Tag: superannuation

meeting

ATO issues ‘good governance’ checklist for NFPs

Posted on | by Allan Hall

The Tax Office has reminded not-for-profit organisations to check that tax and super obligations are being met effectively to uphold good governance.

Background

It’s important that your NFP organisation has good governance and you are meeting your tax and super obligations. You need to check that you continue to be entitled to:

  • deductible gift recipient (DGR) endorsement
  • income tax exemption
  • other tax concessions.

To do this, you should complete a self-review of your NFP every 12 months and when your organisation makes changes to its governing rules or structure and activities.

The checklist and worksheets below will help you complete your self-review. You may need to complete more than one worksheet depending on the entitlements you are claiming.

You must also:

If you don’t notify the ATO of changes to your eligibility or registration details, penalties or a referral to prosecution may apply.

Not-for-profit good governance checklist

All NFPs should complete the self-governance checklist. This will help you:

Eligibility to income tax exemption

From 1 July 2023, non-charitable NFPs with an active ABN need to lodge an annual self-review return to confirm their eligibility to self-assess as income tax exempt.

NFPs that self-assess as income tax exempt, can use the questions in the ATO’s self-review guide to conduct an early review. This can be done before the NFP-self-review return is available on 1 July.

Charitable NFPs endorsed as a tax concession charity (TCC), must self-review TCC endorsement annually, and whenever there is a change in the charity’s structure, purposes or operations.

Charities are not required to lodge the NFP self-review return with the Tax office.

The following worksheet will help charities review their TCC endorsement:

Deductible gift recipient (DGR) endorsement worksheets

The following worksheets will help you to work out whether your NFP organisation is still entitled to endorsement as a DGR.

Select the worksheet that applies to your organisation:

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forest

APRA releases super statistics for September 2024

Posted on | by Allan Hall

Superannuation Industry Hits $4.1 Trillion in Assets: September 2024 Snapshot

Strong Growth in Contributions and Benefit Payments Highlights Industry Momentum

The Australian Prudential Regulation Authority (APRA) has released its Quarterly Superannuation Performance publication and the Quarterly MySuper Statistics report for the September 2024 quarter.

Key statistics for the superannuation industry as at 30 September 2024: 

 September 2023September 2024Change
Total superannuation assets$3,599.3 billion$4,083.0 billion+13.4%
Total APRA-regulated assets$2,459.2 billion$2,829.7 billion+15.1%
Total self-managed super fund assets$924.0 billion$1,024.4 billion+10.9%
Exempt public sector superannuation schemes assets$160.0 billion$171.6 billion+7.3%
Balance of life office statutory fund assets$56.1 billion$57.3 billion+2.1%

Total superannuation assets increased by 3.7 per cent over the quarter to reach $4.1 trillion as at September 2024, of which $2.8 trillion are in APRA-regulated funds. 

Total contributions increased by 13.1 per cent to $191.3 billion in the year ending in September 2024. Of this, employer contributions increased by 11.4 per cent over the year to $140.8 billion. Member contributions increased by 18.1 per cent over the year to $50.5 billion.

Benefit payments increased by 11.4 per cent to $119.9 billion in the year ending in September 2024. This increase was the result of lump sum payments rising by 4.9 per cent to $65.1 billion and pension payments increasing by 20.3 per cent to $54.8 billion.

Key statistics for entities with more than six members for the year to September 2024:

 September 2023September 2024Change
Total contributions$169.1 billion$191.3 billion+13.1%
Total benefit payments$107.6 billion$119.9 billion+11.4%
Net contribution flows*$58.2 billion$66.0 billion  +13.5%

*Net contribution flows comprise of contributions plus net benefit transfers, less benefit payments

A well performing self-managed superannuation fund (SMSF) has the potential to be your most profitable and tax effective means to an outstanding retirement. However, just like an elite athlete needs an experienced coach, an SMSF needs the guidance of an expert SMSF mentor. This is where our Allan Hall Superannuation team can help.

CONTACT ALLAN HALL SUPERANNUATION

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casual worker

Reform Urged to Extend Super to All Workers Under 18

Posted on | by Allan Hall

A Super Start

Empowering Australia’s Young Workforce

Australia’s under-18 workforce could benefit from an additional $10,000 in retirement savings if outdated rules excluding them from superannuation contributions are abolished, according to a new report by the Super Members Council (SMC).  

Currently, under-18 workers must clock more than 30 hours a week to qualify for compulsory super contributions. This complex and discriminatory rule denies approximately 505,000 teenage workers $368 million annually, an average of $730 each.  

The report highlights that: 

  • A typical teenager working two years could accumulate $2,200 in super contributions, setting them on a path to long-term financial security 
  • By retirement, these savings would grow to an additional $10,000, leveraging the power of compound interest 
  • The report calls for removing the 30-hour threshold, a move that simplifies employer administration while promoting equity. 

SMC CEO Misha Schubert emphasised the importance of this reform:   

“Every Australian worker deserves the opportunity to build a dignified retirement, starting with their first job. Extending super to under-18s ensures their savings grow from day one, simplifying compliance for businesses and delivering a fairer system.”   

The report recommends a phased implementation to ease the transition for businesses, citing similar adjustments for other worker categories in 2022.   

This initiative aligns with strong public support, as 85% of Australians believe all paid workers deserve super contributions. The SMC hopes to collaborate with employer groups to achieve this reform, ensuring Australia’s youth can fully benefit from the nation’s superannuation system.   

CONTACT ALLAN HALL SUPERANNUATION

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payroll

Employers face new reforms with Payday Super

Posted on | by Allan Hall

From 1 July 2026, employers will be required to pay their employees’ super at the same time as their salary and wages.

On 2 May 2023 the Australian Government announced that from 1 July 2026, employers will be required to pay their employees’ super guarantee (SG) at the same time as their salary and wages.

This measure is not yet law. Treasury and the ATO will engage with industry and stakeholders on these changes.

On 18 September 2024, the government announced further details, including:

  • Contributions of super. From the start of the measure, employers will be required to pay their employees’ SG at the same time as their salary and wages. They will be liable for the super guarantee charge (SGC) unless contributions are received by their employees’ superannuation fund within 7 days of payday. Payday is the date that an employer makes an ordinary time earnings (OTE) payment to an employee. Each time OTE is paid, there will be a new 7-day ‘due date’ for contributions, with some limited exceptions.
  • Updated super guarantee charge. Where employers fail to pay contributions in full and on time, they are liable for SGC.

    The SGC will be updated and consist of
    • Outstanding SG shortfall: any contributions that remain unpaid when the SGC is assessed. The shortfall calculation will be based on OTE, creating consistency with the calculation of SG contributions. Late contributions paid by an employer before they are assessed for the SGC will reduce the outstanding SG shortfall.
    • Notional earnings: an interest component to put employees in the same position that they would have been had the contributions been received in full and on time.
    • Administrative uplift: an additional charge levied to reflect the cost of enforcement.
    • Once SGC is assessed, additional interest and penalties may apply if the SGC liability is not paid in full.
    • The SGC will be tax-deductible, ensuring the income tax consequences for paying employees’ super are consistent.
  • SBSCH decommission. The Small Business Superannuation Clearing House (SBSCH) will be retired from 1 July 2026. The improvement in payroll software solutions over recent years provides employers with cost-effective and higher quality options for paying superannuation contributions more timely and accurately. We will engage with small businesses ahead of time to guide them in transitioning to a commercial alternative that is fit-for-purpose for Payday Super.
  • SuperStream updates. The deadline for super funds to allocate or return contributions will be reduced to 3 business days, down from 20. The SuperStream data and payment standards will be revised to allow payments made via the New Payments Platform and improve error messaging to ensure employers and intermediaries can quickly address errors.
  • STP updates. Employers will be required to report in Single Touch Payroll (STP) both the OTE and the total super liability for an employee, ensuring the SG can be correctly identified.

More information on the design of Payday Super is available in the Treasury fact sheet.

CONTACT ALLAN HALL BUSINESS ADVISORS

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renovations

DIY Repair and Renovation Pressure Points for SMSFs

Posted on | by Allan Hall

Trustees of self-managed superannuation funds (SMSFs) face strict tax and super laws when undertaking repairs and renovations on real estate held within the SMSF. 

Many trustees wonder what they can legally do to enhance the value of their fund’s property without falling foul of these strict rules. 

Trustees must ensure that any services provided to a SMSF are undertaken on an arm’s length basis. Failure to do so may result in some of the fund’s income being taxed at 45% under the Non-Arms Length Expenditure (NALE) rules rather than the general superannuation tax rate of 15% or nil if the fund is in pension phase.    

Broadly, these rules can apply where the cost of expenses connected with a fund’s property investments, such as property management expenses, repairs and maintenance, etc are less than might be expected in an arm’s length situation.    

This does not mean however that a trustee who provides any service to an SMSF must charge a fee – see more information below. 

Further, the SMSF needs to be invoiced directly for any goods and materials as otherwise the fund will be deemed to have acquired them from the members directly which is prohibited. 

Key Considerations 

  • Who provides the service? Consider activities undertaken by a person in their individual capacity vs in their trustee capacity 
  • Who is invoiced for the goods or service? Acquiring building materials and any other goods or services connected with the property from related parties, even if at market value, will breach the super laws. 

Trustee v Individual capacity 

A fundamental rule for SMSFs is that a trustee cannot be remunerated for their duties as trustee. This is embedded in superannuation law. Examples of trustee duties include opening a bank account, making investments, collecting rent and paying expenses, and repairing and maintaining assets. However if a service is provided in their individual professional capacity then a fee must be charged.     

Examples 

Peter is the trustee of his SMSF and he is also a licensed electrician by trade. The SMSF owns a residential property in which Peter undertakes electrical repairs that can only be done by a licensed electrician. Peter is considered to be acting in his individual capacity because the activities have been performed pursuant to a licence/qualification.  The fund must be charged an arm’s length fee for the work. 
Michael’s SMSF owns a commercial property and does not engage the services of a property management business. Michael attends to all administrative duties in connection with the lease (eg collecting rent, renegotiating lease terms upon expiry, organising repairs). Michael also mows the lawn, tends to the garden at the property and makes minor repairs using his personal mower and tools. He does not provide these services to others. These activities are obligations imposed on Michael because he is a trustee of an SMSF (ie they are trustee duties). Michael cannot charge the SMSF fees for these services as he performs them in his capacity as trustee. 
Andrew is a licensed builder and performs minor repairs on a jammed door in his SMSF’s investment property using his tools of trade. On another occasion, Andrew builds a deck at the property, largely using timber and materials left over from another job.  Ad-hoc maintenance activities are obligations imposed on Andrew because he is a trustee of his SMSF (ie they are trustee duties). The use of his tools of trade for such activities are minor and infrequent.   Building the deck however gives rise to Andrew’s specialist skills as a builder, with such services being offered to the public. As Andrew is acting in his individual capacity he must charge an arm’s length fee to the fund for the work performed.     

Further to the example of Andrew above, as the materials for the deck are sourced from Andrew, the SMSF has unknowingly breached the super laws. To avoid such compliance issues, the SMSF trustee must source all materials directly from the supplier and ensure the SMSF is invoiced, not the trustee in their individual capacity.   

Consulting a professional before undertaking any repairs or renovations is crucial to ensuring compliance with the law. 

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health insurance

Navigating SMSFs and Insurance

Posted on | by Allan Hall

Key Rules and Essential Considerations

If you’ve chosen to manage your own SMSF, it’s likely you’re also proactive and responsible regarding insurance.

Whether you currently hold life insurance outside super or within an existing super fund, starting an SMSF requires attention to your insurance strategy.

SMSF trustees must assess whether to obtain suitable insurance coverage for each fund member as part of developing their investment strategy.

What are the rules?

Legally, all SMSFs must prepare a documented investment strategy during setup.

This strategy—including any insurance coverage—must be regularly reviewed by the fund’s trustees to ensure it aligns with members’ evolving needs and circumstances. Compliance with this investment strategy is checked annually by a licensed SMSF auditor.

In 2015, the Federal Government’s Super System Review found that SMSF members were more likely to hold insurance outside super compared to members in other superannuation sectors. Consequently, SMSFs are not required to provide default insurance for members as many public sector funds do.

However, SMSF trustees still need to carefully consider each member’s financial situation to determine if they have adequate insurance coverage. Key considerations include:

  • Current debt levels of members
  • Whether members have dependents and, if so, how those dependents could be financially supported in the event of the member’s death or inability to work.

What types of insurance cover can SMSFs provide?

SMSFs are permitted to offer any insurance cover that aligns with one of these superannuation conditions of release:

  • Death (life insurance)
  • Permanent incapacity leading to the member’s permanent cessation of work (total and permanent disability insurance or TPD)
  • Temporary incapacity that causes the member to stop working temporarily (income protection insurance)
  • Terminal illness diagnosis (by two medical professionals) indicating likely death within two years, generally included as a feature in life insurance policies.

Note: With TPD insurance, insurers apply different definitions and features. A key distinction in TPD policies is occupation type, with two options:

  1. ‘Own occupation’ provides benefits if the member cannot work in their specific role
  2. ‘Any occupation’ offers benefits only if the member is unable to work in any gainful role they are reasonably suited for.

SMSFs cannot hold ‘own occupation’ TPD policies unless issued before 1 July 2014, as policies issued after this date must meet a condition of release to ensure proceeds are accessible before members reach preservation age. The ‘any occupation’ definition aligns with the permanent incapacity condition, so it is the permissible definition.

Each of the above conditions of release allows a fund member to access their super funds regardless of reaching preservation age.

Once you determine the insurance cover type you need, you can weigh the benefits of holding it within your SMSF, an existing super fund, or personally, outside super.

Ensure your SMSF’s insurance strategy meets legal standards and protects your members — review your coverage options and compliance obligations today.

CONTACT ALLAN HALL SUPERANNUATION

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stopwatch countdown to deadline

$3 Million Super Tax in Limbo

Posted on | by Allan Hall

Senate Delays Raise Doubts Over Timing and Impact

The Better Targeted Super Concessions Bill which includes the $3 million superannuation tax, faces further uncertainty as it has not been scheduled for debate in the Senate this month. 

The Australian government’s proposal to impose an additional 15% tax on superannuation balances exceeding $3 million is progressing through the legislative process.

The draft legislation, introduced to Parliament on 30 November 2023, was referred to the Senate Economics Legislation Committee, which tabled its report on 10 May 2024. The report recommended the bill be passed without changes.

The proposed tax, scheduled to take effect on 1 July 2025, aims to apply a 30% concessional tax rate to future earnings for superannuation balances above $3 million.

Implications for Super Fund Members

The delay raises doubts about whether the bill will be passed before the end of the parliamentary sitting year. The Senate’s draft schedule, released last Friday, does not include the bill for debate.

This change is expected to impact approximately 80,000 individuals, or 0.5% of superannuation account holders. Without Senate approval this year, there are concerns about insufficient time for affected super fund members to restructure their arrangements. 

Members with superannuation balances nearing or exceeding $3 million are encouraged to stay informed and consult financial advisors about potential impacts on their retirement planning.

CONTACT ALLAN HALL SUPERANNUATION

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Businessman flying

Super clearing house end-of-year dates

Posted on | by Allan Hall

Please note the ATO’s annual office shutdown dates impacting the Small Business Superannuation Clearing House.

As the ATO approaches their annual office shutdown, these are the key dates to be aware of for the Small Business Superannuation Clearing House (SBSCH):

  • 5:30 pm AEDT on 10 December 2024 – all super payments with instructions received after close of business on this date will be processed from 2 January 2025
  • 28 January 2025 – super guarantee quarterly payments due.

The ATO and their contact centres will close at noon Tuesday 24 December 2024 and re-open at 8:00 am Thursday 2 January 2025, local time.

For the latest information about the SBSCH and ATO Online system maintenance schedule, please check SBSCH system status and system maintenance.

CONTACT ALLAN HALL BUSINESS ADVISORS

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Compliance cogs

Developing a Compliant and Effective SMSF Investment Strategy

Posted on | by Allan Hall

Your SMSF investment strategy  

Managing a Self-Managed Super Fund (SMSF) requires a well-structured investment strategy to ensure that retirement goals are met and the fund meets the ‘sole purpose test’.  

This test requires the fund to be maintained solely for the purpose of providing retirement benefits to members or their dependants if the member dies before retirement.   

All investment decisions need to be made in the members’ best interests and also to meet the sole purpose test. The decisions regarding how the funds are invested need to be documented in the investment strategy. 

As per Australian superannuation laws, trustees must develop, implement and regularly review the SMSF investment strategy, ensuring it aligns with the fund’s objectives and its members’ circumstances: 

  • Reflect Member Needs: Circumstances change; make sure the strategy still fits members’ retirement goals and risk profiles 
  • Adapt to Market Changes: Markets shift; adjust the strategy to reflect current economic conditions and protect fund performance 
  • Audit Readiness: Avoid potential audit issues by ensuring the strategy matches actual investments, preventing any compliance breaches 
  • Fund Future-Proofing: Use this review to plan for the next financial year, adjusting for diversification, liquidity and evolving fund goals. 

An SMSF investment strategy must consider crucial factors, including risks, diversification, liquidity and insurance coverage for members. It should address how the fund will make, hold and realise assets in a way that meets members’ retirement needs, factoring in their age, employment status and risk appetite. The strategy must be tailored to the fund’s unique circumstances and must go beyond simply restating legislative requirements. 

Trustees are free to choose their investment types, provided they comply with superannuation laws. However, placing all investments in one asset class can lead to concentration risk, especially if the asset is leveraged. To mitigate such risks, trustees should outline how the strategy addresses the lack of diversification and ensures the fund’s long-term stability. 

Regular reviews of the investment strategy are essential 

Significant events like market changes or members transitioning to pension phase should prompt a review to ensure liquidity and cash flow needs are met. Additionally, trustees must demonstrate that these reviews have taken place, with documented evidence available for auditors. 

Auditors will assess whether the SMSF has a compliant investment strategy and if it was adhered to throughout the year. In case of breaches, trustees must rectify the situation promptly to avoid penalties or disqualification. 

For expert advice on creating or reviewing an SMSF investment strategy, trustees should consult a licensed financial adviser to ensure the strategy’s effectiveness in meeting retirement goals. 

The fund’s accountant is generally not able to provide this but can assist trustees to complete a compliant template to create a suitable investment strategy for the fund. 

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