SMSFs have long lagged institutional superannuation funds in allocating to global equities, but SMSFs trustees increasingly realise the best opportunities lie overseas, and they use managed funds as the vehicle.
A reader of Cuffelinks sent an email to the Shadow Treasurer complaining about the future loss of franking credit refunds. Here is Chris Bowen’s response and a firm stance on the policy.
With the maximum number of members in an SMSF likely to increase from four to six, weigh up the pros and cons when deciding if an increase is in the best interests of all members.
Labor’s proposal to deny cash refunds of franking credits may become law next year. SMSFs will consider the various alternatives to minimise loss of franking credits, including the use of member-directed investments.
An SMSF can buy business real property and lease it to a member and the laws and processes are clear. The rent paid is classed as income from the investment rather than a contribution from the member.
When rules are changed, behaviour changes as well. A future Labor government should not be surprised when SMSF trustees and self-funded retires minimise the impact of the removal of imputation credit refunds.
The existence of segregated or unsegregated assets in an SMSF determines how the tax exemption on a pension is calculated, and timing is critical.
In certain limited circumstances, especially relating to Business Real Property, it is possible for an SMSF to acquire property from a member but check the rules carefully to avoid penalties.
The use of separate SMSFs for accumulation and pensions stages to minimise tax obligations may attract the ire of the ATO, but there may be other, more legitimate, reasons for using this strategy.
Denying imputation credit tax refunds to the SMSF as taxpayer will reduce its income, causing pension funds to deplete faster, and its members to turn to the age pension quicker. This isn’t an outcome the Government desires.
The logic on Labor’s franking policy demands an answer to one question: how does a franking credit refund differ from an employee receiving a PAYG refund after putting a tax return?
Pension SMSFs will soon equal the number in accumulation, and the latest SMSF investment surveys reveal that changes in the 2016 Federal budget had a strong impact on investment patterns and flows.
It’s crucial for super fund or SMSF members to understand the law as it relates to death benefit nominations to ensure desired outcomes are achieved. Don’t leave a mess for others to fix.
It’s fashionable to have an SMSF, and at barbecue talk, it goes well with the new car, private school, investment property and overseas holiday. But who should really have one?