Cost effective SMSF Establishments!

4/3/2014 4:00PM

Cost effective SMSF Establishments!

SMSF establishment cost only $520 + GST, with no strings attached!

This includes all deeds, minutes, ABN & TFN registration and bank account setup where instructed by the trustee. There is no lock in period, unlike some providers of cheap or no fee setups, we don’t require you to have your admin done with us for an extended number of years. This is for individual trustees, if you decide to use a corporate trustee structure, then there is only the company cost in addition.

4/3/2014 3:59PM

Only a few months left to fix problems

From 1 July 2014, the new penalty regime is scheduled to commence for self-managed superannuation    funds (SMSFs). This means that any breach reported in an auditor contravention report (or discovered in an ATO audit) could result in fund trustees personally facing significant fines. This penalty regime was due to start on 1 July 2013, but it was delayed due to the election, with the new government now proceeding with its implementation.

 

Given that the penalty regime is set to begin in a few months, trustees only have a small window of opportunity to fix any issues they may have.

Under the new rules, the Tax Office will be able to directly fine SMSF trustees, and potentially complicit accountants and advisers, for compliance breaches.

 

The Tax Office will now have a number of options when a trustee breaches the regulations:

 

Rectification direction

  • may be given if ATO reasonable believes an SMSF has contravened Act or Regulations
  • The ATO will have regard to the seriousness of the contravention and the level (if any) of the financial detriment that might be reasonably expected to be suffered by the fund.

 

Education Direction

  • may be given if ATO reasonably believes an SMSF has contravened Act or Regulation
  • Appropriate where  trustees’ lack of knowledge contributed to breach
  • Trustee will need to provide ATO with evidence of completion of the course

 

Penalty paid

  • If individual trustees – Then each Trustee will incur a penalty e.g. Failure to  keep records of change of trustee – 10 penalty units each individual
  • If corporate –  The directors are jointly and severally liable e.g. failure to record trustee change – 10 penalty units on company
  • If individual contravenes  – Individual member pays penalty e.g. Trustee declaration not signed – 10 penalty units
  • SMSF cannot pay or reimburse the penalty
  • Administrative Penalties – Not applied to all contraventions, only ones listed in table subsection 166(1)

 

The penalty paid is calculated on a set number of “penalty units”, dependant on the breach. The value of a penalty unit is set out in the Crimes Ac 1914 and may change from time to time. The current value of 1 penalty unit is $170.

Section Rule Penalty
35B Financial Statements not prepared $1,700 (10 penalty units)
65 Prohibited from providing financial   assistance to a member $10,200 (60 penalty units)
67(1) Prohibition on super fund borrowing,   except as permitted, eg limited recourse borrowing arrangement $10,200 (60 penalty units)
84 Contravention of In-House Asset rules $10,200 (60 penalty units)
106 Failing to notify ATO of an event that   has significant adverse effect on the fund’s financial position $10,200 (60 penalty units)
106A Failing to notify ATO of change of   status of SMSF, eg fund ceasing to be a SMSF $3,400 (20 penalty units)
103(1) Failing to keep books and  records    for at least 10 years $1,700 (10 penalty units)
103(2) Failing to keep trustee minutes  and records of decisions for at least 10   years $1,700 (10 penalty units)
103(2A) Failure to maintain a s.71E election,   where applicable, in relation to a fund with an investment in a pre 11/8/99   related unit trust $1,700 (10 penalty units)
104 Failing to keep records of change of   trustees for at least 10 years $1,700 (10 penalty units)
104A Failing to sign Trustee Declaration   within 21 days of appointment and keeping for at least 10 years $1,700 (10 penalty units)
105 Failing to keep member or beneficiary   reports for 10 years $1,700 (10 penalty units)
124 Where an Investment Manager is   appointed, failing to make the appointment in writing $850 (5 penalty units)
160 Failing to comply with ATO Education   directive $850 (5 penalty units)
254(1) Failing to provide Commissioner with   information in the approved form $850 (5 penalty units)
347A(5) Failing to complete a form with   requested information provided by the Regulator as part of the Regulator’s   Statistical Program $850 (5 penalty units)

The application of the ATO penalties and rectification actions are determined by the ATO and will depend on the specific circumstances. You should contact your administrator and/or auditor should you be concerned about any matter involving your SMSF(s) and compliance with the rules.

 

4/3/2014 3:59PM

Contribution cap changes

The contribution caps are set to increase from 1st July 2014. These increases are in line with the increase in AWOTE, with the increase applying to both the Concessional and Non Concessional Caps.

 

Indexation of the general concessional contributions cap was paused at $25,000 up to and including the 2013–14 year. Normal indexation resumes for the 2014–15 year.

 

Concessional contributions.

 

These are:

  • Employer contributions (including contributions made under a salary sacrifice arrangement)
  • Personal contributions claimed as a tax deduction by a self-employed person.

Concessional   contributions general cap for a given income year

Income year

Amount of general   cap

2014-15

$30,000

2013–14

$25,000

2012–13

$25,000

2011–12

$25,000

2010–11

$25,000

2009–10

$25,000

2008–09

$50,000

People aged 59 years or over on 30 June 2013, and 49 years or over on 30 June 2014

The concessional contributions cap will be temporarily increased to $35,000 for the:

  • 2013–14 financial year if you are aged 59 years or over on 30 June 2013
  • 2014–15 financial year or a later financial year if you are aged 49 years or over on the last day of the previous financial year.

The temporary higher cap is not indexed and will cease when the general concessional contributions cap is indexed to $35,000.

Concessional   contributions cap for those aged 59 years or over on 30 June 2013 and those   aged 49 years or over on 30 June 2014

Income year

Cap for those aged   59 years or over on 30 June 2013

Cap for those aged   49 years or over on 30 June 2014

2014–15

$35,000

$35,000

2013–14

$35,000

$25,000

 

Non Concessional

 

Non-concessional contributions are generally contributions made by a member from their after-tax income or savings. They may also be made by your spouse.

  • Personal contributions: a contribution you make to your account balance from your after-tax money for which you do not claim a tax deduction.
  • Spouse contributions: a contribution by your spouse from their after-tax money to your account balance for which your spouse may be entitled to claim a spouse contribution offset.

 

The cap is 6 times the base Concessional Cap and therefore the Non-Concessional Contribution Cap will increase to $180,000 pa

 

Using the bringing forward will enable up to $540,000 in a one year, by bring forward the future two years worth of contributions.

 

Non -Concessional   contributions general cap for a given income year

Income year

Amount of general   cap

2014-15

$180,000

2013–14

$150,000

2012–13

$150,000

2011–12

$150,000

The contributions listed above are the proposed levels due to start on 1st July 2014. You should however confirm that they are implemented as stated and that no last minute amendments are made. You should also check your own circumstances and verify past contributions and future contribution eligibility.

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