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Superannuation

Superannuation is an important part of our financial affairs.  Being one of the biggest investments you will make throughout your working life. 

Ensuring that your Superannuation is growing and that you are contributing enough to make your retirement years comfortable is essential.  The decisions you make now will have a direct impact on the way you live in your retirement.  So isn't it time you thought about how you invest that money?
 

What type of Super Fund do I need?

There are more types of Superannuation funds available today than ever before. The type of superannuation fund you select needs to be right for your personal situation.  Funds can be grouped into a number of caterogies each having different features. 

Click on the links below to find out more about each topic:

 


Non-consessional Contribution Cap (NCC)

These changes are effective 1 Jul 2017 -

The NCC caps reduce from $180,000/$540,000 to $100,000/$300,000 respectively from 1 July 2017. The ability to make NCCs is linked to total super balances (including pensions) at 30 June of the previous financial year. If an individual has $1.6m or more at 30 June of a financial year, they cannot make NCCs in the next financial year. The ability to use bring forward rule (ie bring forward future year’s contributions) is impacted once total super balances exceed $1.4m.

If the $540,000 cap was triggered in 2015/16 and not fully utilised by 30 June 2017, the NCC cap at 1 July 2017 reduces to $460,000. If the $540,000 cap is triggered in 2016/17 and not fully utilised by 30 June 2017, the NCC cap at 1 July 2017 reduces to $380,000. A client cannot exceed this transitional NCC cap by virtue of contributions made before 1 July 2017. 
 

Reduced Concessional Contributions (CC) Cap

These changes are effective 1 Jul 2017 - The CC cap reduces to $25,000 for everyone from 1 July 2017 and is indexed in $2,500 increments.

The reduced cap may impact salary sacrifice and personal deductible contribution strategies, including transition to retirement strategies. More clients may receive excess CC cap notices and need guidance accordingly.
 

What is SuperStream?

SuperStream is the way businesses must now pay employee superannuation guarantee contributions to super funds. With SuperStream money and data are sent electronically in a standard format. There are deadlines in place for employers to be using SuperStream and it must be used by:  

  • employers
  • self-managed super funds
  • APRA-regulated funds

There are a number of options a small business can choose to implement SuperStream:

  • using a payroll system that meets the standard
  • a super fund’s online system
  • a messaging portal
  • a super clearing house like the ATO’s Small Business Super Clearing House (SBSCH)

SuperStream transmits money and information consistently across the super system – between employers, funds, service providers and the ATO. The data is linked to the payment by a unique payment reference number. This means:

  • employers can make all their contributions in a single transaction, even if they're going to multiple super funds.
  • Contributions and rollovers can be processed faster, more efficiently and with fewer errors;and
  • people can be more reliably linked to their super, reducing lost accounts and unclaimed monies.

SuperStream for Small Businesses
For small business owners, you can find the ATO step-by-step guide here: https://www.ato.gov.au/super/superstream/employers/employer-checklist--a-step-by-step-guide/

More information on SuperStream can be found on the ► ATO website. 

Retail Funds

Retail funds are run by banks or investments companies and anyone can join.  They are usually accumulation style funds with a large selection of investment options. The company that owns the retail fund, retains the profit.

Q.  Who is this fund targeted at?  Answer: Generally employees within the private sector.
Q.  Is there a MySuper option?  Answer: Yes, some do offer this

Industry Funds

Most Industry funds have been established to meet the needs of a particular industry and are still limited to only people working within that industry however many large Industry funds are now open to anyone to join.  They are usually accumulation style fund however some still may have defined member benefits.  Investment options within these funds are less however they have options to suit most people's circumstances. These are 'not for profit' funds so any income earned is returned to it's members.

Q.  Who is this fund targeted at?  Answer: Employees working within specific industries.
Q.  Is there a MySuper option?  Answer: Yes, some do offer this 

Public Sector Funds

Public sector funds are only open to employees of the State and Federal Government departments.  They offer a modest range of investment choices with profits going back into the fund for its members.  New members of these funds are usually in an accumulation style fund, however other long term members often have defined benefits.

Q.  Who is this fund targeted at?  Answer: Employees of the State or Federal Governments
Q.  Is there a MySuper option?  Answer: Yes, some do offer this

Corporate Funds

Corporate funds are generally set up by an employer specifically for it's employees.  Some Corporate funds are run by the employer who operates the fund under a board of trustees, others may be included as a separate part of a large retail or industry fund. 

Q.  Who is this fund targeted at?  Answer: Only employees of companies who have these funds set up
Q.  Is there a MySuper option?  Answer: No 

Self Managed Superannuation Funds

NEWS: Extended deadline for ATO’s review of non-arm’s length LRBAs

In December 2015, the ATO advised SMSF trustees to review their Limited Recourse Borrowing Arrangements (LRBA) to ensure that any related party loan terms are consistent with an arm’s length dealing or brought to an end by 30 June 2016. The ATO has extended this deadline to 31 January 2017.

Self Managed Super Funds (or SMSF's) are super funds are small superannuation funds which are set up by it's members (up to four) and managed by the members (trustees). It means you can make your own investment choices relating to your money, however you must have the time and knowledge to effectively run these funds. There are many legal responsibilities involved with SMSF's and as such, it is best to only consider establishing an SMSF if you have adequate financial experience or a team of qualified advice sources, such as Financial Advisor, Accountant and Legal representative. It is also best to have a large amount of money (at least $200,000) in the fund to ensure it is worth while, as you will need to absorb fees and still generate a profit.

SuperStream for SMSF’s
Self-managed super funds (SMSFs) must be able to receive employer contributions and the associated data electronically using the SuperStream standard.  For more information on SuperStream for SMSF’s see this link: https://www.ato.gov.au/Super/SuperStream/Self-managed-super-funds/
 

Exemptions for SMSF's
Your SMSF doesn't need to use SuperStream if:
it doesn't receive any employer contributions, or the only employer contributions are from a related-party employer.   For example: if you're an employee of your family business and your super guarantee contributions go to your SMSF, these contributions are exempt from the SuperStream standard.  
 
SuperStream also does not apply to:
personal contributions made by members or rollovers to or from an SMSF


We highly recommend that you read this information if you are contemplating establishing a Self Managed Superannuation Fund -

Eligible Roll over Funds

Eligible Roll over Funds are holding accounts for lost superannuation (or inactive members with low account balances).  They cannot receive employer contributions. 

MySuper

MySuper has replaced most existing default accounts offered by super funds.  If you don't select a superannuan fund for yourself, your employer must contribute your superannuation into a MySuper account.  MySuper is only for accumulation funds (not defined benefits) and doesn't apply to accounts in pension phase. 

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