Why “simple” superannuation questions don’t always result in simple answers

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This is why SMSF accountants are essential. Have you ever posed seemingly straightforward questions to your SMSF administrator, hoping for a prompt and clear response, only to be informed that it’s not that simple? This highlights the necessity of consulting SMSF accountants.

How much can I contribute to my SMSF this year?

This depends on several factors that must be carefully assessed before a definitive contribution amount can be confirmed.

Such considerations include the following:

  • How much is your current total superannuation balance?
  • Are you eligible to contribute? How old are you?
  • What type of contribution do you wish to make – concessional or non-concessional?
  • What is your contribution history?

Can I take money out of my SMSF?

Similar to contributions, whether an individual can withdraw part or all of their superannuation monies depends on several factors, such as:

  • Are you eligible to make a withdrawal? (eg. have you met the preservation age?)
  • How much can be withdrawn? This can be affected by the preservation components of your super balance and the type of income stream you are taking.
  • Are there particular circumstances which allow for early access to super? Even if the answer is yes, restrictions on how much can be accessed and/or additional criteria may need to be met.

What happens to my superannuation should I pass away?

This will depend on the breakdown of your member entitlements at the time of death and what Estate Planning documentation is in place inside your SMSF.

A member who passes away with their superannuation entirely in the accumulation phase will have different outcomes than a member with part or all of their benefits in the retirement phase.

In addition, the succession of the SMSF may be impacted by the death of one member of the fund’s trustees individually as opposed to the corporate trustee.

How will the ALP’s franking credit proposal affect my SMSF?

With a Federal election expected in a few months’ time and the possibility of a change to a Labour Government, their proposed change to SMSF’s refund of franking credits has kept many SMSF trustees awake at night.

It’s important to note that the franking credits will not be abolished. SMSFs can continue to use the franking credits to offset income tax payable, including the 15% contributions tax on concessional contributions.

The amount of franking credits forgone will depend on whether your SMSF is in the accumulation or pension phase or a combination of both and the fund’s underlying assets.

All legislative proposals are just that until they are legislated, so even if there is a change in government, the proposed changes still need to be passed by the House of Representatives and the Senate, which can take some time.

Why can’t a straightforward answer just be provided?

As you can see, every individual’s circumstances are different, and there is no “one size fits all” approach.

To ensure the correct answers are provided, it is vital to use a licenced SMSF administrator (ie. who holds a financial services licence) to provide the correct advice on areas such as making contributions, starting and stopping pensions, establishing and winding up SMSFs.

Kreston Stanley Williamson Team

*Correct as of January 2019

*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.

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