Superannuation Planning Before 30 June 2011 |
Proposed new changes for artwork and collectables held in your SMSF
Important planning tools before 30 June 2011 for your SMSF
Directors super obligations
Selling in order to receive a tax advantage
Proposed new changes for artwork and collectables held in your SMSF
The government has proposed new rules starting on 1 July 2011 in relation to artwork and collectables held by SMSFs. The new rules are:
• Insurance in the name of the SMSF to be in place within 7 days of the investment being bought
• Your SMSF will not be allowed to lease any artwork or collectables to a member or a related party of a member
• Forbidding your SMSF from storing artwork or collectables in a private residence of a related party
• A $1100 fine for trustees if the rules are breached
• SMSFs with existing lease arrangements made before 1 July 2011 have a 5 year period to unwind to comply
Please speak to us so that we can help you abide with these proposed new rules and mitigate the risks in your SMSF.
Important planning tools before 30 June 2011 for your SMSF
a. Ensure that your SMSF pays to you your pension that meets the minimum and maximum rules. We would have individually emailed you this information and please ensure you adhere to this in order to ensure that your SMSF pays no tax on its investment earnings to pay the pension. This is one of the major benefits in paying a pension, especially if your SMSF has realised a substantial capital gain on the sale of an asset.
b. To ensure that you have made a super contribution into your SMSF before 30 June 2011 please ensure the following in order to ensure you maximise your personal tax deduction and minimise any potential possibilities for contributing over the caps so that the contributions will not be included next year:
1. Cheques- The contribution is included when the trustee holds the cheque. The cheque cannot be post dated, must be banked promptly and subsequently honoured.
2. Electronic transfers- The day credited to the SMSF’s bank account.
3. In specie contributions (transfer of physical assets into your SMSF) - When your SMSF holds properly executed transfer documents in registrable form and title deeds (if relevant).
c. If you pay for an SMSF expense personally and this includes paying for insurance premiums that your SMSF owns then this will be treated as a contribution and you must be aware of this to avoid breaching the contribution caps.
d. If you are 50 year or older by 30 June 2011 then you are allowed to contribute $50,000 as a concessional contribution or salary sacrifice this amount into super if you are employed. This applies even if all contributions are made before your 50th birthday. You can contribute concessional contributions between 65-75 years of age as long as you pass the work test which is you must be gainfully employed on a part-time basis. In short, you must work for at least 40 hours in a period of not more than 30 consecutive days in the financial year in which you plan to make a super contribution. If you are under 50 your concessional cap is $25,000.
e. For the 2011/12 tax year the Government has announced in the Budget that the pension reduction will be 25%. If you are under 65 your minimum pension at the moment is 2% but next year it will be 3%. If you are over 65 your minimum pension will be 3.75%.
f. The non-concessional cap is $150,000 or $450,000 in advance of 3 years if you are under 65 years of age. Please speak to us so that we can maximise your benefits. If you are between 65-75 years of age you must pass the work test.
Directors super obligations
In the recent Budget it was announced that the director penalty regime will be extended to superannuation guarantee amounts, making directors personally liable for their company’s failure to pay employee superannuation. Previously, the mechanism for recovery of unpaid employee superannuation contributions was via the imposition of a Superannuation Guarantee Charge on the company so the proposed new rules will be more stringent. To avoid these problems it is important that super is paid for your employees by the 28th day following the end of each quarter.
Selling in order to receive a tax advantage
As 30 June approaches you may want to sell an asset in order to realise a capital loss. If you do sell an asset to realise a capital loss which will then be used to reduce any realised capital gains and then you bought back the asset after 1 July, the ATO may consider this to be a tax avoidance scheme and will disallow the transaction and impose interest and penalties.
This type of transaction will be common with buying and selling listed shares as you can sell a share to realise a loss before 30 June and then buy it shortly after in the following tax year. This may be a problem and this should be avoided. You may also have a problem if you transfer a listed share into your SMSF in order to realise a capital loss or transfer an asset to a related party in order to realise a capital loss.
We hope you have enjoyed this article please contact us if you have any questions.
Disclaimer - The material contained in this newsletter does not constitute advice. DPL is not responsible for any action taken in reliance on any information contained in this newsletter. Anyone reading the newsletter should not act upon material contained in this newsletter without appropriate consultation.
Insight Categories
CEO Avstev Group, Raymond Weil, Girard-Perregaux, Frederique Constant