SMSF Manual sample - Tax & Super Australia

1 Tax & Super Australia 1 smsf Manual A simple guide to Self Managed Superannuation FundsEXTRACT: Chapter 7: Superannuation benefits2017 Digital EditionOctober 2016 Tax & Super Australia 2 2017 Taxpayers Australia Ltd ABN: 96 075 950 284 All right reserved. Apart from fair dealing for the purposes of private study , research, criticism or review as permitted under the Copyright Act, no part may be reproduced, stored in a retrieval system, or transmitted in any form by any means electronic, mechanical, photocopying, recording or otherwise without written permission from the copyright holder. Permission to reproduce items covered by copyright may be obtained by email to or by phone 03 8851 information provided in this publication is of a general nature only and is not personal financial or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional adviser.

2 T o the fullest extent permitted by law, no person involved in producing, distributing or providing the information in this publication (including Tax and Super Australia , each of its directors, councillors, employees and contractors and the editors or authors of the information) will be liable in any way for any loss or damage suffered by any person through the use of or access to this in China by C&C Offset Printing Co., Tax and Super Australia publication. Brought to you by your trusted and experienced team at Tax and Super Australia : Lisa Greig, Gabriella Rusu, Denys Smerchanskyi and Roseann Tanner. Design and production by Leonnie Gleeson. Tax & Super Australia 3 About Tax and Super AustraliaOur tax and Super landscape is constantly and Super Australia has the agility and expertise to provide you with accurate australian tax and smsf guidance through all its ongoing mission is to educate and empower tax and superannuation known as Taxpayers Australia Ltd, Tax and Super Australia is a not-for-profit organisation assisting tax and superannuation professionals for nearly 100 years.

3 It was established in 1919, by a group of Melbourne businessmen who believed in a simple fairer tax system. Since then, we have evolved and remain at the forefront of supporting professionals. With a long and proven track record, we provide relevant and easy-to-understand guidance on all areas of tax, empowering our members to better service their clients. Our highly skilled and credentialed team of experts ensure every piece of information is authoritative and accurate, so when you become a member, you have the peace of mind that your clients are fully compliant with all their and Super Australia represents its members views through the media, the australian taxation Office and the government. As an advocate for professionals, we support today s practitioners so they can thrive and Super Australia1405 Burke Road Kew East Phone: (03) 8851 4555 Fax: (03) 8851 4588 Tax & Super Australia 4 Impact of the impending Superannuation legislationThese are indeed uncertain times for superannuants.

4 The proposed superannuation reform measures announced in the 2016-17 Federal Budget has been a polarising issue for the Government, Labor Opposition and the community return of the Coalition Government with a narrow majority following the Federal Election now means that there is even less certainty for superannuants in planning for their retirement. As such, speculation on the final form of any proposed measure will only exacerbate the current , this edition of the smsf Manual 2017 only contains measures which, at the time of writing, has been enacted. This should provide you with much needed up-to-date with the latest changes to the superannuation law by visiting our dedicated smsf Toolkit at: digital users, the digital edition of the smsf Manual 2017 is updated quarterly to reflect any measures which are ultimately enacted. The print copy is updated legislation contained in the Manual is current as at 7 October Tax & Super Australia 5 All your online smsf resources in one your convenience, we have consolidated all your smsf resources in one place.

5 Visit resources include: smsf forms and templates Rates and thresholds guides Checklists sample smsf deeds and documentation Latest changes and updates to the superannuation law and ATO guidance Case study : sample superannuation fund, and Other contemporaneous online smsf toolkit Tax & Super Australia 6 GlossaryABN australian Business NumberABP Account based pensionABR australian Business RegisterADF Approved deposit fundAMIT Attributable managed investment trustAPRA australian Prudential Regulation AuthorityASF australian superannuation fundATO australian taxation OfficeAWOTE Average weekly ordinary time earningsBAS Business activity statementBDBN Binding Death Benefit NominationBRP Business real propertyCC Concessional contributionCommissioner Commissioner of TaxationCRA Compulsory release authorityCSF Complying superannuation fundDBD Death benefit dependantECCC Excess Concessional Contributions ChargeECPI Exempt current pension incomeECT Excess non-concessional contributions taxECT Excess non-concessional contributions taxEPoA Enduring Power of AttorneyGCS Government co-contribution schemeGIC General interest chargeGPA General power of administrationIAS Income activity

6 StatementITAA97 Income Tax Assessment Act 1997 ITAA36 Income Tax Assessment Act 1936 ITAR97 Income Tax Assessment Regulations 1997 ITAR36 Income Tax Assessment (1936 Act) Regulation 2015 ITRA86 Income Tax Rates Act 1986 LISC Low income superannuation contributions LPR Legal personal representativeLRBA Limited recourse borrowing arrangementLV R Loan value ratioMCS Member contribution statementMTR Marginal tax rateNALI Non-arms length incomeNANE Non-assessable non-exemptNCC Non-concessional contributionNOA Notice of assessmentPDS Product Disclosure StatementPST Pooled superannuation trustRESC Reportable employer superannuation contributionsRITC Reduced income tax creditRSA Retirement savings accountRSE Registrable superannuation entityRSF Retirement Savings FundSAF Small APRA fundSAPTO Seniors and pensioners tax offsetSCS Superannuation contributions splittingSCSA Superannuation contributions splitting applicationSDB Superannuation death benefitsSDBIS Superannuation death benefit income streamSDBLS Superannuation death benefit lump sumSFLU Super Fund LookupSG Superannuation GuaranteeSGC Superannuation Guarantee

7 ChargeSGAA92 Superannuation Guarantee (Administration) Act 1992 SIC Shortfall interest chargeSIS Act Superannuation Industry (Supervision) Act 1993 SIS Reg Superannuation Industry (Supervision) Regulations 1994 TFN Tax file numberTPD Temporary or permanent disabilityTTR Transition to retirementUIGE Unrelated interposed geared entity Tax & Super Australia 7 Table of contents1: Introduction to SMSFsOverview .. is a superannuation fund? .. is a self-managed superannuation fund? .. is a trust? .. : Setting up an SMSFO verview .. and nature of an smsf .. of superannuation funds .. fund requirement .. of election to be regulated and/or establishment of a new fund .. Fund Lookup .. of Self Managed Superannuation Fund .. of relative .. of employee .. decision tree: Funds with more than one member .. decision tree: Single member funds .. trustee .. cannot be a trustee? .. of individual and corporate trustee .. declaration .. to general trustee rules.

8 Trustee appointed by the ATO .. Trust Deed .. fund establishment matters .. a bank account .. for GST .. initial members and providing a PDS .. TFN .. strategy .. : ContributionsOverview .. of contributions .. (before-tax) contributions . contributions (concessional) .. concessional contributions .. (after-tax) contributions .. caps .. caps .. caps .. from NCC cap .. contributions from small business CGT events: the CGT cap .. arising from personal injury payments .. contributions / Excess non-concessional contributions tax .. concessional contributions .. concessional contribution charge to release excess concessional contributions .. contributions and excess concessional contributions .. benefit interests .. non-concessional contributions tax .. of excess non-concessional contribution amounts .. of the ECT if release option is not taken .. 293 tax .. file numbers and superannuation .. superannuation contributions and spouse contributions.

9 Contributions .. contributions splitting .. co-contribution scheme .. income superannuation contribution to non-complying of contribution .. Tax & Super Australia 84: Contribution strategiesOverview .. strategies .. of contribution scenarios .. strategies .. of re-contribution contribution cap barriers .. 292-100 excluded contributions requirements .. of contribution cap scenarios .. sacrifice .. of salary sacrifice scenarios .. your spouse s superannuation balance .. contributions balance .. for contributions splitting .. of superannuation splitting scenario .. of superannuation splitting .. business CGT exemptions .. of small business CGT exemptions .. : Tax issues for SMSFsOverview .. income .. contributions income .. and non-taxable contributions / rollovers .. offsets and credits .. credit trading rules .. of excess imputation credits .. gains .. is a CGT asset? .. events .. acquired before 30 June 1988.

10 Acquired before, and disposed of, after , 21 September 1999 .. acquired after am AEST on 21 September 1999 .. capital gains distributed from a trust .. gains and unit trust distributions . losses .. records .. of insurance premiums and providing death or disability benefits .. Death and disability superannuation benefits .. insurance polices .. deductions for insurance premiums .. deduction .. for anti-detriment payments s length income .. fund becomes non-complying .. fund lodgment and payment .. instalment notices .. withholding .. stage .. summary stage .. stage .. and services tax .. input tax credits .. of typical smsf transactions . 6: Managing an SMSFO verview .. purpose test .. Core purposes .. Ancillary purposes .. if the sole purpose test is met .. Prudent Person regime .. the Prudent Person regime means for trustees .. investment rules .. investment and potential pitfalls . of tax consequences.