1. Self-Managed Super Funds
Take Control of Your Future

2. What tax rate* do you prefer?
Investment Structures
A B C D
Income 46.5% 30% 15% 0%
Capital Gains 24% 30% 10% 0%
Superannuation
*Maximum tax rates

3. 3
The SMSF Market *
 503,320 funds registered with the
Government
 34,218 new funds established last 12
months
 114,615 new funds in last 4 years
 $1.58 trillion - total of all super assets
 $496b – total SMSF assets (31.3%)
 945,207 members
 69% of funds have no more than 2
members
*APRA stats as at Mar.2013

4. Age Profile of SMSF Members
4
SMSF Age Profile
61.5% of SMSF fund members are age
55+ (nearing and post retirement age).
These members would have higher
average balances and as they move into
pension draw down the growth in assets
will slow.
4

5. 5
Income
Dividends
Contributions
Rollovers
Fund Bank A/C
Trust Deed / TrusteesAdministration Auditor
Members
The Funds Investments $$

6. Compliance/Administration Checklist
 Fund establishment
 Trust Deed review
 Trustees & members
 Electing to become regulated
 TFN
 ABN
 GST registration
 Separate bank account
 Accepting contributions
 Investment strategy
 Investing
 Record keeping
 Paying of benefits
 Annual requirements
 Tax matters
6

7. 7
Drivers for SMSF
Advantages
o Control of investment
decisions
o Direct Investments options
o Investment returns
o Lower Costs
o Ability to Gear
o Tax Management
o Flexible retirement pension
options
o Flexible estate planning
Disadvantages
o Full trustee responsibilities
o Lack of Knowledge
o Time consuming to run
o Tough penalties for breaching rules
o May be uneconomic for low
balances
o Extra legal responsibilities
o Potentially higher costs
o Maximum of four members

8. ATO & Compliance
8

9. How Should Trustees Be Investing ?
9

10. 10
The Fund’s Investment Strategy
SIS Regulation 4.09
As a Trustee you must consider:
 Risk involved, likely returns and fund objectives
 Composition of a fund’s investments, diversification
 Liquidity requirements of the fund
 Ability of the fund to discharge present and future liabilities
 Providing insurance cover for members within the fund

11. Asset & Family Protection
 Providing insurance cover within a SMSF
 The fund can insure members for:
 Life Insurance as a result of death
 Total & permanent disability
 Income protection
 The fund will claim a tax deduction for the insurance premiums
 Provides cash liquidity to enable payment of death benefits to beneficiaries
 Provides protection for any borrowings within the fund
 Tax advantages of holding insurance in super as opposed to outside super
11

12. The Different Types of Assets
Core Type
 Cash /TD’s
 High interest savings a/c
 Diversified fixed interest
 Tailored TD’s
 Australian property
 Managed funds
 ETF’s
Satellite Type
 Directly held shares
 Self-funding instalment
warrants
 Specialised managed funds
 Global property
 Hybrid securities
 Global fixed interest
 Capital protected products
 Collectables
12

13. Concessional Caps Increased
* Estimate only indexation expected from 1 July 2014
**Those aged 59 on 30 June 2013 also eligible for $35,000 (2013/14)
Those aged 49 on 30 June 2014 also eligible for $35,000 (2014/15)
Concessional Cap 2012-13 2013-14 2014-15
Under age 50 $25,000 $25,000 $30,000*
Aged 50 - 59 $25,000 $25,000 $35,000**
Aged 60 + $25,000 $35,000** $35,000**

14. 14
Salary Sacrifice 2013/14
Income
Superannuation
Guarantee
Maximum salary
sacrifice
For those Aged
60+
$100,000 $9,250 $15,750 $25,750
$125,000 $11,562 $13,348 $23,438
$150,000 $13,875 $11,125 $21,125
$180,000 $16,650 $8,350 $18,350
$200,000
$17,775
(maximum)
$7,225 $17,225

15. 15
Personal Contributions -Where No Deduction Claimed
 Personal contributions capped at $150,000 pa
 If under 65 you can bring forward 2 years of cap and contribute up to
$450,000
$150,000 $150,000 $150,000 $150,000
30 June 2012 30 June 2013 30 June 2014 30 June 2015
$450,000 $0 $0 $450,000 $0
30 June 2016
$150,000

16. SMSF Borrowing To Invest
16

17. SMSF Borrowing Rules
 Loan must be used to purchase a single acquirable asset
 The asset must be held in trust for the SMSF- SMSF holds
beneficial interest in that asset
 SMSF has the right to acquire the asset following the SMSF making
one or more subsequent payments
 The loan must be limited recourse
 Rules are complex and extreme care should be taken in setting up
properly
17

18. 18
The Structure
SMSF$ contributions
loan
funds used to acquire
asset held on trust
Rental Income
Trust holds property
interest
personal guarantee?
lim
ited
recourse

19. Recent Changes –SMSFR 2012/1
 Clarification of definition of a “single acquirable asset”
 Improvements
o Still not allowed with “borrowed” funds
o However money from other sources can be now used e.g.
Contributions/other fund assets
 Replacement assets
o If asset subject to borrowing is improved too much may become a
different asset & breach the rules
o Off the plan purchases are OK
19

20. The Borrowing Option to Purchase Asset
The Advantages
o Can increase your returns by using
borrowed funds
o Income from investment taxed at
maximum 15%
o Capital Gains Tax limited to 10%
o Nil tax if in pension phase
o Interest payments are tax deductible to
the fund
The Disadvantages
o Borrowing can magnify losses as
well as gains
o Borrowing costs are usually higher
due to limited recourse loan
o Asset usually locked in super until
retirement
o Costs to set structure & ongoing
administration
20

21. The Transition to Retirement Option (TTR)
“How to get a free kick-start for your
retirement”

22. 22
Your Preservation Age for Super Access
Date of birth Preservation age
Before 1 July 1960 55
1 July 1960 to 30 June 1961 56
1 July 1961 to 30 June 1962 57
1 July 1962 to 30 June 1963 58
1 July 1963 to 40 June 1964 59
After 30 June 1964 60

23. 23
Advantages of a TTR Pension
 Allows you to work full or part-time and access your super
 Convert super to a pension and invest tax free
 Must draw a pension each year –Min. 4% to Max. 10% of account balance
 Cannot draw a lump sum until you retire
 Combine with salary sacrifice tax savings on contributions
 Ages 55-59 pension amount receives a 15% rebate/ age 60+ non -assessable
 Can be rolled back to accumulation super

24. 24
TTR Case study - Anna aged 55
Client Anna ‘s current situation
Employment Full-time
Income $76,000 p.a.
Super $350,000

25. 25
Anna’s TTR strategy
 We transfer her current super benefits to a transition to retirement pension
 Draw pension each year required to be same after tax position
 She salary sacrifices $25,000 p.a. to super (includes SG)
Assumptions:
Salary indexed at 4% per annum
Super/ Pension investments earn 7% p.a. pre-tax
Excess income not re-invested

26. 26
Anna’s TTR Option
Do nothing Implement strategy
Gross income $76,000 $71,950
Tax payable $17,490 $13,072
Net income $58,510 $58,878
Super balance $377,046 $22,745
Pension balance $360,390
Net balance year 1 $377,046 $383,135
Balance at 65 $720,248 $821,584

27. 27
$300,000.00
$400,000.00
$500,000.00
$600,000.00
$700,000.00
$800,000.00
$900,000.00
56 57 58 59 60 61 62 63 64 65
Superbalances
Current
Transitionto retirement
Case Study : Anna’s result

28. SMSF &
Estate Planning
28

29. SMSF & Estate Planning
 In the event of death of a member the SMSF can pay death benefits in the
form of:
 a lump sum to beneficiaries
 a pension to a SIS spouse dependant or child dependant beneficiaries
 a reversionary pension to spouse for existing pensions
 Super death benefits do not form part of your estate unless the estate is
nominated as beneficiary under binding or non-binding death benefit
nomination form
29

30. Katz v Grossman [2005] NSWSC 934
 SMSF with $1m of assets
 Mr and Mrs Katz had 2 children – Linda & Daniel (adults)
 Mrs Katz died a few years earlier and Mr Katz appointed Linda as
co-trustee of SMSF
 Mr Katz made a binding nomination that death benefit ($1 m) be paid to children
equally
 Mr Katz died
 Linda appoints her spouse as co-trustee
 Guess what happened ???

32. 3232
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BT Financial Group – a multi-brand strategy

33. 33
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description of the matters described. The presentation has been prepared without taking into account any personal
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