Print Friendly, PDF & Email

Self Managed Superannuation Fund (SMSF) clients will no doubt welcome the Government's decision to withdraw the proposed ban on "off-market" transfers of listed shares to a SMSF by a member or related party which was to apply from 1 July 2013.

The proposed legislation had more far reaching effects than just acquisition of listed shares by an SMSF from a related party. The amendment would also have imposed a requirement for expensive qualified independent market valuations for any investments acquired by an SMSF or sold or transferred out to a member e.g. lump sum benefit payments in kind or "in-specie" instead of in cash.

The changes would have created significant additional costs for SMSFS acquiring or disposing of business real property with a related party, and headaches when valuing such items as artwork and collectables or other non-listed investments.

The ban was first proposed due to evidence of market manipulation of share prices in off-market transfers. If you are transferring listed shares to your SMSF in the future, ensure that the market value of the listed shares being transferred is as at the day the transfer forms are completed.  Beware advice suggesting that you can back date forms at a date when the share price was lower.

Auditors of SMSFs have been put on notice by the ATO that they must report instances of price manipulation in off-market share transfers.

Concessional (deductible) contributions cap increased – 1 July 2013

Legislation to increase the concessional contribution cap to $35,000 has been passed by the House of Representatives.  For people aged 60 and older they will be able to increase their super contributions to $35,000 from 1 July 2013 and for anyone 50 and older from 1 July 2014.

When?

Age 60 & over

Age 50 to 59

Under age 50

Currently

$25,000

$25,000

$25,000

From 1 July 2013

$35,000

$25,000

$25,000

From 1 July 2014

$35,000

$35,000

$25,000

If you are at least age 59 on 30 June 2013, you will be eligible for the $35,000 cap from 1 July 2013, regardless that you may turn age 60 later in the 2013/2014 financial year.

If you will be aged 59 or more on 30 June 2013, you may wish to review your written salary sacrifice contribution agreement with your employer by 1 July 2013. According to the ATO, to be effective  a salary sacrifice agreement must be in place before the work is actually performed e.g. 1 July 2013.

Are you topping up super contributions by 30 June 2013? Important points:

  • Concessional (deductible) contributions are capped at $25,000 for all, regardless of age 
  • Your concessional cap of $25,000 includes:
    1. Compulsory 9% employer super contributions
    2. Contributions by all employers (not $25,000 per employer)
  • Tally your contributions to super to date if you are unsure. Additional tax of 31.5% applies to excess contributions over $25,000


Timing of super contributions

Contributions must be "received" by a superannuation fund by 30 June 2013 to be deductible.

  • Beware as Friday 28 June 2013 is the last working day of the financial year.
  • The ATO has ruled that internet transfers of contributions that are not credited to the fund's bank account by 30 June won't be deductible. Beware internet transfers between different banks on Friday 28 June or on the weekend as they won't be credited until the next working day, i.e. Monday 1 July 2013, which is too late.
  • A cheque for contributions is different to an internet transfer. It must be in the hands of the trustees of a super fund by 30 June 2013. Even if banked after 1 July 2013 it will still count for the previous financial year, unless the cheque is subsequently dishonoured.

June-30-Image

 

 

This article was published in the Winter 2013 Horizon. For a pdf version of the newsletter please click here.