Here are some of the latest changes on Superannuation and SMSFs that you should be aware of:
Essential Changes to Super
A plethora of superannuation law tweaks has been made by the Government recently, which include:
- Removing the $450 monthly super guarantee threshold.
- Reducing the eligibility age for making downsizer contributions from 65 to 60.
- Changes to facilitate the removal of the work test for those aged between 67 and 75 (rather than 67, as is currently the case).
- Increasing the maximum releasable amount under the First Home Super Saver scheme from $30,000 to $50,000.
- Allowing super fund trustees to choose not to use the segregated assets method in certain circumstances.
These superannuation measures will take effect from 1 July 2022 (except for the changes relating to the last dot point, which will apply from the 2022 income year onwards).
Keeping and maintaining SMSF records
Trustees of SMSFs have been put on notice by the ATO that keeping and maintaining good records is one of their key responsibilities and legal obligations.
Good record-keeping means trustees can ensure accurate and timely SMSF accounts, audits and income tax return lodgements.
As a result, the ATO has recently confirmed that even where SMSF trustees rely upon super or tax professionals to administer their SMSF, each trustee remains personally responsible for good record keeping.
If trustees are unsure of their obligations, the ATO has encouraged them to view the ATO’s record-keeping videos and undertake an approved education course to improve their understanding and knowledge.
Increase in releasable First Home Super Saver Scheme amounts
From 1 July 2022, eligible individuals will be able to include contributions up to $50,000 (currently $30,000) in the maximum releasable amount of the First Home Super Saver (‘FHSS’) Scheme.
Eligible contributions made from 1 July 2017 can count towards the total amount released.
The ATO has recently reminded participants that additional changes have also been made in recent legislative amendments to improve the experience for first home buyers accessing the scheme by:
- Increasing the discretion of the ATO to amend and revoke FHSSS requests;
- Allowing individuals to withdraw or amend their requests before them receiving an FHSSS amount, and Allowing those who withdraw their request to re-apply for FHSSS releases in the future;
- Confirming the Commissioner can return the released FHSSS money to super funds, provided that the money has not yet been released to the individual; and
- Clarifying that the money returned to super funds is treated as non-assessable non- exempt income and does not count towards the individual’s contribution caps.
These amendments will come into effect from 1 July 2022, with retrospective application from 1 July 2018.
The value of advice during a crisis
When the COVID pandemic hit and the sharemarkets crashed in early 2020, uncertainty and panic was rising amongst superannuation investors and super fund members. Many people feared the bad news and decided to switch from growth options to cash or withdraw savings from superannuation. However, the markets rebounded quickly, and those people missed out on the post COVID recovery and experienced negative cumulative returns.
The major lesson here is that panic plays just as equal a role as economic factors in stock market volatility, and more importantly, professional financial advice has proven to be more critical during a crisis.
In the recent issue of The Weekend Australian, Mano Mohanlumar, Chant West senior investment research manager, stated that the members who sought financial advice were less likely to switch than those who didn’t.
“The fear of losing money, even if only on paper, is a powerful emotion and difficult to overcome without the calming influence that expert advice can provide,” Mohanlumar said.
Source: NTAA, ATO, The Weekend Australia
For further information and expert assistance with your superannuation and SMSF, contact our KMT adviser today!
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or professional advice from a qualified financial adviser at KMT Partners.