Applying the segregated pension method for an SMSF can result in cash-flow issues caused by the division of earnings and expenses. While the decision to segregate assets in an SMSF into pension and accumulation mode may be due to tax purposes, there are still a range of important issues to consider. Bank accounts are usually…

The benefits of a binding death nomination

Signing a binding death nomination can help your beneficiaries make the most of tax savings in super. A binding death nomination compels your super fund’s trustees to direct your super to the chosen dependent beneficiary upon your death. It also means your beneficiaries can receive any assets within the tax-effective structure of super. This is…

Splitting superannuation

When a marriage or de facto relationship breaks down, any property can be divided between the parties. Under the Family Law Act 1975, superannuation is also treated the same way. Parties must enter a superannuation agreement or obtain a court order to allow the splitting of their superannuation. A spouse may seek a court order…

Avoiding SMSF death benefit disputes

Recent family disputes over superannuation death benefits carry an important warning to current SMSF trustees. The disputes have highlighted the need for trustees to have appropriate and binding death-benefit directions planned while members are still alive, in order to reduce the risk of a dispute arising. When there are clear death-benefit directions, surviving trustees have…

Refund of excess non-concessional contributions

The Government recently made changes to excess non-concessional contributions, bringing the treatment of excess non-concessional contributions into line with the treatment of excess concessional contributions. The changes eliminate double taxation, where individuals were being taxed at the top marginal tax rate even though they paid income tax on contributions prior to making contributions to their fund.…

SMSF’s and non-arm’s length income

Self-managed super funds and related parties must transact on arm’s length terms. This ensures that both parties are acting in their own self-interest and will not succumb to any pressure from the other party. The true market value of an asset should always be reflected in the purchase and sale price of assets. Members need…

Revise your SMSF investment strategy

Self-managed super fund members should revise their strategy regularly to ensure it continues to reflect their circumstances and the fund’s investment objective. A self-managed super fund requires a clear, well-documented investment strategy to be successful. Characteristics of these SMSF investment strategies include: – ability to pay benefits when members retire. A member must be able to…

SMSF and investing in property

While using a self-managed super fund (SMSF) to buy an investment property has become increasingly popular, members must carefully consider whether it supports their overall investment strategy before they go ahead with this investment approach. There is a condition that the SMSF trustee or any of their relatives cannot buy the property with the intention…