We have seen many changes and proposed changes to the superannuation system over the past year or so, and this year we will see many of these become law. As a trustee of an SMSF you need to know what your responsibilities will be and need to keep on top of the changes. 

The ATO has outlined its attitude to claiming the tax free 'exempt current pension income' (ECPI) in circumstances where for one reason or another, the member fails to take the minimum required. The basic starting point is that the tax free status of the assets backing the pension is removed for that year. If the standards are subsequently met in a future year, the fund is held to have commenced a new pension. 

There has been discussion in the media and industry on the consequences of not satisfying the minimum pension payment requirements within the SIS regulations.  

Background

Over the last five years the GFC has triggered a significant loosening of monetary policy in regions such as the US and Europe, as authorities have sought to reflate their ailing economies.  

The most common reason for choosing to establish a SMSF is investment flexibility. Many people ponder what the point is of having a SMSF if you only want to own cash, shares or managed funds. 

According to the Chair of the Superannuation Complaints Tribunal (SCT) there has been an increase in the number of complaints primarily relating to how death benefits are distributed. 

The ATO recently released a Taxpayer Alert regarding the use of Limited Recourse Borrowing Arrangements (LRBA) within SMSFs, and some of their concerns. The link to this can be found below. While it deals with some of the technical issues that they are seeing, I found the notes the most interesting part. Yes there are pitfalls and traps for the unwary, and it is a fairly technical area to play in if you’re not sure of what you are doing. But the notes expressed a broad based concern for the ATO, and one I would imagine shared by many professionals in this area. 

In a recent study by Pope and Schweitzer (2009), it was found by analysing 2.5 million putts that even elite golfer’s placed more emphasis on not being punished (by scoring a bogey) than they did on being rewarded (by scoring a birdie). What this indicated was that golfer’s were loss averse, and this aversion caused a change in behaviour that defied logic. In fact, the researchers found that this behaviour actually cost the elite golfer’s around $1.5m each year. 

Every working person in Australia has some type of superannuation, whether it’s an industry fund, a retail fund or a self managed super fund (SMSF). For those invested in an industry or retail fund have no say on the types of income their fund can generate.  

Anyone investing in shares is taking some level of risk. Even more of a risk if that share is not paying a reasonable dividend, because you only have the speculative hope of a return, if the share increases in value.