While the worst of the COVID-19 pandemic is (hopefully) behind us, trustees now must focus on how to meet their regulatory obligations for 2020 – 2021.

Meeting new pension requirements

Due to COVID-19, the Government has reduced the minimum drawdown requirements by half for pensions in 2020-21. While the minimum has been reduced, failing to meet the minimum drawdown will still mean your SMSF will be subject to 15% tax on pension investments instead of being tax free.

If you receive regular pension payments, such as weekly or monthly payments from you SMSF, you have more than likely met the required minimum payment for this year. If you are unsure, it is best to contact us now to ensure you have enough time to withdraw any shortfall.

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Decrypting Crypto for SMSFs

Cryptocurrencies, such as BitCoin or Ethereum, have seen a massive increase in investments over the past few years. With current global economic uncertainty, it isn’t surprising that many SMSF trustees are turning away from traditional investments and looking to cryptocurrencies to bolster their superannuation savings.
While you are permitted to invest in cryptocurrencies via your SMSF, there are a few factors to be mindful of to avoid any potential audit issues.

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Happily, this year’s Federal Budget has some welcome changes for SMSFs!

All changes expected to commence from 1 July 2022, once they have received Royal Assent. Until this occurs they still may be subject to changes and amendments.

No more work test!

Arguably the biggest and best change! Now anyone aged 67 to 74 (inclusive) will be able to make non-concessional (including under the bring-forward rule) or salary sacrifice contributions regardless of their working status! The usual contribution limits and thresholds still apply.

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How much money do I need for an SMSF?

Like any investment, SMSFs aren’t for everybody.  However where they are suitable the advantages may be considerable.

New research has been released to provide deeper insights into the costs of running an SMSF – and it shows SMSFs are cheaper to run than many people may think!

The research shows potential SMSF trustees estimates of fees for various SMSF balances compared with retail and industry superannuation funds (also known as APRA regulated funds).

The costs include establishment, accounting costs and some investment fees. The comparisons do not include direct investment fees as these are levied on the investment regardless of if it is in an SMSF or an APRA fund.

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By spreading your investments across different types of asset and investment markets, also known as diversifying, an SMSF trustee can better position themselves for a secure retirement.  A diversified portfolio can have the benefit of reducing volatility and short-term downside investment risks, preserving capital and in the long-run, benefits of higher overall returns.

With interest rates at record lows and all-round economic uncertainty, it is important to ensure your SMSF investments are meeting your retirement goals.

Unfortunately, many SMSFs do not diversify their investments nor do they take an active approach in changing their investments as market conditions change.

Another problem with diversification is the amount of SMSFs with half or more of their funds invested in a single investment. Other trustees say they primarily invest in shares to achieve diversification in their SMSF, while just a quarter say they invest in at least four asset classes to achieve this.

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Retirement, in a superannuation sense, is defined at SIS Regulation 6.01(7) which states:

 

“For the purposes of Schedule 1, the retirement of a person is taken to occur:

  1. a) in the case of a person who has reached a preservation age that is less than 60, if:

(i) an arrangement under which the member was gainfully employed has come to an end; and

(ii) the trustee is reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or a part-time basis; or

  1. b) in the case of a person who has attained the age of 60, an arrangement under which the member was gainfully employed has come to an end, and either of the following circumstances apply:

(i) the person attained that age on or before the ending of the employment; or

(ii) the trustee is reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or a part-time basis.”

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