Best ways to structure for your investment and business in Australia | 找尋最佳澳洲投資及商業架構

Tax Residency & Capital Gain Tax | 澳洲稅務居民資產增值稅

The post Australia Taxation video series | 澳洲稅務系列 appeared first on SW Accountants & Advisors.

In the context of ongoing public debate regarding the appropriate minimum size for an SMSF, new research has been provided to provide insights into the true costs of running an SMSF. And the research shows SMSFs are cheaper to run than many people may think.

The findings allow SMSF trustees and potential SMSF trustees to compare appropriate estimates of fees for differing SMSF balances with institutional superannuation funds (commonly referred to as APRA regulated funds).

The costs include establishment, annual compliance costs, statutory fees and some investment management fees. Direct investment fees have been excluded.

What does the research tell us?

SMSFs with less than $100,000 are not competitive in comparison to APRA regulated funds

SMSFs of this size would generally only be appropriate if they were expected to grow to a competitive size within a reasonable time.

SMSFs with $100,000 to $150,000 are competitive with APRA regulated funds

SMSFs of this size can be competitive provided the Trustees use one of the cheaper service providers or undertake some of the administration themselves.

SMSFs with $200,000 to $500,000s are competitive with APRA regulated funds even for full administration.

SMSFs above $250,000 become a competitive alternative provided the Trustees undertake some of the administration, or, if seeking full administration, choose one of the cheaper services.

SMSFs with $500,000 or more are generally the cheapest alternative regardless of the administrative options taken.

For SMSFs with only accumulation accounts, the fees at all complexity levels are lower than the lowest fees of APRA regulated funds.

This research highlights that SMSFs with a low complexity can begin to become cost-effective at $100,000. This is a significant departure from what many had believed to be the case. For simple funds, $200,000 is a point where SMSFs can become cost competitive with APRA regulated funds or even cheaper if a low cost admin provider is used. With the proposed expansion to six member SMSFs, we may see many more take up this option at this threshold.

Comparing 2 member funds

From a cost perspective, the real benefit of an SMSF is when it achieves scale in balance and this can occur when members pool their superannuation savings. The below comparison can be used to grasp the ranges you might fall into.

But it’s more than cost

When determining whether an SMSF is right for you, your analysis must go further than just a simple comparison of the costs versus APRA Regulated Funds. It should also factor in your retirement and income goals and whether you have the desire, time and expertise to take on the role of an SMSF trustee. It’s also worth factoring in SMSF members may not receive the same level of protection in the event of theft or fraud that members in APRA regulated funds do.

How can we help?

If you would like to discuss whether an SMSF is right for you, please feel free to call our office and speak to Iggy Moro.

The post How much money do you need to start an SMSF? appeared first on SW Accountants & Advisors.

What is Super Stapling?

Currently, where an employee does not nominate a complying superannuation fund, the employer is required to provide the minimum superannuation contributions, currently 10% of ordinary time earnings, to their default superannuation fund.

In the 2020-2021 Federal Budget, the Government announced the Super Reforms – Your Future, Your Super measure. 

One of the key elements is the super stapling. 

A stapled super fund is an existing superannuation account which is linked, or ‘stapled’, to an individual employee so that it follows them as they change jobs.

If a fund is recorded, then employers must send contributions to the fund for an employee, unless the employee requests for a change.

Employers will be obligated to search for their new employees’ existing fund and a new account can only be created with the employer’s default fund once it is confirmed by the ATO that it cannot identify a stapled fund for the employee.

Employers may also need to request the employees’ stapled super fund details if they are either:

• Temporary residents
• Covered by an enterprise agreement or workplace determination made before 1 January 2021.

Employees will be able to see details of their stapled super fund via their personal MyGov account (as long as it is linked to the ATO portal).

When does it come into effect?

Super stapling will come into effect from 1 November 2021. 

It is still mandatory for employers to provide employees with a Standard Choice of Fund form. 

Employers need to record when it provides the form and when it collects a completed form from the employee. Where an employer has nominated the default superannuation fund, it can still provide details of that Fund in Part B of the form.

If the employer does not meet choice of super fund obligations, additional penalties may apply. In the first 12 months, the ATO has indicated it may apply some leniency with penalties for non-compliance with the ‘stapled’ fund rules unless there is evidence that the employer did not make reasonable attempts to comply with the ‘stapled’ fund rules. 

Why the change?

This measure aims to reduce employees accumulating multiple super accounts after moving from one job to another throughout their working life.

Having more than one super account can be costly as it can means employees are paying multiple sets of fees and insurance premiums.

Stapling should also make it easier for employees to keep track of their super savings.

Do employers still need to have their own default or preferred funds?

The answer is yes. 

If a new employee is not already a member of a superannuation fund, then the employer is generally required to offer them a choice of fund. If the employee does not choose a fund, the employer will nominate the company’s default fund, which will then become their stapled fund.

Will existing employees be affected?

Existing employees are not expected to be affected by these changes. 

Employers will continue to make their compulsory SG payments to the same super fund account they do today.

Do these new rules apply to contractors?

The answer is yes. 

The rules will apply equally to a person who works under a contract that is wholly or principally for the supply of their labour. In this case, the person is considered and treated like an employee under the SG regime.

How employers can prepare prior to 1 November 2021?

• Ensure you are able to request stapled super fund details from the ATO. Check and update your access levels of your authorised representatives in your ATO online service (Business Portal). This will ensure employers can request the new employee’s ‘stapled super fund’ details from the Australian Taxation Office (ATO) during the onboarding procedure.
• Review onboarding forms to capture a new employees ‘stapled super fund’ account details.
• Review and amend employment contracts if required. For new employees commencing on or after 1 November 2021, current superannuation clauses will need to be updated to refer to the possibility of contributions being made into an employee’s stapled fund.
• Consider how super stapling may impact participation agreements with default funds. For example, where the default fund offers fee discounts or tailored pricing which is conditional upon a certain percentage of employees being in the default fund, such arrangements could be adversely impacted by super stapling.

What employers need to do from 1 November 2021 ?

1. If your new employee has chosen their super fund, you will need to pay into their chosen fund. 
2. If your employee has not chosen their super fund, you will need to obtain the stapled super fund details from the ATO. The stapled super fund details can only be requested after you have submitted a tax file number (TFN) declaration or Single Touch Payroll pay event linking your new employee to your business. There is no limit to the number of requests you can make. To request a stapled super fund, you or your business authorised representative need to log in to the ATO online services portal and provide the employee’s details (including their TFN, full name, date of birth and address). You should be notified of the result within minutes and will be sent to the authorised representative.
   Employers can make a bulk request if you are onboarding more than 100 new employees at once. A bulk request form will be made available in excel format for download from 1 November 2021.

   ATO will notify your employee of the stapled super fund details they have provided to you.

   If an employee has more than one fund, they will be automatically stapled to the one that has been active (received a contribution) most recently. Where there is more than one active fund rules will be applied to select the most appropriate fund, for example, the fund with the biggest balance.

3. If the stapled super fund account provided by the ATO cannot accept contributions for the employee, you will need to make another request via the ATO online services portal.
4. If the same stapled super fund account is returned, you will need to contact ATO to obtain an alternative stapled super fund account. If there is no alternative fund, the ATO will advise whether the contributions can be made to the employer’s default superannuation fund or another fund that meets the choice of fund rules.

How SW can help

• SW has an outsourcing team to assist with your payroll function. We can assist employers understand and become familiar with the new requirements to make this change as easy as possible.
• Review your onboarding process and provide advice around current procedures used to obtain super account details and recommend possibly a more efficient onboarding procedure.
• We are a registered tax agent and can request the stapled super fund details for employees for you.

Get in touch 

Sharon Burke

E sburke@sw-au.com

Janelle McPhee

E jmchpee@sw-au.com

Joshua Teo

E jteo@sw-au.com

Legal expert

Alison Baker 

E alison.baker@hallandwilcox.com.au

The post Superannuation Reform appeared first on SW Accountants & Advisors.