Day 2 Superannuation Schools 2012 PLANNING STRATEGIES WITH THE NEW CONTRIBUTION RULES...1

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1 PLANNING STRATEGIES WITH THE NEW CONTRIBUTION RULES...1 Introduction ATO gives green light to accessing TWO contributions caps in the one income year ATO confirms contribution counted towards cap in the year it is allocated ID 2012/ Documentation guidelines when allocating contributions as outlined in ID 2012/ Does the principle in ID 2012/16 equally apply to non-concessional contributions? Use related party lenders to avoid the contributions caps What is regarded as a contribution for superannuation purposes? Does a contribution arise where a related party provides free services to a superannuation fund? Does a contribution arise where a related party makes an interest-free loan to an SMSF? Advantages associated with making interest-free loans to an SMSF Do trustees breach the arm s length requirement in S.109 by accepting an interest-free loan? Do any of the anti-avoidance rules apply to these interest-free arrangements? Make excess super contributions for high income earners and literally save $ 000s Using the borrowing concession to make excess super contributions to avoid the PSI rules Using excess concessional contributions for company directors to flush out Division 7A problems Using the revamped withdrawal and re-contribution strategy to save clients $'000s Overview of the tax treatment of a lump sum and pension paid from an SMSF Superannuation interests and the proportioning rule Calculating the tax free and taxable components Implementing the withdrawal and re-contribution strategy Using the withdrawal and re-contribution strategy for clients aged between 55 and 59 years of age Using the withdrawal and re-contribution strategy for clients aged 60 or more estate planning...33 National Tax & Accountants Association Ltd: September October 2012 i

2 LEGALLY AVOID PAYING ANY TAX ON SUPER CONTRIBUTIONS INTO AN SMSF Introduction Fundamentals of making anti-detriment payments Overview of the anti-detriment provisions Detailed discussion of anti-detriment payments What requirements must an SMSF satisfy to claim an anti-detriment deduction? How is the anti-detriment deduction calculated brief overview Calculating the anti-detriment payment Importance of the SMSF s trust deed Financing the anti-detriment payment Using fund reserves (e.g., investment reserves) to finance an anti-detriment payment Using life insurance proceeds to fund an anti-detriment payment Using the account balance of other fund members to fund an anti-detriment payment the FITB method Summary of financing methods ATO confirms massive deductions for SMSFs making anti-detriment payments Anti-detriment strategy can eliminate CGT on death Combining an anti-detriment strategy with a withdrawal and re-contribution strategy Shifting surviving children into an SMSF and create a tax free retirement nest egg Case study shows how an SMSF generates a $1million deduction by making a $150,000 payment! NTAA decision grid on when SMSFs should use an anti-detriment strategy The Do s and Don ts associated with anti-detriment strategies When should taxpayers implement an anti-detriment strategy Checklist Decision tree on when SMSFs should use an anti-detriment strategy...71 ii National Tax & Accountants Association Ltd: September October 2012

3 SUPER PLANNING STRATEGIES DURING AN ECONOMIC DOWNTURN...73 Introduction Understanding the proportioning rule and the taxation of pension benefits Calculating the tax free and taxable components of a pension benefit payment The taxation of a pension benefit payment Converting a taxable pension into a tax free pension during a share market downturn How does a share market correction or downturn increase the tax free proportion of a pension? Treatment of capital growth and investment earnings while in pension phase Benefits of converting a taxable pension into a tax free pension for members aged less than 60 years Benefits of converting a taxable pension into a tax free pension for estate planning purposes The benefits for SMSFs that revalue property during a downturn Maximising the tax free component Tips and traps of commencing a pension during a property market downturn Can the above strategies apply by stopping an existing pension and restarting it? Tax free and taxable components of commuted lump sum benefits rolled back into the fund Maximising the tax free component by stopping a pension and starting a new pension at the most appropriate time...96 ADVANCED ESTATE PLANNING STRATEGIES UNDER THE SUPER RULES.103 Introduction An A to Z guide to structuring death benefit ETPs under the NEW rules Introduction Does an employment relationship exist between the taxpayer and their employer? What is the tax treatment of employment termination payments paid on death? What is the tax treatment of unused annual and long service leave on death? Tax planning strategies associated with paying out employee entitlements on death National Tax & Accountants Association Ltd: September October 2012 iii

4 2. Making lump sum payments from a superannuation fund on death Background associated with making death benefit payments from an SMSF Relying upon the SMSF trustee s discretion Using a Binding Death Benefit Nomination Using hard wired clauses in an SMSF deed Planning with reversionary pensions to save! When is a pension regarded as a reversionary pension? What is the tax treatment of a super pension which reverts to a dependant of a deceased member? When should taxpayers implement a reversionary pension strategy? What are some of the risks associated with using reversionary pensions? Tax strategies for clients with a terminal illness What constitutes a terminal medical condition? What is the tax treatment of superannuation entitlements paid out to a client with a TMC What structuring techniques should be implemented for a taxpayer diagnosed with a terminal illness? Checklist: Key TMC considerations Implementing tax-effective super benefit trusts Massive income tax and CGT savings by creating a superannuation benefit trust NTAA checklist highlights the do s and don ts with tax-effective super plans LATEST ADVANCED AUDIT TIPS AND TRAPS WITH RUNNING AN SMSF Introduction Tips and traps for SMSFs that use related parties in a property development Issues for SMSF property developments satisfying the sole purpose test and other regulatory requirements Traps with remunerating a related party engaged in a property development ATO confirms tax sting for SMSFs receiving in-specie superannuation contributions What is the contribution requirement? ATO confirms contribution requirement can be met by making in-specie contribution ATO ID 2010/ iv National Tax & Accountants Association Ltd: September October 2012

5 2.3 Reducing a capital gain that arises from an in-specie transfer under the retirement exemption In-specie contributions must comply with the SIS Act and the SIS Regulations Tax jolt for SMSFs with non-resident members What residency requirements must an SMSF satisfy to retain its complying status? Practical strategies to ensure an SMSF remains an Australian superannuation fund AN A TO Z GUIDE TO DESIGNING TAX-EFFECTIVE SUPER PLANS Setting up a tax-effective super plan Determining the profile of the client The projected growth of a member s super balance Creating tax-effective super plans for clients aged between 40 and 55 years Planning tips to develop an effective contributions strategy for clients aged 40 to 55 years Other strategies for clients aged 40 to 55 years Creating tax-effective super plans for clients aged General superannuation planning strategies for clients aged Advanced estate planning strategies Getting the right documents in place Planning in sensitive or high-risk situations Notes National Tax & Accountants Association Ltd: September October 2012 v