Summary of superannuation changes
Recent changes to SMSF legislation:
- Concessional contributions cap
- Superannuation guarantee contributions
- Information on Employee Payslips
- Low Income Super contributions
- Changes to Tax Concessions Provided to Very High Income Earners
- Changes to Excess Contributions Tax
- Changes to SMSF levy
- SMSF auditor registration
- Off – market transfers
- Market Valuation
- Investment Strategy requirements
- Unclaimed Superannuation
- ATO administrative directions and penalties for contraventions relating to SMSFs
- Tax Certainty for deceased estates
- SMSF Annual Asset Revaluation
From July 1 2016, advisors must have a limited Australian Financial Services License (AFSL) to provide advice in superannuation. We do not have an AFSL and therefore do not provide any investment advice. This includes advice on setting up an SMSF.
Changes to the SMSF annual return for 2013
A number of changes were made to the SMSF annual return for the year 2013. The following are the most important:
- Section A: Item 10 Exempt current pension income – now requires trustees to answer whether the fund paid an income stream to any of its members in the income year and, if so, to list the exempt current pension income amount and the method used to calculate it. Item 6 has also changed from Fund Auditor to SMSF Auditor.
- Section B: Item 11 Income – now includes a question on whether a trustee has applied an exemption or rollover in that year.
- Section C: Item 12 – has been renamed Deductions and non-deductible expenses.
- Section D: Item 13 Calculation Statement – includes changes to the supervisory levy amount (see details below). There is also a new label for a supervisory levy adjustment for wound-up funds.
- Section F: Member information – now includes room for up to eight members to be listed in an SMSF (past and present).
- Section H: Item 15b Australian direct investments – now requires the value of each type of asset that is held under a limited recourse borrowing arrangement to be reported at the appropriate label./em> Item 15d – In-house assets/em> (also in Section H), requires trustees to clarify whether the fund held a loan to, lease to, or investment, in related parties as at the end of the year, as well as the value of the assets.
- Section J: Regulatory information – has been removed.
SMSF supervisory levy
The timing of the annual payment of the SMSF supervisory levy has been brought forward so that SMSFs pay the current year’s levy at the time of lodgment of the previous year’s annual return. The annual SMSF levy will also increase from $191 in 2013 to $259 from 2014.
The change in the timing of the collection of the SMSF levy will be phased in over the two financial years (2013-14 and 2014-15) to give SMSFs time to adjust. These amendments are consistent with APRA regulated funds, which pay the superannuation supervisory levy in the same financial year that it is levied.
For the year ended 30 June 2013, the SMSF levy payable is $321. This comprises $191 for the 2013 financial year, plus $130 (50% of the $259 SMSF supervisory levy for the financial year of 2014).
For further information on how the levy is collected and amounts payable see the ATO update below.
Valuation of SMSF assets
For financial years ending 30 June 2013 and later, SMSF trustees will be required to report assets using market valuations.
Superannuation Warehouse was valuing assets at market values long before this date.
To assist self-managed superannuation fund trustees when valuing assets for superannuation purposes the ATO has developed ‘Valuation guidelines for self-managed superannuation funds’. The ATO has advised that these guidelines should be read in conjunction with ‘ Market valuation for tax purposes’ and Taxation ruling TR 2010/1– Income tax: superannuation contributions.
SMSF contraventions – ATO administrative directions and penalties
As part of the Stronger Super reforms, it has been proposed that from 1 July 2013 the ATO, as regulator of SMSFs, would have the power to impose administrative penalties on SMSF trustees who breach their obligations as trustees.
To date, the bill containing this measure, the Superannuation Legislation Amendment (Reducing Illegal Early Release and Other Measures) Bill 2012, remains before the House of Representatives.
As this bill has not proceeded through the legislative process, the measure did not come into effect on 1 July 2013, as originally proposed. It is expected that this measure will still be legislated for but it is unclear when it will come into effect.
The new penalty regime will play an important role in encouraging and ensuring trustee compliance with the SIS Act. Trustees will need to be familiar with the measures and understand how they will impact on them if they do not meet their responsibilities when operating their funds.
Documentation to claim a deduction for personal super contributions
Individuals wishing to claim a deduction on contributions must inform the SMSF, in writing, of their intention to do so. In return, the SMSF is required to acknowledge receipt of the individual’s notice to claim. A failure to complete all appropriate documentation may result in a denial of the deduction.
Other SMSF guidance and tools
The following is a list of several guidance and resources available to assist SMSF Trustees in their responsibilities:
- Superannuation Key Rates and Thresholds – summarises the rates and thresholds for key areas of SMSFs. The summary has been updated for indexation.
- Key Contributions Legislative Updates – helps Trustees stay abreast of the changes in legislation surrounding contributions.
- Exempt current pension income (ECPI) – provides detailed information regarding ECPI, the requirements for claiming the deduction and the correct calculation of ECPI.
- Early access of superannuation benefits & Illegal early release – assists members to understand early access of superannuation benefits and illegal early release – a major area of compliance risk identified by the ATO.
- Market Valuation, Insurance and Separation of Assets – details newly introduced measures that require trustees to: value the assets of the fund at market value; regularly review the fund’s investment strategy; consider insurance for members as part of the SMSF’s investment strategy, and keep money and other assets of an SMSF separate from those held personally by a trustee.
Superannuation Everyday Tools – provide Trustees with templates, guides and checklists that assist with superannuation processes. The free guides include checklists for SMSF administration, plus links to other important regulatory resources.