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

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

Have you ever asked your SMSF administrator the following “simple” questions expecting a quick and simple answer, only to be told it’s not that straightforward? This is why!

How much can I contribute to my SMSF this year?

This depends on several factors and these need to be carefully assessed before a definitive contribution amount can be confirmed.

Such considerations include:

  • how much is your current total superannuation balance?
  • are you eligible to make a contribution? 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 to you met 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  • how much can be withdrawn?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 special circumstances which allow for early access to super? Even if the answer is yes, there may be 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 that passes away with their superannuation entirely in accumulation phase will have different outcomes compared to a member that has part or all of their benefits in retirement phase.

In addition, the succession of the SMSF maybe impacted by the death of one member if the trustees of the fund are individual as opposed to a 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 Labor Government, their proposed change to SMSF’s refund of franking credits has been keeping many SMSF trustees awake at night.

It’s important to note that the franking credits themselves are not going to 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 accumulation or pension phase, or a combination of both and the underlying assets of the fund.

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.

In order to ensure the right answers are provided, it is important to use an SMSF administrator that is licenced (ie. holds a financial services licence) so that they can 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 contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under professional standards legislation.

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