Day 2 Superannuation Schools 2011 ADVANCED PLANNING STRATEGIES FOR SUPER PENSIONS...1

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1 ADVANCED PLANNING STRATEGIES FOR SUPER PENSIONS...1 Introduction Setting up a tax-effective SMSF pension Background to the proportioning rule calculating the tax free and taxable components of a pension Tax benefits associated with commencing a superannuation pension Benefits for capital growth and investment earnings while in pension phase Commence a pension during a property downturn and convert a taxable amount into a tax free one! Using withdrawal and re-contribution with pensions for clients under 60 year of age! Accessing super for taxpayer aged less than Case study illustrates how the withdrawal and recontribution strategy increases tax-free amount Could the Commissioner apply Part IVA to the withdrawal and re-contribution strategy? Massive tax and estate planning savings with using multiple pensions Using reversionary pension interests on death Case study illustrates tax savings associated with using reversionary pension interests Maximise the pension asset exemption! Background Given the difficulties involved is it worth using the segregated method? Managing carry forward capital losses with respect to segregated pension assets in an SMSF What is the best method moving forward when markets rebound? Making the right decision Segregated versus the unsegregated method Documents which allow members to switch from the segregated to unsegregated pension method...31 National Tax & Accountants Association Ltd: September October 2011 i

2 6. Using reserving strategies and paying super Background to reserve accounts How are amounts allocated from a reserve account to a member treated? When are amounts allocated from a reserve account excluded from the concessional contributions cap? What is the tax treatment of income/earnings that are allocated to a pension reserve? What are the advantages associated with allocating amounts to a pension reserve? Sample trustee resolutions for making Allocations from reserves Checklists of income tax & Centrelink issues to consider when commencing a pension Issues to consider before commencing a pension Checklist of Centrelink issues that need to be considered Checklist of income tax issues to consider with pensions...43 CREATIVE PLANNING OPPORTUNITIES USING THE NEW BORROWING RULES Introduction The old and the new law what are the "must know" changes? The ATO s view regarding unresolved borrowing issues facing SMSF trustees The concept of a single acquirable asset In what circumstances is an SMSF trustee permitted to make an improvement to real property? Dangers associated with refinancing Maximise investment returns using a related party lender The major issues to consider prior to entering into a borrowing arrangement with a related party Why use a related party lender? Quantifying the benefit obtained from the interest rate differential Comprehensive case study Using a related party lender to develop vacant land Can an SMSF develop vacant land held under a new borrowing arrangement? The non-geared unit trust strategy...70 ii National Tax & Accountants Association Ltd: September October 2011

3 5. Make excess super contributions for high income earners and save $ 000 s How do the capping rules apply? Effectively avoid the concessional contribution cap using negative gearing losses in the SMSF...75 NTAA GUIDE TO SUPERANNUATION AND THE BANKRUPTCY RULES!...77 Introduction Fundamentals of the bankruptcy rules and superannuation Are superannuation interests protected from a trustee in bankruptcy? Consequences of an SMSF Member Becoming Bankrupt What are the tax and CGT implications associated with creditors clawing back super contributions? Traps and Tips with Designing Asset Protection Strategies for Business Clients Should business taxpayers use Individual or Corporate Trustees in an SMSF as part of Asset Protection? Contribution Strategies When can creditors claw back super contributions which have been made for a company director? Detailed case study on asset protection Miscellaneous Tips and Strategies Unique NTAA Guide to Reviewing Existing Business Structures for Business Clients When can business assets be transferred into an SMSF as part of Business Restructuring? SMSFs leasing business real property (BRP) to a related party Tax Implications of Transferring Assets into an SMSF When should clients make in-specie contributions into an SMSF for asset protection? National Tax & Accountants Association Ltd: September October 2011 iii

4 ADVANCED SMSF INVESTMENT STRATEGIES FOR BUSINESS CLIENTS Introduction Use the NEW borrowing concession and make tax-free lease payments into an SMSF Advantages associated with borrowing to purchase business real property and leasing it to a related party Case study showing savings of using an SMSF to acquire business premises using negative gearing Dangers and benefits associated with SMSFs investing in overseas real estate Can an SMSF invest in a rental property that is located overseas? Can an SMSF pay for travel and accommodation costs of trustees inspecting overseas property? NTAA guide to the dangers and benefits associated with investing in overseas-based rental properties Undertaking property development and investment with an SMSF Introduction Can an SMSF carry on a business of property development? Issues/problems with shifting an existing property development business into an SMSF Tax structuring opportunities when operating a PDB in an SMSF Checklist of factors to consider when undertaking property development in an SMSF A COMPREHENSIVE GUIDE TO SUPERANNUATION AND DIVORCE Introduction Fundamentals of splitting super on divorce To whom do the rules apply? Splitting super on divorce generally Splitting super on divorce and Court orders Binding Financial Agreements between the parties Methods of payment to non-member spouse Tax consequences of splitting How does the proportioning rule apply for super transferred on marriage breakdown? iv National Tax & Accountants Association Ltd: September October 2011

5 2. NEW rules provide relief for transferring assets between SMSFs Related party acquisitions Pre-1999 geared unit trusts Advanced issues and structuring techniques Tax effective structuring to split super on marriage breakdown and beat the preservation rules! Traps with making super contributions before marriage breakdown Tips for business and investor clients Government employees and Public sector funds SMSFs and collectables and personal use assets Structuring when children are involved SETTING UP A TAX EFFECTIVE SUPERANNUATION PLAN Introduction Determining the profile of the client The projected growth of a member s super balance Planning for clients aged 45 to 59 years Planning tips to develop an effective contributions strategy for clients aged 45 to 59 years Other strategies for clients aged 45 to 59 years Planning for clients aged 60 years or more General superannuation planning strategies for clients aged 60 years plus Advanced estate planning strategies Getting the right documents in place Planning in sensitive or high-risk situations The financial services regime Notes National Tax & Accountants Association Ltd: September October 2011 v