This module provides the relevant references to paying benefits from a self-managed superannuation fund (SMSF) in the event of the death of a member. It revisits the trustee requirements on death, the benefit payment options and references the appropriate taxation. The module also investigates the ways in which a member can direct the trustees of their fund to pay their benefit when they pass away.
Following on from the death of a member, this module looks at a number of taxation deductions available to the fund once a death benefit has been paid and finally provides a guide to winding up the SMSF.
LEARNING OUTCOMES
On completing this module, you should be able to:
• identify the different types of nominations that can be made to a superannuation fund
• differentiate between a Superannuation Industry (Supervision) Act 1993 (Cth) dependant and a tax dependent
• calculate an anti-detriment benefit and deduction
• calculate the future liability to pay a benefit deduction
• wind-up an SMSF.
This module provides the final overlay of taxation on benefit payments. Having identified the components of a member’s interest, the proportioning that applies to benefit payments and the types of benefits that can be paid, the final step is to determine how much tax is to be paid on those benefits. The module also considers the taxation treatment of non-standard benefit payments such as disability superannuation benefits and terminal illness benefits.
LEARNING OUTCOMES
On completing this module, participants should be able to:
• calculate how much tax is payable on a lump sum or pension
• identify the taxation implications of paying a reversionary pension
• calculate the tax-free portion of a disability superannuation lump sum
• calculate the untaxed element of a superannuation lump sum death benefit payable to a non-tax dependant.
This module considers the features of a member account and how a member can access their money. It also discusses how money can be taken either as a superannuation lump sum or as an income stream and how both lump sum and pension payments are proportioned between taxable and tax-free components.
This module also reviews previous types of pension payable from a self-managed superannuation fund (SMSF) and discusses the critical issues of when a pension commences and ceases and introduces the concept of the transfer balance cap.
LEARNING OUTCOMES
On completing this module, you should be able to:
• identify the types of benefits that can be paid from an SMSF, and when
• Identify when a pension commences and ceases
• calculate the minimum pension obligations for a full or part-year pension
• discuss the requirements when a pension is commuted
• detail the different types of pension that can be paid from an SMSF
• understand the transfer balance cap.
All superannuation members have an interest in their superannuation fund. For self-managed superannuation fund (SMSF) members, these interests are a single accumulation interest and/or single or multiple pension interests.
This module defines an interest is an SMSF and explains the preservation status of a members’ benefit.
The module also considers the conditions of release that a member must satisfy to access money from their superannuation interest.
LEARNING OUTCOMES
On completing this module, you should be able to:
• calculate a member’s tax-free and taxable components in an interest
• describe the various preserved benefits
• identify and discuss the various conditions of release that apply
• describe the cashing restrictions that apply to certain conditions of release.
This module explores a complying superannuation fund’s taxation obligations. It considers the taxation of contributions, the applicable capital gains tax (CGT) provisions, how foreign transfers are treated and ordinary income.
This module also identifies income from transactions that are not maintained on an arm’s-length basis and imposes a higher rate of tax for income that is deemed not at arm’s length. It also explores the deductions allowable for a self-managed superannuation fund (SMSF) both in accumulation and retirement phases.
LEARNING OUTCOMES
On completing this module, you should be able to:
• identify which contributions are taxable
• understand how capital gains tax is calculated in an SMSF
• make an election to have the applicable fund earnings of a foreign superannuation fund taxed concessionally in an SMSF
• determine what income amounts are deemed non-arm’s length income
• identify which insurance premiums are deductible
• explain how the exempt current pension income deduction works.
Self-managed superannuation fund (SMSF) trustees have ultimate control over the investments of the fund, so long as all investments are made in conjunction with the fund’s investment strategy, the sole purpose test and within the investment restrictions outlined in the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) and Superannuation Industry (Supervision) Regulations 1994 (Cth) (SIS Regulations).
The module analyses the requirements for an SMSF to have an investment strategy in accordance with the trustee covenants and operating standards for investments. It also revisits the concept of the sole purpose test, with a deeper review of what the test requires.
Having determined a fund’s investment strategy, this module investigates the numerous investment restrictions placed on superannuation trustees, and more specifically SMSF trustees, and the exceptions to the rules that allow SMSFs and small Australian Prudential Regulation Authority (APRA) funds (SAFs) to acquire certain assets from related parties that other funds are unable to acquire.
LEARNING OUTCOMES
On completing this module, you should be able to:
• identify the obligations associated with giving effect and formulating an investment strategy
• consider the sole purpose test with regards to making investments in an SMSF
• describe the prohibitions that an SMSF trustee is faced with in regards to investments and the exceptions to those prohibitions
• outline the assets that the trustees of an SMSF can acquire from a related party of the fund
• define a related party of the fund
• understand the rules relating specifically to collectable and personal-use assets that apply only to SMSFs
• describe the in-house asset rules and how they apply
• consider the use of reserves in an SMSF.
Contributions require a thorough understanding of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (SIS Regulations), and the Income Tax Assessment Act 1997 (Cth) (ITAA 97) and Income Tax Assessment Regulations 1997 as they provide the rules on making and accepting contributions, and determine the taxation treatment, designation and deductibility.
This module provides an outline of the rules about accepting contributions, who can make contributions and the way those contributions can be made.
It then discusses the difference between mandatory and non-mandatory contributions, taxable and non-taxable contributions and excessive and non-excessive contributions.
The module also highlights some of the key contributions that can be made to help members accumulate beyond normal contributions, leading to strategic opportunities.
LEARNING OUTCOMES
On completing this module, you should be able to:
• outline when a fund can and cannot accept contributions based on a member’s age
• provide an overview of the types of contributions that can be made
• highlight how contributions can be made to a fund
• calculate the amount of concessional and non-concessional contributions that will be excessive
• identify when contributions can be returned.
This module looks at the steps to establish a self-managed superannuation fund (SMSF) as a regulated superannuation fund in order to become a complying superannuation fund entitled to tax concessions. The module identifies the trustee covenants that all trustees must abide by and are deemed to be incorporated into the governing rules of the fund whether they are actually stated or not.
In the first significant link between the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) and the Income Tax Assessment Act 1997 (Cth) (ITAA 97), this topic reviews the definition of an Australian superannuation fund which is a definition that an SMSF is required to satisfy if it is to be a complying superannuation fund.
Finally, the module covers the fund’s responsibilities that must be outsourced and identifies the penalty regime that applies to all SMSFs for breaches of the SIS Act.
LEARNING OUTCOMES
On completing this module, you should be able to:
• identify some of the considered advantages and disadvantages of having an SMSF
• list the key regulatory steps required to establish an SMSF
• identify the key trustee covenants and their associated regulations to ensure an SMSF meets its obligations with regards to assets
and investment strategies
• describe the characteristics of an Australian superannuation fund
• ensure an SMSF continues to satisfy the definition of an Australian superannuation fund
• discuss the various penalties that may be imposed on SMSF trustees for a breach of the SIS Act.
The key to specialising in self-managed superannuation funds (SMSFs) is to understand how legislation interacts and how the various regulators of the superannuation industry interpret the law. While there are many pieces of Commonwealth and state legislation that are relevant to superannuation, two Acts and their associated Regulations, are critical to the ongoing management and taxation of superannuation funds, and by extension SMSFs. The Superannuation Industry (Supervision) Act 1993 (Cth) and Superannuation Industry (Supervision) Regulations 1994 (Cth) were introduced for the prudential management and supervision of superannuation funds, and the Income Tax Assessment Act 1997 (Cth) and Income Tax Assessment Regulations 1997 (Cth) provide the associated tax concessions for those supervised funds, where entitled.
To fully appreciate the interaction between these two key pieces of legislation, it is beneficial to understand the Australian superannuation and retirement system and the pathway to the current situation.
Australia’s superannuation (retirement income) system has a three-pillar approach:
• government-funded means-tested age pension
• compulsory savings via employer award and superannuation guarantee (SG) contributions
• voluntary savings via superannuation and other sources.
SMSFs are only one of a number of superannuation fund structures available for individuals to accumulate their retirement benefits.
This topic sets the scene for the regulation of SMSFs by providing a summary of the key historical events associated with our superannuation system as well as identifying the purpose of superannuation. It also introduces the key concepts behind the definition of an SMSF that will be explored further throughout this subject.
LEARNING OUTCOMES
On completing this topic, you will be able to:
– Confirm the key pieces of legislation that govern the regulation of SMSFs
– Explain the significant events that have occurred in the history of superannuation in Australia
– Explain the purpose of superannuation
– Formulate an abstract definition of an SMSF
– Evaluate who can and cannot be a trustee and member of an SMSF