L&H Group Superannuation Fund ANNUAL REPORT FOR THE YEAR ENDING 30 JUNE 2015 PART 2 (Your Annual Member Statement forms Part 1 of the annual periodic information and should be read in conjunction with this Annual Report.) Important Information The issuer and Trustee of the L&H Group Superannuation Fund, (ABN 64 641 864 843, Registrable Superannuation Entity ( RSE ) Registration No: R1001211), is Equity Trustees Limited (ABN: 46 004 031 298, RSE Licence No. L0003904, Australian Financial Services Licence ( AFSL ) No: 240975, Address: GPO Box 2307, Melbourne VIC 3001. Ph: (03) 8623 5000 Fax: (03) 8623 5200) The Administrator of the L&H Group Superannuation Fund is KPMG Superannuation Services Pty Limited, ABN: 90 094 584 755, AFSL No: 241366, Address: PO Box 67, Australia Square NSW 1215. Ph: (02) 9335 8272 Fax: (02) 9335 7001.
General Information This Annual Report is issued by Equity Trustees Limited ( the Trustee ) ABN 46 004 031 298, AFSL No. 240975, RSE Licence No. L0003904 as Trustee of the L&H Group Superannuation Fund ( the Fund ), ABN 64 641 864 843, Registrable Superannuation Entity ( RSE ) Registration No: R1001211. The Trustee, any underlying investment manager and other service provider to the Fund, do not guarantee the investment performance of any investment offered or the repayment of capital. Investment in the Fund is subject to investment risk including loss of income and capital invested. Any defined benefits are subject to the continuation of employer funding to the Fund. The information provided in this report is in accordance with the requirements of the Corporations Act 2001. The report also summarises recent changes to the Fund and some legislative changes that may be relevant to your superannuation. Any information is of a general nature only and has been prepared without taking into account your investment objectives, financial situation and needs. Before making any investment decisions in relation to the Fund, you should obtain professional financial advice from a licensed or authorised financial adviser. Whilst all due care has been taken in the preparation of this Annual Report, the Trustee reserves its right to correct any errors or omissions. The terms of your membership in the Fund are set out in the Fund s Trust Deed and any applicable insurance policy. Should there be any inconsistency between this Annual Report and the Fund s Trust Deed, the terms of the Fund s Trust Deed will prevail. Insurance benefits are subject to the terms and conditions of the applicable insurance policy. 2
Message from the Trustee The Trustee presents the Annual Report for the L&H Group Superannuation Fund ( the Fund ) for the year ended 30 June 2015. This Annual Report should be read in conjunction with your Annual Member Statement (accompanying this Annual Report) which shows your member entitlements in the Fund as at 30 June 2015. Please take the time to read this report, and, if you have any queries or require further information, contact the Fund Administrator (contact details on the back page). Who runs the Fund The Trustee of the Fund is Equity Trustees Limited (ABN: 46 004 031 298, AFSL No. 240975, RSE Licence No. L0003904). The Fund is set up as a trust and is governed by a legal document called a Trust Deed. The Fund s trustee is responsible for running the Fund in accordance with the Trust Deed. Net earning rates*: Key points for 2014/2015 - Aggressive Investment Option 13.4% - Growth Investment Option 12.2% - Balanced Investment Option 9.0% - Stable Investment Option 5.9% Total contributions and transfers paid in $1,149,658 Total benefits paid and payable $1,357,080 Net Fund assets at 30 June 2015 $13,873,459 * The net earning rate for each investment option is based on the combined investment return of the underlying fund managers used in each investment option (refer to page 6 to 9 for more information). It reflects the earning rate applied in respect of each available investment option, less the deduction of relevant fees, costs and taxes deducted prior to the calculation of the earning rate. Generally, the net earning rate is not relevant to a member s defined benefit but may be relevant to other benefits or accounts applicable to a member. Refer to the annual Member Statement for more information. Fund membership The Fund s membership changed during the reporting period was follows: Total members at 1 July 2014 34 New members 0 Members who left 3 Total members at 30 June 2015 31 Trustee indemnity insurance The Trustee has taken out trustee indemnity insurance to help protect the Trustee, its Directors and the Fund against certain liabilities, that is consistent with the size and nature of its business and industry standards. As with any insurance, the indemnity is subject to the terms and conditions of the relevant insurance policy. Policy committee A Policy Committee is a committee whose purpose is to facilitate communication between the members of the Fund and the Trustee. The Policy Committee performs functions such as reviewing the Fund s member communications. In most instances, a Policy Committee of a superannuation fund is required to be made up of an equal number of employer and employee representatives. Because the Fund has less than 50 members, there is no requirement for a Policy Committee to be formed unless (as has occurred in the case of this Fund) at least 5 of the members request so. The representatives of the Policy Committee of the Fund over the year to 30 June 2015 were: Policy committee representatives over the year to 30 June 2015 3
Member Representative Steve Woodiwiss Sue Cole John Festing Employer Representative Maureen Cooper Pam Herbstreit John Kerr Accounts in your member statement) they have within the Fund: 1. The Aggressive Option; 2. The Growth Option; 3. The Balanced Option; and 4. The Stable Option. David Mitchell Gary Reading Employer Representatives of the Policy Committee were appointed by L&H Group Pty Limited. Member Representatives of the Policy Committee were elected by members of the Fund via a ballot. For further information regarding the Member Representative election process, contact the Fund Administrator (contact details on the back page). Investment Managers The assets of the Fund are invested in a range of investment funds or products. The following list of companies ( underlying fund managers ) managed the investment funds or products in which assets of the Fund were invested as at 30 June 2015 Underlying fund managers over the 2014/2015 year Vanguard Investments Australia Limited. MLC Limited. Equity Trustees Limited*. Note: the underlying fund managers utilised by the Trustee for investments by the Fund may be changed from time to time at the absolute discretion of the Trustee. They are shown in this report to provide historical information about the investments of the Fund during the year. You have no ability to choose the underlying fund managers utilised by the Trustee. * Equity Trustees Limited is the issuer of the EQT Cash Management Account in which the Fund invests. Transactions between Equity Trustees Limited in its capacity as Trustee of the Fund and Equity Trustees Limited in its capacity as issuer of the EQT Cash Management Account are conducted on normal commercial terms and involve conditions no more or less favourable than those available to other parties unless otherwise stated. Investment objectives and strategies Accumulation Accounts You can split the investment of your existing accumulation accounts in any proportion between the four investment options. You can also elect to direct your future contributions to any one of the four investment options. As such, you have the option of maintaining your accumulation accounts in your existing strategy, while being able to consider whether you would like to have your future contributions invested in the same option or an alternative strategy. Please note that if you have not selected your preferred investment option, the default investment option (the Growth option) applies to your accumulation accounts. Further information on these investment options is available within the Fund s current Member Booklet which is available by contacting the Fund Administrator (contact details on the back page). You should consider the most up to date Member Booklet, Annual Report and any Significant Event Notices provided to you when choosing an investment option. If you would like to make an investment choice, contact the Fund Administrator to request an Investment Choice Form or for further information (contact details on the back page). No switching fee is charged, but a buy/sell spread may be incurred. Contact the Fund Administrator for further information (contact details on the back page). Defined Benefits The assets supporting the defined benefit component of your superannuation interest in the Fund is invested in accordance with the investment strategy and objectives for the Growth Option. The Growth Option s investment objective and strategy are outlined on page 7 of this annual report. Generally, the performance of the Growth Option is not relevant to your defined benefits which are calculated based on a defined formula. Refer to the information about the Allocation of earnings to members later in this report for further details. Members have a choice of the following four investment options for the investment of any accumulation accounts (referred to as Additional 4
Investment tables The tables overleaf (pages 6 9) contain information regarding the objectives and strategies of the Fund s investment options. The objectives of each option are not a promise or guarantee of any particular benefit or return. The objectives are used by the Trustee to measure the performance of the Fund s investments. Information about investment performance is provided in your Member Statement for the year to 30 June 2015. For the purpose of monitoring performance of the Fund s underlying investment managers against comparable surveyed managers, the Trustee compares the underlying investment manager performance with the respective peer group managers surveyed by Morningstar Australasia Pty Limited ( Morningstar ). The achievement of the objectives is subject to market conditions which may inhibit success at certain times. A superannuation fund s investment performance typically varies over time. Because superannuation is a long-term investment, longer-term returns (such as 5 and 10-year figures) smooth out short-term results. Depending on the nature of each investment option (including its risk profile), an investment option may experience negative returns from time to time and it is generally not appropriate to assess the performance of an investment option by the return for a single year or other short term returns. 5
Aggressive Investment Option Suitability This option is intended to be suitable for members seeking long-term returns with high levels of volatility. Investment objectives The Aggressive option s investment objectives are: To aggressively pursue high investment growth with the likelihood of high volatility; To outperform (after taxes and fees) the Average High Growth Manager over a rolling 5-year period; To outperform (before taxes and fees) the Consumer Price Index ( CPI ) by 4% over rolling 5-year periods; and To limit the chance of a negative annual return to 1-year in every 4 years. Risk profile* Potential long-term return Likely variability of return Potential for negative returns High High 5 in 20 years Asset Allocation Benchmark Allocation Actual allocation 30 June 2015 Actual allocation 30 June 2014 Aust Shares 41.8% Int'l Shares 34.2% Property 9.5% Aust Fixed Int 3.8% Int'l Fixed Int 5.7% Cash 5.0% Aust Shares 37.4% Int'l Shares 38.4% Property 9.3% Aust Fixed Int 3.9% Int'l Fixed Int 6.0% Cash 5.0% Aust Shares 37.6% Int'l Shares 38.1% Property 9.7% Aust Fixed Int 3.8% Int'l Fixed Int 5.8% Cash 5.0% * This provides a general indication of the level of risk associated with this investment option. For an assessment of risks taking into account your personal situation, we suggest you consult an appropriately qualified adviser. 6
Growth Investment Option Suitability This option is intended to be suitable for members seeking long-term returns with high levels of volatility. Investment objectives The Growth option s investment objectives are: To provide strong growth with modest risk; To outperform (after taxes and fees) the Average Growth Manager over a rolling 5-year period; To outperform (before taxes and fees) the CPI by 3% over rolling 5-year periods; and To limit the chance of a negative annual return to 1-year in every 5-years. Risk profile* Potential long-term return Likely variability of return Potential for negative returns High High 4 in 20 years Asset Allocation Benchmark Allocation Actual allocation 30 June 2015 Actual allocation 30 June 2014 Aust Shares 36.6% Int'l Shares 31.2% Property 8.3% Aust Fixed Int 9.2% Int'l Fixed Int 7.9% Cash 6.5% Other 0.3% Aust Shares 32.8% Int'l Shares 34.1% Property 8.3% Aust Fixed Int 9.0% Int'l Fixed Int 8.3% Cash 6.9% Other 0.6% Aust Shares 33.1% Int'l Shares 34.0% Property 8.7% Aust Fixed Int 9.2% Int'l Fixed Int 7.9% Cash 6.5% Other 0.6% * This provides a general indication of the level of risk associated with this investment option. For an assessment of risks taking into account your personal situation, we suggest you consult an appropriately qualified adviser. 7
Balanced Investment Option Suitability This option is intended to be suitable for members seeking long term returns with moderate to high levels of volatility. Investment objectives The Balanced option s investment objectives are: To provide modest growth with a medium level of risk; To outperform (after fees and taxes) the Average Balanced Manager over a rolling 5-year period; To outperform (before taxes and fees) the CPI by 2% over rolling 5-year periods; and To limit the chance of a negative annual return to 1-year in every 6-years. Risk profile* Potential long-term return Likely variability of return Potential for negative returns Moderate - High Moderate - High 3 in 20 years Asset Allocation Benchmark Allocation Actual allocation 30 June 2015 Actual allocation 30 June 2014 Aust Shares 23.1% Int'l Shares 23.2% Property 5.1% Aust Fixed Int 23.4% Int'l Fixed Int 13.6% Cash 10.5% Other 1.1% Aust Shares 20.7% Int'l Shares 23.0% Property 5.7% Aust Fixed Int 22.4% Int'l Fixed Int 14.3% Cash 11.8% Other 2.1% Aust Shares 21.2% Int'l Shares 23.2% Property 6.3% Aust Fixed Int 23.3% Int'l Fixed Int 13.6% Cash 10.4% Other 2.0% * This provides a general indication of the level of risk associated with this investment option. For an assessment of risks taking into account your personal situation, we suggest you consult an appropriately qualified adviser. 8
Stable Investment Option Suitability This option is intended to be suitable for members seeking stable returns and minimal risk of a negative return. Investment objectives The Stable option s investment objectives are: To provide modest growth with good security; To outperform (after taxes and fees) the Average Conservative Manager over a rolling 5-year period; To outperform (before taxes and fees) the CPI by 1% over a 1-year period; and To limit the chance of a negative annual return to 1-year in every 7-years. Risk profile* Potential long-term return Likely variability of return Potential for negative returns Low - Moderate Low - Moderate 1 in 10 years on average Asset Allocation Benchmark Allocation Actual allocation 30 June 2015 Actual allocation 30 June 2014 Aust Shares 9.5% Int'l Shares 15.2% Property 1.9% Aust Fixed Int 37.5% Int'l Fixed Int 19.5% Cash 14.5% Other 1.9% Aust Shares 8.7% Int'l Shares 11.8% Property 3.1% Aust Fixed Int 35.7% Int'l Fixed Int 20.3% Cash 16.8% Other 3.6% Aust Shares 9.3% Int'l Shares 12.4% Property 3.8% Aust Fixed Int 37.4% Int'l Fixed Int 19.2% Cash 14.3% Other 3.6% * This provides a general indication of the level of risk associated with this investment option. For an assessment of risks taking into account your personal situation, we suggest you consult an appropriately qualified adviser. Allocation to Underlying Investments Allocation to Underlying Investments that are in excess of 5% of the Fund s Assets Investments Holding as at 30 June 2015 ($) Percentage of the Fund s total holdings as at 30 June 2015 Vanguard High Index Growth Fund 11,177,410 79.52% MLC Conservative Option 2,053,502 14.61% EQT Cash Management Account 825,965 5.87% Total 14,056,877 100.00% 9
Allocation of earnings to members Earnings of the Fund s investment options are allocated to members accumulation accounts (after the deduction of relevant fees, costs and taxes including estimates or provisions for fees, costs and taxes payable (but not yet paid)) depending on the investment options applicable to the accounts. Earnings are allocated on a pro-rata daily basis and are compounded annually, each 30 June. The returns of the Fund s investment options are subject to normal investment market movements and future investment performance cannot be guaranteed. Earnings can be positive or negative. The net earning rate for each investment option is based on the Fund s actual earning rate of the investment option, i.e. the combined return of the underlying fund managers less relevant fees, costs and taxes which are deducted by the manager or from the assets of the Fund. The net earning rates for the year ended 30 June 2015, for each of the Fund s investment options, are set out below. Further information about net earnings is shown in your Member Statement. Aggressive Investment Option 13.4% earned by the Fund and the deduction of taxation, fees and costs. The Trustee does not guarantee that you will earn any specific rate of return on your investment or that your investment will gain or retain its value. General investment market overview for the year to 30 June 2015 All asset classes provided positive returns in the 12 months to 30 June 2015. Over the year to 30 June 2015, unhedged international shares was the strongest performing asset class, returning 23.0%. Contributing to such strong performance was a combination of a delay in interest rate hikes in the United States and further global monetary easing, particularly in Europe, Japan and China. Further, the depreciation of the Australian Dollar relative to the US and Pound Stirling boosted returns over the year. Hedged international shares and Australian shares delivered returns of 6.6% and 5.7% respectively, over the year to 30 June 2015. Bond markets performed well, with Australian and international fixed interest returning 5.6% and 6.2% respectively, over the year ended 30 June 2015. Growth Investment Option 12.2% Balanced Investment Option 9.0% Stable Investment Option 5.9% Note: the net earning rates are not, generally, relevant to any defined benefit entitlements of a member (i.e. an entitlement based on number of years of service, a defined benefit accrual rate and final average salary) provided employer funding of these entitlements continues in accordance with actuarial recommendations. However, the net earning rate for the Growth option (which is the option in which the assets supporting the Fund s defined benefits are invested) will also be relevant to the calculation of the notional accumulation benefit, which acts as a minimum threshold when determining resignation benefits. Note: Past performance is not a reliable indication of future performance. If you leave the Fund or withdraw monies from the Fund, you may get back less than the amount of contributions paid into the Fund as a consequence of the level of investment returns Australian property performed strongly over the 12 months to 30 June 2015 (listed property delivering a return of 20.3% and unlisted property delivering a return of 11.1%) supported by record low interest rates. This is general information only about the performance of investment markets (not the Fund s investments) in the last financial year and does not constitute financial advice. This market overview is provided by the Fund Asset Consultant, KPMG Superannuation Services Pty Limited Asset Consultant The Trustee utilises an independent asset consultant to provide advice regarding the investments of the Fund. The asset consultant to the Fund is KPMG Superannuation Services Pty Limited (ABN: 90 094 584 755) (AFSL No. 241366). The investments of the Fund are monitored via quarterly investment reports, which are reviewed by the Trustee. Underlying fund managers may be appointed and removed by the Trustee having regard to the 10
recommendation of the asset consultant. Any decision to appoint/remove a manager is based upon an assessment of the fund manager s style and performance, as well as its fit with the other managers utilised by the Fund. Reserves The Fund has an Operational Risk Financial Requirement Reserve ( ORFR ) which is intended to provide adequate financial resources to address potential losses arising from operational risks (as defined under superannuation laws) that may affect the Fund s business operations, for example, losses resulting from inadequate or failed internal processes, people and systems or from external events. The ORFR within the Fund will be built up to a defined target - 0.25% of Fund assets over a transition period expected to end by 30 June 2016, through the transfer into the reserve of monies contributed by L & H Group Pty Ltd. The target ORFR within the Fund for 30 June 2015 is 0.20% of the Fund s assets. The Trustee has a strategy for managing this reserve which includes investing the ORFR solely in cash and cash equivalent investments. The ORFR may be drawn upon to assist in compensating members or the Fund in the event of an operational risk having materialised. Movements in this reserve since its inception (on 20 November 2014) are as follows: Balance Opening Balance (1/07/2014) - Transfer In (31/12/2014) 12,967 Transfer In (30/06/2015) 14,735 Interest earned (1/1/15 to 30/6/15) 107 Closing Balance 27,809 Derivatives The Trustee does not directly invest any of the assets of the Fund in derivative securities such as options, futures or swaps. The underlying fund managers utilised by the Fund may utilise derivatives to manage the risk and liquidity of their portfolios. They do not, as a general rule, invest in derivatives for speculative purposes. Actuarial review An actuarial review of the Fund was completed effective 30 June 2014. The purpose of the actuarial review is for the Fund s actuary to investigate the financial position of the Fund and make recommendations regarding the level of contributions to be made by L&H Group Pty Limited. L&H Group Pty Limited makes regular contributions to fund members defined benefits. Contributions are made in accordance with the Actuary s recommendations from time to time. The Fund is required to obtain an actuarial review at least every three years. Additionally, annual actuarial solvency calculations are undertaken to monitor the Fund s financial strength. The next annual solvency calculation will be due effective 30 June 2016. The next triennial actuarial review will be due effective 30 June 2017. Superannuation Surcharge Tax Whilst the superannuation surcharge was abolished with effect from 1 July 2005, the ATO may still issue assessments in relation to previous years. Any assessments received in relation to individual members of the Fund will be reflected in their Surcharge Account and deducted from their benefit upon leaving the Fund. Please note all surcharge assessments are paid to the ATO within the necessary timeframe. Any amount deducted in relation to the superannuation surcharge tax during the year is shown on your Member Statement. Your Surcharge Account will continue to accrue with earnings until you leave the Fund. The interest applied to your Surcharge Account is the net earning rate of your investment option within the Fund. Eligible Rollover Fund The Super Safeguard Fund ( SUSA ) is the nominated Eligible Rollover Fund ( ERF ) for the Fund. An ERF is a fund designated by the Australian Prudential Regulation Authority ( APRA ) to receive and invest the entitlements of superannuation members in certain circumstances. Subject to any legislative requirement for the Trustee to transfer lost accounts to the ATO, your benefit may be transferred to the ERF if: You leave the employment of your employer without providing benefit payment instructions within 90 days of leaving; or You become a "lost member", where two pieces of mail are returned to sender and 11
the Fund no longer has updated contact details for you and is otherwise unable to contact you. If your benefit is transferred to SUSA, any insurance cover that you may have will cease as at the date of transfer. Once your benefit has been transferred to SUSA, you will have no entitlement to benefits from the Fund. Instead, you will become a member of SUSA and be subject to its governing rules. If the Trustee holds your current address or contact details, you will be provided with a Product Disclosure Statement ( PDS ) from SUSA upon transfer of your benefit to them. This PDS will outline the operational and membership details of SUSA. Please contact SUSA for further information (contact details below). The investments, fees and costs in relation to SUSA will be different from those of the Fund. In addition, SUSA does not offer insurance benefits in the event of death or disablement. As such, apart from any grace period applicable to members insurance benefits on termination of employment, any insurance benefits you may have in the Fund will cease at the time your benefit is transferred to SUSA. Members wishing to locate their benefit after it has been transferred from the Fund, or members who have any enquiries on the nominated ERF, should contact SUSA at the following address: Those enquiries or complaints will be properly considered and dealt with within 90 days. It is important to distinguish between enquiries and complaints. Enquiries are requests for information about the Fund or your benefits. Complaints are expressions of dissatisfaction. Enquiries If you have an enquiry regarding the Fund, you should contact the Fund Administrator (contact details on the back page). Enquiries can be made by email, phone or in writing. If you do not receive a satisfactory response within 28 days, you should immediately contact the Trustee (see the back page for contact details). Complaints Complaints should generally be made in writing to the Trustee, and you should receive a response from the Trustee within 90 days. Complaints to the Trustee should be directed to the Complaints Officer at the following address: The Complaints Officer Equity Trustees Limited GPO Box 2307 MELBOURNE VIC 3001 Postal address Super Safeguard Eligible Rollover Fund GPO Box 3426 MELBOURNE VIC 3001 1300 135 181 1300 135 191 www.supersafeguard.com.au Where benefits are transferred to the ATO under Government legislation, they can be claimed by contacting the ATO (go to www.ato.gov.au for more information). Enquiries and complaints The Trustee is required to take all reasonable steps to ensure that there are arrangements in place under which: Members or their beneficiaries have the right to enquire into, or complain about, the operation or management of the Fund; and (03) 8623 5000 (03) 8623 5200 Superannuation Complaints Tribunal If you are not satisfied with the Trustee s handling of your complaint or their decision, or the Trustee does not respond within 90 days, you may contact the Superannuation Complaints Tribunal. The Tribunal is an independent body set up by the Federal Government to assist members or beneficiaries to resolve certain types of complaints with fund trustees. The Tribunal may be able to assist you to resolve your complaint but only if you are not satisfied with the response received from the Trustee s handling of your complaint. If the Tribunal accepts your complaint, it may attempt to resolve the matter through conciliation, which involves assisting you and the Trustee to come to a mutual agreement. If conciliation is unsuccessful, the complaint is referred to the Tribunal for a determination which is binding. You should be aware, however, that a party may 12
appeal a decision of the Tribunal to the Federal Court. The Tribunal cannot deal with all complaints. If you wish to find out whether the Tribunal can handle your complaint and the type of information you would need to provide, phone the following number for the cost of a local call anywhere in Australia: Postal address Superannuation Complaints Tribunal Locked Bag 3060 GPO Melbourne VIC 3001 1300 884 114 Information on request You can request additional information by contacting the Fund Administrator (contact details on the back page): The Fund s Trust Deed and Rules; The latest audited accounts; All member forms, e.g. the Change of Beneficiaries Nomination Form; Information about your benefit entitlements; and Any other information that may help you understand particular investments of the Fund or the management, financial condition and performance of the Fund. Legislative Update Note: This update, which includes some recent legislative changes applicable to the 2014/15 reporting period (including some proposed changes which are still not law), was compiled as at July 2015 and is subject to change. For up to date or additional information relating to taxation of superannuation go to www.ato.gov.au or contact the Fund Administrator. Temporary Budget Repair Levy The Government s temporary budget repair levy (of 2%) for financial years between 1 July 2014 and 30 June 2017 (Levy Period) applies to that part of a person s taxable income which exceeds $180,000. This levy gives rise to some consequential changes to other tax rates that are based on the top marginal tax rate (including tax rates relevant to superannuation). For example: The excess non-concessional contributions tax rate for the Levy Period has increased from 47% to 49%. Tax on amounts that are assessable income of an individual (such as excess concessional contributions and the taxable component of benefit payments received by an individual) may be increased by 2% if an individual s taxable income in an income year during the Levy Period exceeds $180,000. Tax on the taxable component of Departing Australia Superannuation Payments during the Levy Period has increased from 35% to 38%. No-TFN tax on contributions and withholding tax on benefit payments where no TFN has been provided has also increased by 2% during the Levy Period. Please visit www.ato.gov.au for more information or see a qualified taxation adviser for an explanation of how these changes may affect you. The changes are complex and the summary we have provided above does not take into account your personal circumstances. Division 293 Tax During the 2014/15 and future financial years, an additional amount of tax may apply to certain super contributions made by very high income individuals (that is, individuals with income in excess of a high income threshold of $300,000) to reduce the concessional tax treatment of those contributions. The additional tax rate is 15%. Please visit www.ato.gov.au for more information or see a qualified taxation adviser for an explanation of how these changes may affect you. The changes are complex and the summary we have provided above does not take into account your personal circumstances. Non-concessional contributions The Federal Government has passed amendments to taxation legislation that allow non-concessional contributions which are in excess of the nonconcessional contributions cap to be released (with associated earnings to be taxed at the member s marginal tax rate after any relevant adjustments). These amendments only apply to excess nonconcessional contributions made from 1 July 2013. 13
Benefits Tax For the 2015/16 financial year, the low rate threshold for super lump sum payments is $195,000 (increased from $185,000 in the 2014/2015 year). Any taxable component of a lump sum payment below this threshold is not subject to tax. The low rate threshold amount is reduced by any amount previously applied to the threshold. The threshold may change from year to year. Superannuation Guarantee Charge As a result of Federal Government legislative changes, the Superannuation Guarantee Charge Percentage commenced to be frozen from the 2014/2015 year at 9.5%. The freeze will apply until the financial year ended 30 June 2021. The Superannuation Guarantee Charge percentage will increase by 0.5% from 1 July 2021 until it reaches 12% for financial years on or after 1 July 2025. The Superannuation Guarantee Charge is subject to a maximum super contribution base, which determines the maximum limit on any individual employee s earnings base for each quarter of any financial year. Employers do not have to provide Superannuation Guarantee contributions for that part of earnings about the maximum limit. In the 2015/2016 financial year, the maximum limit per quarter is $50,810 (increased from $49,430 per quarter in the 2014/2015 financial year). Government Co-contributions Eligible low income earners may receive (usually via their superannuation fund) a Government cocontribution if they make a personal super contribution during a financial year. The cocontribution matches the personal contribution subject to certain limits (in particular, a maximum cocontribution of $500 per year for $1000 of personal contributions). Eligibility depends on an individual s income with the maximum entitlement being available to individuals with income below a lower income threshold. The lower income threshold is $35,454 in the 2015/2016 financial year (increasing from $34,488 in the 2014/2015 financial year) and may change from year to year. For further eligibility details, visit www.ato.gov.au. Low Income Superannuation Contribution While the Federal Government made legislative changes during the reporting period which mean that the low income superannuation contribution (which is designed to return tax payable on concessional contributions for eligible low income earners) ceases to apply to concessional contributions made for the 2017-18 financial year and later financial years, the low income superannuation contribution is available to eligible individuals in the 2014/15 and 2015/16 financial years. The maximum low income superannuation contribution is $500 and is usually payable to an individual s superannuation fund. For further eligibility details, visit ww.ato.gov.au. Release of Super for Terminal Medical Conditions Government regulations have been changed to make it easier for superannuation benefits to be released (tax-free_ to an individual suffering a terminal medical condition. From 1 July 2015, superannuation benefits can be released if 2 relevant medical practitioners certify the medical condition is likely to result in death within a period of 24 months (rather than 12 months). This change is subject to a superannuation fund s trust deed and insurance arrangements. Qualifying Regulated Overseas Pension Schemes The relevant UK authority has made changes to rules affecting Qualifying Regulated Overseas Pension Schemes (QROPS), which significantly impact the transfer of account balances from the United Kingdom (UK) into Australian superannuation funds that are QROPS. Financial Adviser Register The Government passed legislation facilitating the established of a publicly available register of financial advisers. The register is available from ASIC s website - www.moneysmart.gov.au. The register allows consumers to access information about people who provide personal advice on investments, superannuation and life insurance, including where a financial adviser has worked, their qualifications, training, memberships of professional bodies and what products they can advise on. Other information The Trustee s approach to conflicts management is governed by its Conflicts Management Policy which sets out the principles and the minimum requirements of the Trustee. Conflicts identified are recorded and managed ongoing via the Trustee s registers of relevant duties and interests and via other relevant Trustee policies, systems and processes. Training and awareness with respect to the Trustee s Conflicts Management Framework is undertaken annually. 14
Summary of financial performance A summary of the Fund s audited accounts for the year ending 30 June 2015 is shown below. The full audited accounts and auditor s report are available for inspection, on request, by contacting the Fund Administrator (contact details on the back page). Statement of Change in Net Assets Statement of Net Assets NET ASSETS AT 1 JULY 2014 $ 12,998,336 Assets $ Plus Interest 13,662 Movement in net market 1,058,844 value of investments PST rebates / (fees) (3,000) Trust distributions received 454,544 Employer contributions 1,024,762 Member contributions 124,896 Total Income 2,673,708 Cash 825,967 Vanguard High Growth 10,936,935 Index Fund MLC Conservative Option 2,053,501 Prepayments 22,337 GST receivable 5,138 Income receivable 240,474 Contributions receivable 78,036 Deferred tax assets 4,424 Total Assets 14,166,812 Less Benefit paid and payable 1,357,080 Administration fees 33,214 Auditors remuneration 35,906 Consulting fees 149,167 APRA fees 1,946 Actuarial fees 12,766 Insurance premiums 32,588 Interest paid 185 Trustee fees 41,115 Bank charges 1 Subscriptions 3,096 Custody fees 2,976 Legal fees 15,407 Income tax expense 113,138 Less Accrued charges 88,010 Provision for income tax 37,490 Provision for deferred 167,853 income tax Total Liabilities 293,353 Represented by Members funds 13,845,650 Reserves 27,809 Equals Total Expenditure 1,798,585 NET ASSETS AT 30 JUNE 2015 13,873,459 Represented by Members funds 13,845,650 Reserves 27,809 Equals NET ASSETS AT 30 JUNE 2015 13,873,459 15
Contact details For further information regarding the management of the L & H Group Superannuation Fund, please contact the Fund as follows: Fund Administrator KPMG Superannuation Services Pty Limited Level 4, 10 Shelley Street SYDNEY NSW 2000 AU-FMNATL&HSuper@kpmg.com.au (02) 9335 8272 (02) 9335 7001 Trustee Equity Trustees Limited GPO Box 2307 Melbourne VIC 3001 (03) 8623 5000 (03) 8623 5200 Equity Trustees Limited (RSE Licence No. L0003904, ABN 46 004 031 298, AFSL No. 240975) as Trustee for the L&H Group Superannuation Fund 16