Presentation slides for the SMSF Tax Planning webinar presented by Aaron Dunn of the SMSF Academy on 24 April 2013. With the growing number of self-managed super funds, the need to appropriately plan and take advantage of the various contribution, pension, investment strategy and tax issues all lead to the value of discussing some key tax planning strategies with SMSF trustees. If you wish to view the webinar recording, this can be purchased for $99 (incl. GST). You can visit the SMSF Academy online store to purchase this recording, https://nq129.infusionsoft.com/app/storeFront/showCategoryPage?categoryId=9

1. Presented by:
AARON DUNN
THE SMSF ACADEMY

3. GENERAL ADVICE WARNING
This presentation provides general advice only. No direct or implicit recommendations are given in this
presentation. This means that the general advice provided has not been prepared taking into account
any individual’s financial circumstances (i.e. investment objectives, financial situation and particular
investment needs).
The SMSF Academy Pty Ltd believes that the information in this presentation is correct at the time of
compilation but does not warrant the accuracy of that information. Save for statutory liability which
cannot be excluded, The SMSF Academy disclaims all responsibility for any loss or damage which any
person may suffer from reliance on this information or any opinion, conclusion or recommendation in
this presentation whether the loss or damage is caused by any fault or negligence on the part of
presenter or otherwise.
© The SMSF Academy, 2013

4. CONTRIBUTION
TIPS, TRAPS &
STRATEGIES FOR
30 JUNE

5. REVIEW CONCESSIONAL CONTRIBUTIONS
Has member Ensure adequate
satisfied the ‘work time to make the
Be aware of prior
test’ where 65-74? contribution – 30
year payments
E.g. self-employed June falls on a
made up to 28 July
contributions? Sunday!
2012 2013
$25,000 CONCESSIONAL CONTRIBUTION LIMIT EXCESS
Reserve/Holding Consider timing for Have you identified
account allocations completion of notice of any amounts that
from previous or intent to claim a may have
current income personal tax deduction
for super contribution
breached the cap?
year?

6. ONE-OFF REFUND CONTRIBUTION
RNING OF EXCESS HOLDING DEMINIM
NTRIBUTIONS CONCESSIONAL ACCOUNT RULE
CONTRIBUTIONS (RESERVE)
WHAT OPTIONS ARE
AVAILABLE WHERE A
MEMBER BREACHES THEIR
CONTRIBUTION CAPS?

7. CONTRIBUTION SPLITTING REMAINS
A POWERFUL STRATEGY AND TO
MANAGE LEGISLATIVE RISK
Popular strategy for couples with
age discrepancy
Expected re-focus with
proposed $100k threshold per
individual on pension earnings

8. REVIEW NON-CONCESSIONAL CONTRIBUTIONS
Has member Are any
Any excess
satisfied the ‘work contributions fund-
concessional
NCC cap based test’ to make the capped and not
contributions count
on age at 1 July contribution where be accepted by
towards NCC cap?
65-74? the Fund?
2012 2013
$150k/$450k NON-CONCESSIONAL CONTRIBUTION LIMIT
Have you reviewed Any amounts from
the member’s Are there any items
reserve to be
previous ‘bring that may constitute
allocated against
forward’ a contribution (TR
NCC cap for
requirements? 2010/1)?
income year?

9. COUNTING AS CONTRIBUTIONS
TR 2010/1 RESERVE ALLOCATIONS
Transferring existing assets into the fund Remember prior year
Creating rights in the fund contribution reserve amounts to
avoid ECT
Increasing the value of an existing asset in
the fund Disproportionate allocations
Paying an amount to a third party on Amounts allocated that are
behalf of the fund more than 5% of value of fund
Forgiving a debt owed by the fund assets at time of allocation
Shifting value to an asset owned by the Concessional contributions must
fund be grossed-up by 1.176

10. TIMING OF CONTRIBUTIONS
61 62 63 64 65 66 67 Total
$450,000 $450,000
$150,000 $450,000 $600,000
$150,000 $150,000 $450,000 $750,000
IMPORTANT CONSIDERATIONS
• Eligible to ‘bring forward’ contributions at age 64
even where no work test to be met beyond 65
• Member turned age 65 during year?
• Utilise for contributions & re-contribution strategies
with cash and/or in-specie contributions

11. MEET JENNY Self-employed doctor with no
concessional contributions made YTD
Net capital gain of $100,000 from sale of
investment property
Wants to reduce CGT bill as far as
possible
Contributes $50,000
$21,250 in
(2 x payments) Contribution Grossed-up
Holding Allocated to amount reported
$25k Fund pays Account member prior as contribution in
allocated to income tax to 28 July following year
Jenny’s on $5ok
account contributions
1 June 2013 30 June 2013 28 July 2013

12. CONTRIBUTION HOLDING
ACCOUNT APPLIES EQUALLY TO Contributions
(cash or in-
NON-CONCESSIONAL
specie) must not
CONTRIBUTIONS be fund-capped
Cannot split a
contribution (SISR
7.08(2))
Off market
transfer of listed
shares into SMSF
before 1 July
2013 change?

13. OTHER CONTRIBUTIONS
• Low Income Super Contribution – ATI < $37,000
• Maximum earnings test (10% rule)
• Additional contributions tax for high income earners – Income
threshold of $300,000
• Expected to be legislated in remaining sitting days before Federal Election
• Consider timing of bonuses & contributions for threshold calculation
• CGT cap amount
• Lifetime cap $1,255,000 (inclusive of Retirement Exemption $500,000)
• Spouse contributions
• Co-contribution

14. PENSION TIPS,
TRAPS &
STRATEGIES FOR
30 JUNE

15. BENEFIT PAYMENTS
Has the client met In what form does
Does the condition What are the tax
a condition of the member wish
of release have a consequence of
release during the to take the benefit
cashing restriction? the withdrawal?
financial year? payment?

16. PENSION OBLIGATIONS
• 10% TRIS maximum – no pro-rata
Minimum %
Age Later Years applies
2012-13
• GPA concession available where
Under 65 3% 4% shortfall may exist
65-74 3.75% 5% • What level of pension is the client
75-79 4.50% 6% withdrawing?
80-84 5.25% 7% – More than minimum? Multiple pensions
allows you to decide which income
85-89 6.75% 9% stream to take the above minimum
90-94 8.25% 11% amount
– Don’t need to take the minimum? Can
95 or more 10.50% 14%
elect to make a partial commutation lump
sum (in-specie transfer benefit payment)

17. PENSION OBLIGATIONS
• TR 2011/D3 discusses the concept of any form of benefit payment from
income stream (whether pension or as lump sum for tax purposes) counts
towards minimum pension
– Under 60 – tax driven in drawing against LRT
– Over 60 – management tool in shifting wealth
2012/13 2013/14
Age 64 65
Minimum Pension % 3.0% 5%
Account Balance $1,500,000 $45,000 $75,000
• Solution may be to in-specie transfer assets to deal with ‘surplus’ cash flow
needs
• Expect to be common property strategy for members which to retire in
existing SMSF property or shifting listed shares in-specie as benefit payments

18. PENSION STRATEGY OPTIONS
SEPARATE
RUN MULTIPLE ASSET
PENSION FOR
PENSIONS -TAKE SEGREGATION
UNPRESERVED
ADVANTAGE OF IN RISING
MONEY WITHIN
THE INVESTMENT
TRANSITION TO
PROPORTIONING MARKETS
RETIREMENT
RULE
PENSION

19. SEGREGATION
• Ability to segregate specific assets within an SMSF to a
member or ‘pool’ of members
– Pension Pool / Accumulation Pool / Reserve Pool
– Class of Membership
• ATO’s views (NTLG Super Technical Group – March 2010)
– ATO typically expects total segregation of an asset
• not half a property or part of a bank account
• Refer to ATO website, “SMSFs and tax exemption on pension
assets”

20. WHY SEGREGATE?
Tax exemption / Members have
tax deduction different risk
(e.g. LRBAs) tolerances
Accelerate the
tax-free Improve the tax
proportion of an effectiveness or of
income stream a TRIS (under 60)

21. MEET ELLA
57 years old
Account Balance of $420,000
Wishes to commence TRIS
(includes $20k TFC)
She has the ability to make in-
specie share transfer of $330,000
as NCC contribution
Combine or setup two pensions
(multi-pensions)?

22. SEGREGATION EXAMPLE
If setup two pensions:
• Can elect to segregate to each pension account
• Can assign ‘aggressive’ assets (i.e. shares) to TFC pension ($330k)
• Share market rebounds 30%; overall fund portfolio increases 15%
TRIS #1 TRIS #2
$391,500 $396,000
$420,000 X 1.032* $330,000 X 1.30
TRIS#2 has a
(growth) - $42,000 (growth) - $33,000 100% TF
(pension) (pension) proportion
WHAT HAVE WE ACHIEVED?
• Increased balance and tax efficiency of TRIS #2 as 100% tax-free
• Not assessable even through <60

23. REVIEWING THE FUND’S INVESTMENT STRATEGY
Consideration of a contract of insurance for the
CHANGES EFFECTIVE FROM 1 JULY 2012
members & regular review
FUND ASSETS RECORDED AT MARKET VALUATION
ATO guidelines available for assets where an
underlying market does not exist
DEATH BENEFIT NOMINATIONS
Do they need to be reviewed? Binding, Non-
binding, lapsing or non-lapsing?
TRUST DEED
Are there strategies looking to be undertaken that
an out-dated deed does not allow?

24. SUMMARY
• Important to manage contributions, but take advantage of caps
available each year (use them or lose them!)
• How are income streams structured - one or more pension?
• How is the client going to take those benefit payments for the financial
year?
• Think about your best approach to tax exemption for the financial year
– does segregation have a role to play?
• Do the trustees need to review other aspects of their fund including
investment strategy, member death benefit nominations, insurance
arrangements, SMSF loans, etc…
• There’s lot of work to be done with your SMSF clients!

25. NEXT WEBINAR
SMSF101 - Changing Face of SMSFs
• Quarterly Technical & Regulatory Update
– including budget summary
• Members - free
• Non-members: $99 (incl. GST)
– Keep a look-up for special offers!
Tuesday, 21 May 2013
11am AEDST

26. www.smsf101.com.au
No. Module
A RG146 Knowledge Refresher
B Adviser Skills
1 Introducing Super & SMSFs
2 Establishing an SMSF
3 Introducing Estate Planning
4 SMSF contributions
5 SMSF investment rules
6 SMSF investment strategies
7 SMSF taxation
8 Paying SMSF benefits
9 Tax effective SMSF benefit and estate planning Register online to watch our sample module
strategies

27. Any final questions? Podcast created
with webinar
questions
Link to SMSF Tax
planning checklist
in follow up email
PLEASE COMPLETE SURVEY TO
PROVIDE FEEDBACK, FUTURE TOPIC
SUGGESTIONS AND OBTAIN YOUR
SPAA CPD CERTIFICATE

28. Aaron Dunn
The SMSF Academy
www.thesmsfacademy.com.au
SMSF Dunn Right,
http://thedunnthing.com
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