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First Home Super Saver Scheme

The First Home Super Saver (FHSS) scheme was introduced in the Federal Budget 2017–18 to reduce pressure on housing affordability. The scheme allows people to save money for their first home inside a superannuation fund, helping first home buyers to save faster. Changes introduced to the FHSS scheme in the Treasury Laws Amendment (2019 Measures No. 1) Bill 2019, will come into effect on 1 July 2019.

The FHSS can now only be applied to a first home that is bought in Australia, as opposed to previously being in any location.

Another change is that individuals must now also apply for and receive an FHSS determination from the ATO before signing a contract for their first home or applying for the release of FHSS amounts. A contract can be signed to purchase or construct a home either:

There is no longer a waiting period between the first FHSS amount being released and signing a contract to purchase or construct the home.

Individuals now have 12 months from the date they make a valid release request to do one of the following:

These changes apply retrospectively to valid FHSS release requests and contracts entered into on or after 1 July 2018.

Posted on 18 June '19, under super. No Comments.

How the ‘Protect Your Super’ changes will affect you

A number of changes to superannuation will come into effect from 1 July 2019. The ‘Protect Your Superannuation’ Bill passed through Parliament in February and forms part of the Government’s package of reforms that were announced in the 2018-19 Federal Budget.

The new legislation is designed to protect Australians’ superannuation savings by ensuring that their super balance isn’t negatively affected by unnecessary fees on insurance policies. Changes that may affect you are;

Insurance:
For those who do not act before 1 July, your insurance may be deemed inactive. Under the Protect Your Superannuation Bill, super accounts that have been inactive for 16 months will have their automatic insurance cancelled. Members will be able to ‘opt-in’ to protect their insurance cover and stop their account from being inactive, but this must be done before 30 June.

Ban on exit fees:
The new laws will remove the need to pay exit fees from all superannuation accounts. Trustees that are currently charging exit fees will need to review the current fee structure in order to implement any necessary disclosure and product changes.

All superannuation trustees and members will need to review these changes to ensure they are meeting all necessary obligations. If further help is needed about how the changes will impact you, consult your financial advisor.

Posted on 11 June '19, under super. No Comments.

What and when you need to report in your SMSF

The event-based reporting (EBR) framework for self-managed super funds (SMSFs) commenced on 1 July 2018. This system allows the ATO to administer the transfer balance cap. Reporting under the EBR framework commences when your first member begins a retirement phase income stream. The transfer balance account report (TBAR) is then used to report certain events and is separate from the SMSF annual return.

An SMSF must report events that affect a member’s transfer balance, these should include details of:

All SMSFs must report events that affect their members’ transfer balances. If no event occurs, there is nothing to report.

Timeframes for reporting are determined by the total superannuation balances of an SMSF’s members. In the events affecting members’ transfer balances, reports must be made within 28 days after the end of the quarter in which the event occurs. Unless a member has exceeded their cap and the fund needs to report an event sooner, the first due date for the lodgment of TBARs is 28 October.

Posted on 3 June '19, under super. No Comments.

In’s and out’s of the super downsizer scheme

Under the super downsizer scheme, eligible individuals that are 65 years and older may be able to make a contribution into their superannuation of up to $300,000 from the proceeds of selling their family home. This scheme came into effect on 1 July 2018 as one of several measures announced in the May 2017 Federal Budget.

Benefits to downsizer contributions:

Other considerations to be aware of include:

Posted on 27 May '19, under super. No Comments.

What disqualifies you from an SMSF

Self-managed super funds are regulated by the ATO and have specific eligibility criteria that members and trustees must follow. While anyone 18 years old or over can be a trustee or director of an SMSF, they mustn’t be under a legal disability such as mental incapacity, or a disqualified person.

The ATO can render an SMSF trustee as a disqualified person if they see it is necessary, particularly for illegal early access breaches. There are other ways a person may become disqualified and some may not even realise they have been. Continuing to act as an SMSF trustee or director of the corporate trustee while disqualified is an offence, and further penalties may apply.

A person is disqualified if they:

The ATO has a disqualified trustees register to see if an individual has previously been disqualified. The register provides information and easy search options to help determine whether a potential trustee has been disqualified. It is updated quarterly and includes all individuals who have been disqualified since 2012, the year that the information was first published electronically.

When a person has been disqualified, the two main options are to roll over the disqualified person’s member benefits to a large (APRA) superannuation fund, such as an industry or public offer fund, or convert the SMSF into a Small APRA Fund (SAF) by appointing an APRA approved trustee.

Trustees or directors of a corporate trustee are responsible for running the fund and making decisions that affect the retirement interests of each fund member, including themselves. Therefore, it would be wise for members to remain aware of which trustees are or may be disqualified and how a trustee may become disqualified.

Posted on 24 May '19, under super. No Comments.

What disqualifies you from an SMSF

SMSF’s are regulated by the ATO and have specific eligibility criteria that members and trustees must follow. While anyone 18 years old or over can be a trustee or director of an SMSF, they mustn’t be under a legal disability, such as mental incapacity, or a disqualified person.

The ATO can render an SMSF trustee as a disqualified person if they see the need, particularly in relation to illegal early access breaches. There are other ways a person may become disqualified and some may not even realise they have been. Continuing to act as an SMSF trustee or director of the corporate trustee while disqualified is an offence, further penalties may apply.

A person is disqualified if they:

The ATO has a Disqualified trustees register to see if an individual has previously been disqualified. The register provides information and easy search options to help determine whether a potential trustee has been disqualified. It is updated quarterly and includes all individuals who have been disqualified since 2012 (when the information was first published electronically).

Posted on 20 May '19, under super. No Comments.

ATO warns of TBAR lodgement errors

With upcoming annual lodgement dates for Transfer Balance Account Reporting (TBAR), the ATO is alerting funds of common lodgement mistakes that could lead to delays and additional processing time.

The Transfer Balance Cap (TBC) is a $1.6 million cap on the total amount of superannuation benefits that a member can transfer into a tax-free retirement phase income stream. TBAR is used by SMSF trustees to report to the ATO any events that affect a member’s transfer balance. The information is used to record and track the member’s TBC and apply provisions if the member were to breach the cap.

Reports can be lodged both online or by paper forms. The electronic method is recommended by the ATO as human errors are common when using the paper form to report. These issues are often a failure to provide the fund’s ABN and failing to report the event type. When these errors occur, the form will be suspended for manual review and the ATO may need to contact funds in some cases to resolve any issues.

When an SMSF practitioner is reporting multiple events, they must specify the type for each different case. When an event has been reported incorrectly, it must be cancelled before reporting the correct information. This is because the ATO’s system for TBAR treats each report as a new event, and not one that overrides another. Once the event has been cancelled, it will no longer display in the member’s transfer balance account details.

A TBAR must be lodged for the 2018-19 financial year if any member had a transfer balance account event occur in the last year, and if all members have a total super balance of $1 million. The due date for annual TBAR reporting is the same date as the SMSF annual return on 15 May 2019, although not all funds have the same lodgement due date. Trustees should familiarise themselves with their SMSF’s due dates and ensure they are reporting the correct information to avoid processing delays.

Posted on 10 May '19, under super. No Comments.

ATO warns of TBAR lodgement errors

With upcoming annual lodgement dates for Transfer Balance Account Reporting (TBAR), the ATO is alerting funds of common lodgement mistakes that could lead to delays and additional processing time.

The Transfer Balance Cap (TBC) is a $1.6 million cap on the total amount of superannuation benefits that a member can transfer into a tax-free retirement phase income stream. TBAR is used by SMSF trustees to report to the ATO any events that affect a member’s transfer balance. The information is used to record and track the member’s TBC and apply provisions if the member were to breach the cap.

Reports can be lodged both online or by paper forms. The electronic method is recommended by the ATO as human errors are common when using the paper form to report. These issues are often a failure to provide the fund’s ABN and failing to report the event type. When these errors occur, the form will be suspended for manual review and the ATO may need to contact funds in some cases to resolve any issues.

A TBAR must be lodged for the 2018-19 financial year if any member had a transfer balance account event occur in the last year, and if all members have a total super balance of $1 million. The due date for annual TBAR reporting is the same date as the SMSF annual return on 15 May 2019, although not all funds have the same lodgement due date. Trustees should familiarise themselves with their SMSF’s due dates and ensure they are reporting the correct information to avoid processing delays.

Posted on 10 May '19, under super. No Comments.

Super changes to protect employees’ entitlements

Several revisions from the Treasury Laws Amendment (2018 Measures No.4) Bill 2018 took effect from 1 April 2019. These measures are designed to help reduce the super guarantee (SG) gap, protect employees’ super entitlements and strengthen the ATO’s ability to recover unpaid super.

Changes to disclosure laws will now allow the ATO to disclose information to employees about an employers’ failure to meet SG obligations. This will also allow for the ATO to reveal their processes involved in retrieving these amounts.

Additionally, a free voluntary online education course is now available to help employers understand and meet SG obligations. Education directions permit the ATO to instruct employers who don’t meet their SG obligations to complete the online education course, which includes an assessment element.

The revisions have strengthened debt collection mechanisms, making it easier for the ATO to identify and correct mistakes. They are now able to:

Individuals are encouraged to notify the ATO of non-complying employers. If your employer is approachable, you could make them aware of the online course and its benefits prior to the ATO contacting them and directing them to complete it.

Posted on 6 May '19, under super. No Comments.

Super changes to protect employees’ entitlements

Several revisions from the Treasury Laws Amendment (2018 Measures No.4) Bill 2018 took effect from 1 April 2019. These measures are designed to help reduce the super guarantee (SG) gap, protect employees’ super entitlements and strengthen the ATO’s ability to recover unpaid super.

Changes to disclosure laws will now allow the ATO to disclose information to employees about an employers’ failure to meet SG obligations. This will also allow for the ATO to reveal their processes involved in retrieving these amounts.

Additionally, a free voluntary online education course is now available to help employers understand and meet SG obligations. Education directions permit the ATO to instruct employers who don’t meet their SG obligations to complete the online education course, which includes an assessment element.

Individuals are encouraged to notify the ATO of non-complying employers. If your employer is approachable, you could make them aware of the online course and its benefits prior to the ATO contacting them and directing them to complete it.

Posted on 6 May '19, under super. No Comments.

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