Tag Archives: CPE Newsletter

Ins & Outs of Aged Care

It’s hard to be passionate about Aged Care and in fact a lot of the time it’s very overwhelming and daunting, and can be a very emotional time for the family when they have to move a loved one into care.

 

Often one of the biggest questions is how do we fund it!? Especially when it comes to paying the Refundable Accommodation Deposit (RAD), with most people then stressing over what to do with the family home? Add onto that the fact it can be something that could be time critical, and selling a home isn’t something that can be done overnight.

 

The good thing is that this isn’t the only option you have. Although most Aged Care providers will probably try to make you pay a RAD, you actually don’t have to straight away. In actual fact you have 28 days from the date you enter Aged Care to make a decision on whether or not you have to pay a full or partial RAD, or if you want, you could even pay a Daily Accommodation Payment (DAP) or a combination of both.

 

If you elect to pay a DAP at a later time you can then decide to pay a RAD, but it doesn’t happen the other way around, so if you select RAD as your payment, unfortunately you’re stuck on this option. If selling the family home is the only viable financial option, by selecting a DAP you have the flexibility to not rush to sell the home and can instead pay the DAP up until the home is sold and when you can afford to pay the RAD.

 

However, the DAP isn’t necessarily cheap either, it’s normally worked out based on what RAD you are required to pay to secure a room. For instance, if the RAD is $450,000 and the current Maximum Permissible Interest Rate (MPIR) is 5.73%, then your DAP is $70.64 per day ($450,000 x 5.73%) / 365. If you pay a part RAD then you’re also required to pay a part DAP, and an option you have is to have the DAP deducted from the RAD to help ease cash flow.

 

Now you can see why it’s hard to be passionate about Aged Care, you have RAD’s, DAP’s, MPIR’s, and a whole lot of other acronyms that are hard to get excited about, and we haven’t even gone into all the fees yet, yikes!

 

Here at JBS we are passionate about helping our clients through every stage of their life including assisting their loved ones make decisions around Aged Care. When the time comes, rather than stressing about what to do, pick up the phone and talk to JBS. We can help assess what the best option is for you or your loved one and help you put in place a strategy to help fund Aged Care, and where possible help to reduce the impact of the fees.

 

– Peter Folk –


Cash Flow Management

There’s something about starting a new year that brings with it a tonne of motivation. That fresh start where you can re-set, clean-up, and where energy levels are high and excitement at its peak. Where our passion for giving those dreams of ours a really good shot is reignited and our visions of living bigger and better are at the forefront of our thinking.

 

However, we get to March and the motivation starts to taper off and by April most goals have been abandoned or forgotten about. Research shows, in the end only about 8% of people stick with their good intentions.

 

So what do this 8% do differently? Are they just more willing to invest wholeheartedly to work towards their goals? Maybe, but experts say it has more to do with how they set themselves up for success. Specifically, they use January to re-set themselves and clean up any messes from the previous year, then invest the time and effort into effective goal planning.

 

So with the new year having now kicked off, here’s a list of the best results-driven tactics to ensure you are part of that 8% and make 2017 your best year yet:
Get Super Clear

Vague or generalised goals such as ‘save more’ won’t serve you. They need to be specific and well defined so that they can be measured.

 

–  What?

–  When?

–  And How?

 

Specific goals such as ‘pay off credit cards by March’ are easier to measure. By then mapping out the action steps required it is then easier to achieve the goal than not.

 

But there’s also the why? Connecting emotion with your goals will help you remember why they were important in the first place and will reignite your passion for reaching them when things get difficult.

 

Write it Down

Study after study has shown that those who write down their goals accomplish significantly more than those who don’t. Why? Putting pen to paper forces you to clarify what you want, it motivates you to take action and it makes it easier for you to see your progress and celebrate your successes.

 

Get Support & Accountability

We’ve all heard the importance of being around the right people, especially when chasing our goals.  When you’re in pursuit of a dream, there are many elements that can resist your path and block your forward motion.  Surrounding yourself with people that are genuinely cheering for you will help you disengage from this resistance and keep you moving forward.

 

That’s where JBS fits in. We believe (and know!) that the biggest influence of you achieving your financial and lifestyle goals is firstly to have clarity on what your goals are, then aligning your cash flow to help you achieve those goals. Fortunately for you we have a program designed to help you achieve this.

 

The JBS Cash Coach program is tailored to you, your needs, your goals, and the actions you need to take to achieve those goals.  We take the time to understand you, then design solutions to help you achieve your goals. We help you create a spending and savings plan that is aligned to your goals, and keep you accountable and motivated on a monthly basis to maximise the probability of achieving your goals so you can have the lifestyle you are entitled too in 2017 and into the future.

 

The early part of 2017 is the perfect time de-clutter your life of the excess build up from last year, clean up, clear your head, set motivating goals, and get moving towards those goals.

 

The JBS Cash Coach program will help you get the most out of 2017 but only if you take action. Make time and join the best support network around (aka JBS Cash Coach).


Pension Changes Means Reduced Tax Savings

Rule changes occur regularly with the Government in power tweaking legislation to make it fairer for all and ensure that the Government isn’t relied upon to fund everyone’s retirement through the Age Pension. This balancing act means that the strategy you implemented last year may no longer be beneficial for you or worse, not allowed. One change that is due to take effect from 1 July 2017 is the change of the tax treatment for Transition to Retirement pensions.

 

Transition to Retirement (TTR) pensions were introduced back in 2005 to allow those people that were easing into retirement by dropping their working hours to supplement their wages with an income from their super balance. However, while this was very useful for those in retirement transition, it also proved to be a powerful financial planning strategy, recycling funds through the super system to achieve the same take home pay however a reduced tax liability, meaning more funds are held in your superannuation account building for your eventual retirement. The Government and ATO knew of this strategy however as it was within the bounds of the laws in place, it has been accepted for use.

 

It does seem, however, that the Government now understands the additional tax that could be found and has implemented changes to take effect 1 July 2017 to make a TTR pension lose its tax-free status. This means that a TTR pension will have the same tax treatment as if it was in a superannuation account (15% tax rate). For those in the retirement transition space, it probably won’t change much as they need to subsidise their income and if the money wasn’t held in pension, it would be subject to the 15% super tax rate anyway. For those who have employed a TTR strategy to reduce tax, the tax savings will be reduced.

 

The strategy may still be beneficial, especially if you are able to achieve a significant salary sacrifice contribution from a higher income, however the tax savings will drop as the pension fund will now be subject to the 15% tax rate also.

 

Example:

pension-table

 

* For the purposes of this simplistic calculation, ‘Tax on Pension Investment’ is the 15% tax on investment income earned (4%) while money is held in a TTR pension. If assets were sold during the year, CGT would also be payable, making it again less tax effective. As this individual is under age 60, pension income is taxable.

 

Some clients situations allow them to maintain a tax-free pension or become eligible to establish one in the future. For this reason it is critical that all TTR strategies are reviewed prior to 30th of June 2017 as the new rules may not be applicable to you.

 

While you need to be making an appointment with your Financial Adviser to discuss the changes and determine if there’s still a benefit for you to continue with your TTR, more than anything this should highlight the need to have an ongoing relationship with a financial planner. Make sure you take up every opportunity to have a regular review of your financial plan, your objectives, determine if you are on track to reaching your goals and determine if the strategies in place are still appropriate. Your situation may not have changed but legislation may have.


Mistakes People Make When Buying Insurance

Purchasing insurance is the most effective method to protect our families and ourselves, financially against unforeseen circumstances.  Often however, people make simple mistakes whilst purchasing personal insurance cover.  Here are some of the mistakes we find people make.

 

Purchasing insurance online or over the phone without professional advice

 

insurance-2This point refers to all those commercials you see on TV about how you can buy insurance cover over the phone in 5 minutes without any medical and lifestyle questionnaires. When you buy insurance over the phone or online, the assessment process will seem to be very simple and fast.  This type of insurance is what we refer to as direct insurance.  Although simple to implement, direct insurance comes with more risks as direct insurance cover can mean assessment is carried out at the time of claim.

 

For example you might call up an insurer that you’ve seen on TV and get your insurance cover in place. 3 years later you suffer from a medical condition and need to claim. As the assessment wasn’t carried out during the application stage, it’ll be carried out during the claim stage. During assessment process, the insurer will assess you medically and financially for both the claim and from when you started the policy.  If the insurer discovers that you’ve had medical conditions prior to taking out the insurance policy, they could potentially void your claim altogether, meaning they cancel the policy as if you never held it.  This ultimately means you have been paying 3 years’ worth of premiums for an insurance policy which provided you with no cover at all.

 

Going through professionals such as a financial adviser, should mean you’re assessed at the time of application.  Although the process may take a little longer, it means you and your family have some certainty when you are accepted at application time, rather than be declined payment because of something you didn’t disclose during application stage.

 

Only considering price rather than value of the product(s) purchased

 

Price can often play an important part in your decision to buy personal insurance, but it should not be the only factor to consider. Find out about things like:

 

–  Additional benefits and definitions of the policy
–  What types of benefits are included and excluded
–  Claims payment procedures
–  What exclusions or limits exist on the cover
–  Ownership options

 

Price should not be the only consideration when purchasing insurance. That good old saying of ‘You get what you pay for’ applies here. Cheap generally means a lesser policy.

 

Implementing the wrong levels of cover required

 

We often find many people implement insufficient insurance covers in order to save money on premiums or they simply don’t know what to include when assessing their need for cover.  Whatever the case underinsurance could leave you and your family in financial strife.

 

These are just some of the questions you need ask yourself whilst implementing death cover.

 

If you were to die prematurely which option would you prefer for your partner?

–  Repay the home loan and never have to work again
–  Repay the home loan and not have to work for 5 years
–  They lose the house and have to return to work immediately
–  They can fend for themselves

 

Additionally would you also want the following expenses covered?

–  Funds for funeral expenses, medical expenses and legal expenses
–  Funds for the children’s education
–  Funds as an inheritance for kids and your partner
–  Purchasing insurance with premiums that increase as you get older

 

As you get older the chances of you suffering from a medical condition increases, therefore insurers tend to charge higher premiums for older Australians. This causes many people to cancel their cover simply because the premiums (costs) keep getting higher each year with their age.

 

You also have the option of purchasing your insurance with level premiums. This means the premium can be averaged over the lifetime of the policy and will not increase each year with your age (Cover and premiums can increase by CPI).

 

Another option is to reduce your sum insured which will reduce your premiums.  As you get older, your expenses and debts such as the mortgage tend to reduce.  Therefore you can reduce your level of insurance cover depending on your situation, which in turn will reduce the premiums payable.

 

Not reviewing your situation and your cover as life events take place

 

Certain events that occur in our lives can make a massive impact on our financial needs. Events can range from the birth of a baby to repaying the mortgage, receiving a promotion or re-entering the work force.

 

Every time there are certain changes to your life, you need to review your insurance cover. Picking up that phone and having a chat to your adviser, could mean you and your family receive the much needed additional cover. Or it could even mean savings in premiums as the existing cover you have may be too high and needs to be reduced.  Whatever the case it’s important to review your insurance needs every time a certain life event occurs.

 

If you want to know more or thinking about putting in place personal insurance cover, please contact JBS Financial Strategists.

 


Non-Concessional Contribution Changes

In our last CPE article we talked about the recent changes the government has made to the previously proposed non-concessional contribution life-time cap of $500,000.  To re-cap, the Government has back tracked on this proposal and has instead changed it to an annual cap of $100,000, with the ability to bring-forward 3 years’ worth of contributions from 1 July 2017. Your super balance must also be below $1.6 million to be able to make the contributions.

 

Since then the government has provided further direction on how the proposed bring forward rule and the $1.6 million cap will work.

 

Under current rules you can make a total of $180,000 in one year or $540,000 if you bring-forward 3 years’ worth of contributions. If you as an individual have triggered the bring-forward rule in FY16 and FY17, but you have not used it fully by 30 June 2017, transitional rules will apply.

 

If you trigger the bring-forward provisions in FY17, the transitional cap will be $380,000 (which is the current $180,000 cap plus the new $100,000 annual cap for FY18 and FY19). If you triggered the bring-forward rule in FY16, the transitional cap is $460,000 (current annual cap of $180,000 for FY16 and FY17, plus the $100,000 for FY18).

 

The below table provides an example of how this may work in specific situations, with example one and two outlining how the $380,000 bring-forward cap may work, and example three highlighting how the $460,000 cap works with the example contributions:

example-1

In relation to the $1.6 million eligibility threshold, you are unable to make further non-concessional contributions if your super account is above $1.6 million.  Your balance will be determined as at the 30th of June in the previous financial year.  If your balance is close to $1.6 million, you can only make a contribution or use the bring-forward rule to bring your balance up to $1.6 million without going over, this is summarised below.

example-2

As always these measures are not yet legislated and therefore could change yet again.  The draft legislation is expected in the next few weeks.

 

If you have made any non-concessional contributions in the previous three financial years and are concerned how this may affect you and your future contributions, feel free to contact any of the team here at JBS.


And Yet More Change

Last week, the Government made further announcements in relation to proposed changes to the superannuation system. From Budget night, we had a list of changes that they sort to bring in, however, after industry and community consultation, the Government have made changes to these proposed changes….confused yet?

 

cpe

Ok, well some of the main changes include:

–  The $500,000 lifetime cap on Non-Concessional (NCC) (after tax) Contributions has effectively been scrapped.

–  The $100,000 annual cap replaces the existing $180,000 annual cap for Non-Concessional (after tax) Contributions from 1 July 2017

–  The bring forward rules still apply, so an individual under age 65 can contribute up to $300,000 over a 3-year period

–  The current work test rules still apply for those over 65. This means they cannot contribute, unless working at least 40 hours in a 30 consecutive day period. The removal of the work test proposal has been scrapped until future notice

–  It is expected that the current $180,000 NCC cap still applies until 30 June 2017, meaning that you can trigger a bring forward provision in the current financial year and be able to contribute a maximum of $540,000 over the three (3) financial year period

–  From 1 July 2017, those with a superannuation balance of more than $1.6 million will not be able to make non-concessional (after tax) contributions to their super

–  The 5 year catch-up concessional contribution proposal, that would see those with a balance less than $500,000 able to access their unused concessional contribution cap to make additional before tax contributions to super, has been delayed until 1 July 2018.

 

The ultimate aim of the Government’s changes are two fold; (1) to avoid superannuation being used as an estate planning vehicle where people are saving their wealth in a tax free environment to pass to children rather than for retirement funding, and (2) to strengthen the idea of superannuation being a mechanism to provide an income in retirement, which includes supplementing the Age Pension.

 

We must note again, however, these proposals are not legislation and therefore could again change before they are enshrined into our super system, however it can assist us to forward plan your contributions and superannuation options better by providing a strong indication of what the Government is wanting to achieve.

 

If you are considering any large contributions to super or would like to discuss your personal situation and what these changes could mean for you, please contact us here at JBS.


Accessing your super before retirement

Ever get yourself in a financial spot of trouble and thought about taking money out of super to help? Well, generally speaking you can’t unless you’re retired but there are some limited instances where you can. They are limited to severe situations and you can’t just access the cash because you need a new car or the kitchen appliances need to be replaced.

 

Piggy BankThere are two ‘conditions of release’ (technical term for eligibility criteria to be able to access your super) for members to utilise under extenuating circumstances prior to retirement.

 

Severe Financial Hardship:
The first condition of release is Severe Financial Hardship. The rules around this condition of release vary depending on whether the member has reached their preservation age.

 

If the member has met the preservation age plus 39 weeks then they need to supply a letter from a government department showing the following:

•   At least 39 weeks of Government income support (like Newstart allowance) from the date the member met preservation age.
•   The member was not gainfully employed on any level on the date of the severe financial hardship application, and;
•   Evidence that the member cannot meet any reasonable and immediate living expenses; like you have missed your mortgage payments, can’t pay your electricity bill, however missing your repayment on your Ferrari won’t cut it.

 

If the client is younger than preservation age then the government department letter must show at least 26 weeks of government income support and evidence the member cannot meet their living expenses.

 

The amount that will be released also depends on whether the member has met their preservation age. The member can take their full balance if they meet the above criteria and are over their preservation age. If the member is under, then they can only withdraw between $1,000 and $10,000 in any 12 month period.

 

Compassionate Grounds:
The second condition of release is called Compassionate Grounds. Applications for this condition of release must be submitted to the Department of Health Services, as this condition applies to health related issues. SIS Reg 6.19A outlines what expenses they will release funds for:

 

•    Medical Treatment or transport;
•    To prevent bank foreclosure or sale of the member’s principle residence;
•    To Modify the members principle residence or vehicle to accommodate a disability; or
•    The pay for palliative care, death, funeral and burial expenses.

 

The member will need to supply evidence of these expenses to the Department of Health Services before a decision will be made. If the department comes back with a favourable outcome they will supply a letter for the trustee of the super fund stating how much can be withdrawn from the members account.

 

The member can apply for more than one of the above expenses at once. They will need to submit separate applications to the Department of Health Services with evidence of each expense.

 

These conditions are only available to members who are facing extreme circumstances.

 

So effectively, you have to almost be in dire straits (and I don’t mean the British rock band from the 80’s) to access super before retirement. Be warry of some providers that have touted that they can assist you to access your super early as these schemes are illegal and have been shut down in the past by ASIC however not until some clients have implemented the strategies and got themselves in trouble as trustees of their own super. Best way to look at super is that it is 100% a retirement savings plan and not an emergency or backup fund. If you’re concerned about your future and any road-bumps you may hit along the way, you may want to consider taking out insurances such as income protection or trauma cover so not to be disappointed when you cannot access your super for minor or short term issues.

 

If you have any concerns about your super or you want to look at personal insurances, why not give JBS a call to discuss your options.


Costs of Living in Retirement

Are you coming up to retirement? During the December 2015 quarter, the Association of Superannuation Funds of Australia (ASFA) issued new figures, which showed an increase in the costs of retirement. The average cost of retirement for people retiring at age 65 is approximately $59,236 per annum for couples and $43,184 for singles for a ‘comfortable standard of living’, both up 0.5% from the previous quarter.

 

Senior Couple Calculating CoinsSo then the question is raised, how much money do you need when you retire? It seems to be the age old question. Based on the figures released by ASFA, an average single retiree would require approximately $545,000 in super benefits in order to fund their retirement and couples would require around $645,000. But what do all these numbers mean to you and your retirement? Well, really all these numbers are just that, ‘numbers’. It’s important to understand that a comfortable lifestyle for one person may not be the same for the next.  Some retirees may require $100,000 per annum to live comfortably and others may only require $30,000.  One thing that is certain however is thecost of living will go up in the future and more importantly you will have to prepare for it.

 

Instead of worrying about the large sums of money required to retire on, it’s more important to have an understanding of the level of income you require once you’ve retired and work out from there how much you require in order to retire comfortably, taking into account your assets and other entitlements such as the Age Pension. A good starting point to determining how much you’ll need is to take into account your current living expenses. A common mistake here is most people will use the “off the top of my head” figures to determine expected living expenses. The issue with that is, often we under and over estimate expenses, which leads to very misleading results.

 

At JBS, we use technology to assist us to determine the exact expenses of our clients. This results in both efficiency as clients’ spend less time having to deal with their budgets and at the same time we attain very accurate information on our client’s actual living expenses. Once you’ve determined your living expenses, the next step is to review whether certain expenditures you’re paying today will still be payable once you’ve retired. Often these expenditures include your mortgage repayments, which we all want repaid as soon as possible, and work related expenses, such as commuting costs. Once retired, there’ll be of course no need to pay the tax man for income generated from employment and savings you’ve been putting away each month for retirement will also cease. It’s important that we capture all these points in order to get an accurate figure of your expected retirement expenses.

 

Take this example for instance.  Say you’re a 45 year old male, you’ve done your sums and calculated you’ll require $40,000 per annum in retirement. How do you then determine the following?

–   How much do you require to put into super each year to meet your retirement goals?
–   Will your super benefits be enough to fund your retirement expenses until your life expectancy?

–   When is your life expectancy?

–   How often should you review your retirement benefits to ensure you’re on track to meeting your goals?

 

From what you’ve read so far, we’d imagine you’re beginning to understand the complexity in determining how much you require to retire on.  The main point we wish to highlight is that you need to take time and be realistic with your budgeted retirement expenses. Know what your money goes on now (before your retire) so you can determine if you will spend the same in retirement. Doing all this yourself can become very complex and seeking professional advice is the best way to get an accurate estimate.  Having a professional on your side means there’s someone there to assist you in achieving your retirement goals by implementing different strategies to suit your needs. And more than anything, you don’t have to worry about your retirement as you’ve outsourced that!


Reviewing Personal Insurance

You always hear stories and advice about how important it is to have proper insurance cover, but once it’s in place often everyone sets and forgets about it.  It’s paramount that your insurance policies are reviewed on a regular basis to ensure you’re adequately covered. So how do you know when it’s time to review your insurance policies?  There are several life stages and events, which should trigger you to review your insurance policies.  Whether it be more responsibility such as starting a family, buying a house or even stressful events such as divorce and deaths of family members.  These types of events should trigger a call to action and requires you to review your insurance policies.

 

HouseStarting a family and/or buying a family home
Whether it be having a first child or buying your first home these are the most memorable and proud moments of your life, however often comes with additional responsibilities.  For those of you who remember to review your insurance needs, it’s often done after you’ve had kids or purchased that home.  This may leave you in a bingle as personal insurance policies can often be complicated and may require lengthy amounts of time to alter.  If bad luck strikes after the purchase of the home and your insurance policies aren’t adequate, this may potentially leave you in financial strife.  Therefore it’s a good idea to review and implement adequate insurance covers before these events.

 

Deaths of family members
When a close family member suffers from a medical condition, often this triggers you to think about your own morality and whether the same thing can happen to you.  This would normally be followed with thoughts of what will happen to my family if I were to suffer from the same condition?  On a lifestyle level, you might think to yourself and say I’m going to start eating healthier foods and exercising more.  The other question you should ask yourself, is do I have adequate insurance policies in place, if the same thing was to happen to me?  Again these types of events should trigger you to review your insurance needs.

 

Along with the above events, personal insurance covers should be reviewed but not limited to the following situations;

  • Marriages and divorce
  • Starting a family
  • Buying a house
  • New job
  • Kids enrolling in new school or completing their education
  • Illness and death in the family

 

If you’re unsure on whether or not to review your insurance needs, we strongly advise on picking up the phone and speaking to either your adviser or insurance representative.  There’s no harm is asking questions.

 

Putting in place personal insurance cover doesn’t necessarily require certain events to occur in your life.  Sometimes you may wish to protect the people around you financially.  For example you may be a 22 year old wanting to provide funds to your parents to look after you if you can’t look after yourself so you might want to look at Total & Permanent Disability (TPD) cover, or you may be a single 40 year old that needs to make sure income keeps coming in as you don’t have any other way to provide for your living expenses if you can’t work so you might consider income protection, or even a business owner that’s planning on the sale of the business to fund your retirement plans so you need insurance to make sure those plans don’t go off track somewhere along the line.

 

Whether it’s a certain event which occurs or you just wish to protect your family financially, personal insurance is a complicated area and needs to be looked at in depth.  Therefore it’s always strongly recommended that you visit an insurance expert such as JBS to review your circumstances and to ensure adequate insurance cover is in place for you.

 


To Record or Not to Record

The retention of key documents is an important requirement for the trustees of self-managed super funds. In this day and age, technological advances have seen the ATO update their record-keeping requirements to allow for electronic storage.

 

What do trustees need to know about record-keeping?
The ATO, on its website, emphasises that it is the responsibility of the trustees to maintain records of documents in such a way that they are accurate and easy to access. This includes all tax documents and records of the super fund, especially minutes of all investment decisions ensuring that all trustees have acknowledged the decision and the reasons of the choice of investment are noted. This specifically ensures that any disputes between trustees over failed investments within the fund, should not occur since trustees cannot claim they were not involved.

 

What are the benefits of storing SMSF records electronically?
The ATO’s decision to allow the electronic storage of documents was primarily as a way to minimise the cost of running an SMSF, since it can potentially reduce the costs of maintaining the collection of records. Additionally, a well organised collection may help reduce the cost of any audits required.

 

Data storage. Laptop and file cabinet with ring binders. 3d

What are the negatives of storing SMSF records electronically?
There is a need to ensure that all documents stored electronically can be easily verified for authenticity and are easily accessible. In particular, unknown authenticity of documents held digitally may result in issues when lodging documents with the ATO. Keeping a copy of key documents without the originals may result in difficult questions regarding whether the original was destroyed for the reason other than to simply reduce paperwork. For this reason trustees should strongly consider whether to keep original copies of important documents. The loss of a trust deed, or the existence of one with questionable accuracy, for example, has potentially major implications in case of disputes between trustees, often requiring court decisions for solutions to be achieved.

 

For how long do documents need to be kept by trustees?
The ATO specifies the need to maintain various documents for various lengths of time.  Should any of these documents not be available within the time period then a penalty must be paid based on penalty points.

 

Records required to be held for at least five years:

–  Accounting records with the transactions and financial position of the SMSF (If not held, 10 penalty units must be paid)
–  Annual operating statement and an annual statement of the SMSF’s financial position (10 penalty units)
–  Copies of all SMSF annual returns
–  Copies of other statements required to be lodged with the ATO or provided to other super funds

 

Records required to be held for at least ten years:

–  Minutes of trustee meetings and decisions (10 penalty units)
–  Changes of trustees (10 penalty units)
–  Trustee declarations acknowledging the obligations and responsibilities for any trustee, or director of a corporate trustee, appointed after 30 June 2007 (10 penalty units)
–  Members’ written consent to be appointed as trustees
–  Copies of all reports given to members (10 penalty units)
–  Documented decisions about storage of collectables and personal-use assets

 

Ultimately the responsibility of retaining key SMSF records falls onto the trustees.  Should any doubts be predicted to exist over the authenticity of a document then care must be taken if making the decision to store SMSF records electronically.

 

If you’re receiving full service SMSF administration from JBS, you’ll be happy to note that we do all the recording of documents for you electronically, however we still keep a copy of the original documentation of key documents such as trust deeds, pension documentation and binding death benefit nominations. This allows easy access to documents for members, trustees, auditors, and the ATO. If you are running your own SMSF, make sure you adhere to all document storage requirements or alternatively, contact JBS to discuss how we can help.