ATO lifestyle assets review


Review of assets not previously disclosed or underreporting of income

The ATO has requested insurance policy information from 30 insurers for lifestyle assets such as yachts, thoroughbred horses and fine arts.

family boatThe review, expected to impact 350,000 taxpayers, reaches from the 2015-16 to 2019-20 financial years, revealing assets that previously may not have been disclosed or underreporting of income. "If a taxpayer is reporting a taxable income of $70,000 to us but we know they own a three million dollar yacht then this is likely to raise some red flags," Deputy Commissioner Deborah Jenkins said.

The ATO is looking for:
  • under-reporting of income and mismatches between lifestyle assets and reported income, 
  • the purchase of assets in a company name but where those assets are used for private purposes (incorrect claims or non-reporting of GST credits, FBT, Division 7A, capital gains tax), and
  • lifestyle assets purchased by self-managed superannuation funds that might breach the sole purpose test.

The ATO has stated that the data matching will not result in automatic audits but will be reviewed by compliance officers to support the profiling of selected taxpayers.

Collins Hume partners with you to achieve greater business and lifestyle success as your trusted advisers. Call us in Ballina or Byron Bay on 02 6686 3000.

Experts to bring Renowned Workshop to Ballina

FREE Key Person of Influence Workshop

Dent Global, recognised as one of the world's leading business accelerator programs, are bringing their Key Person of Influence Workshop to Ballina on 27 February 2020 in partnership with Collins Hume.

KPI WorkshopThe Key Person of Influence program is predicated on the five levers of influence – Pitching, Publishing, Productisation, Profile, and Partnerships. Mike Clark and the KPI team will be hosting the 3-hour workshop at Ballina RSL where attendees will learn about the five levers of influence and how they can be applied to every business.

Mike has been travelling to regional towns for the past six months as part of his mission to help more business owners grow their business so they can 'make a dent' in the universe.

"I love travelling to regional towns to meet the passionate local entrepreneurs who are making a positive impact in their communities," Mike said. "I can't wait to meet Ballina's best and brightest this month and help them scale their businesses."

"The workshop offers a great opportunity for Ballina locals to experience a world-class business event right on their doorstep."

The Key Person of Influence team is also giving away a free copy of the best-selling book 'Become A Key Person of Influence' by Daniel Priestley to every Ballina entrepreneur who attends the Key Person of Influence Workshop. For more information and to register for your ticket, please visit https://my.dent.global/au/ballina or call the team at Collins Hume on 6686 3000.

Dent Global are leaders in strategy and technology for entrepreneurial businesses. Since 2010, they have expanded into the UK, USA, Canada, Singapore and Australia, working with over 3,000 entrepreneurs and their teams. Winners of many awards, including the Power 100 List and BRW Fast Starter 100 List, Dent Global have a proven track record of helping businesses stand out and scale up.

Superannuation death benefits


Review succession plans

Regardless of the size of your superannuation benefits, it is vital that you sort out your estate plans to ensure that you have a well prepared estate plan so that the right assets go to the right beneficiaries. 

retired couple plansYou need to make sure that you get holistic estate planning advice and have arrangements in place to review your estate plans regularly. Estate plans are not to be set and forgotten.

First and foremost, it is important to understand that the payment of your superannuation death benefits are covered by the rules of your SMSF trust deed and do not automatically form part of your Estate for distribution in accordance with the terms of your Will. As trustee of your SMSF, you will need to make sure that you have read and understood your SMSF's trust deed and that you comply with it at all times. 

On your death, one option is to rely on the SMSF trustee's wide discretion to determine who, within the operation of the law, will receive your death benefit and how much each beneficiary will receive.

The alternative is to remove the trustee's discretion which gives you greater control in deciding how your superannuation death benefits will be cashed. This may be relevant if:

  • You want certainty over your estate plan;
  • You have a blended family and want all family members to benefit from your superannuation on your death;
  • It is anticipated that there will be conflict amongst your potential beneficiaries;
  • It is a possibility that there may be conflict amongst the remaining trustees of your SMSF upon your death;
  • There is a risk that those controlling the SMSF post your death may not cash your death benefits in accordance with your preferences.

Subject to the specific terms of your SMSF trust deed, ways in which you could consider removal of trustee discretion include: 

  • Having a valid and current binding death benefit nomination (BDBN) in place; 
  • Specifying in your SMSF trust deed how death benefits will be distributed; or
  • Nominating a reversionary beneficiary to whom your pension will automatically revert to on your death.

To ensure that your death benefits are cashed in accordance with your wishes, it is critical to ensure that your estate plans are comprehensive and that you understand the ownership and control of your assets on your death. It is also important that any superannuation death benefit advice you receive is consistent and complimentary to your overall estate plans and is not in isolation to the other. 

At a minimum, we recommend that trustees have their SMSF trust deed reviewed to ensure maximum flexibility when dealing with death benefit payments. It is also recommended this be done alongside a review of any BDBN(s) to ensure that they too are valid and provide certainty in how death benefits will be dealt with upon your death.

When considered in light of an ageing Australia, the value of assets invested in SMSFs and recent court cases, having the correct SMSF documentation and process is essential to minimise the risk of litigation from disappointed beneficiaries to allow a safe passage of death benefits to your intended beneficiaries.

So what should form part of a comprehensive SMSF estate plan? At a minimum it should contain:

  • An up-to-date Will
  • An up-to-date enduring power of attorney
  • An up-to-date SMSF trust deed, including prior variations 
  • An up-to-date death benefit nomination (if applicable)
  • Up-to-date pension documentation (if applicable)
  • All trustee documentation, including details of directors and any trustee changes

How can we help?
If you would like to discuss any aspect of your estate plans, please feel free to give the team at Collins Hume a call on 02 6686 3000 to arrange a time to meet so that we can discuss your particular requirements in more detail or read more about our Estate Planning services here.

Source: SMSF Association. General Advice Warning: This communication has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial adviser before making any investment decisions.

Alerts to protect SMSFs from fraud


SMSF alert fraud protection

A new system alerting SMSF trustees of changes made to their SMSF will roll out this month. 

smart phone SMS textThe ATO will alert trustees by text and/or email when changes are made to bank details, electronic service address of the fund, the authorised contact and members.

Trustees need to notify the ATO within 28 days of key changes to the fund including a change in trustees, directors of the corporate trustee, members, contact details, address and fund status.

Self-managed super and superannuation law in general is a delicate area and personalised planning is required for each individual. At Collins Hume we are superannuation specialists, and can assist in establishing a superannuation fund that will effectively allow you to reach your financial retirement goals. Read more here or call us on 02 6686 3000.

Collins Hume partners with you to achieve greater business and lifestyle success as your trusted advisers. Call us in Ballina or Byron Bay on 02 6686 3000.

Best Interest test


Coming soon the 'Best Interest' Test

If you followed the Banking Royal Commission and the subsequent media reporting you will have heard about a new "Best Interest Duty" that is being introduced for the broking industry. 

Image: WAGstockLet's be clear on one thing though, for us what is in your best interest is also in our best interest as well; so while there is always the odd rogue (as there is in every industry unfortunately) most brokers already act in their clients best interest – if for no other reason than it is good for business.

What is best interest? 

There are a number of variables in the equation that need to be considered and questions to be asked, some of these are:

  • How long will the lender take to give an approval?
  • Are the borrowers eligible for the lenders loan offer?
  • What is the interest rate and other fees?
  • Features and Benefits?
  • Time for an approval

If you are under a tight timeframe to get an approval and settle is it in your best interest to send your application to a lender that is 0.5% cheaper, but will take 2 weeks to get an approval? No, certainly not. But suggesting a more expensive lender that can give you a decision in 24 or 48 hours makes sense; that's in your best interest.

Eligibility

On our lending panel we have a lender with great rates. But if you want to borrow more than 80% of the value of the property you need to pay Lenders Mortgage Insurance, which depending on your circumstances can be expensive. Lots of younger applicants obtain a guarantee from their parents to avoid this insurance cost – this lender does not offer loans with guarantors. Again, using a lender with a higher rate that does permit the guarantee and save the insurance may be in your best interest.

Interest rates and fees

Lots of lenders offer loan packages where you pay an annual fee in exchange for 'fee free banking' and a discount on the interest rate, but does this offer value for money? If for example your loan is small the interest saving may well be less than the annual fee. There are lots of financial institutions that offer free basic accounts so that's not a real consideration. In this case is the advertised lower rate with an annual fee in your best interest?

Features and benefits

Taking a basic loan that has limited features is usually cheaper than the loan with all the bells and whistles. A basic loan may not offer an offset facility but will still allow you to redraw any additional payments that you have made. This means that you need to 'park' your spare cash in your loan account and redraw it if you need the funds – same horse, different jockey? This is true with an owner occupied home loan, but an investment loan? If you pay money off the loan and then redraw it for personal purposes it may affect your tax deduction on the loan (disclaimer here, we're not accountants or tax advisers, this is a generalisation and you need to get your own professional advice). For an investor we may suggest a loan with a higher rate, but with the features that you need.

Getting a home loan is a little more complex than buying milk at the corner store. Get the milk wrong and you endure it for 3 days or so. Get the loan wrong and you may be enduring it for 30 years or so.

An experienced mortgage broker will guide you through all these points and much, much more. Challenge them and ask them why they are making the suggestions that they are – if their answer sounds fishy, or they can't answer effectively then there is something wrong. If their reasoning is rational and makes sense then guess what? The broker is probably acting in your best interest.

We don't really need legislation about this (but we're going to get it anyway). What we need to do is get rid of the minority rogues in the industry. Feel free to give Collins Hume's Lending Specialist David Seymour a call on 0417 785 747 to discuss.

David Seymour is a member of FBAA, a corporate member of MFAA and is an Authorised Credit Representative No 477331 of Regional Finance Solutions Pty Ltd ABN 71163893945 Australian Credit License 484980. He is also registered with ASIC, has professional indemnity insurance and is a member of Regional Finance Solutions' internal and external dispute resolution schemes. Phone David on 0418 785 747 or email david.seymour@regfin.com.au.

Regular insurance reviews

Reviewing your insurance regularly to ensure you are properly covered!

We live in a world of constant change and people are often unaware how such changes can affect the insurance they hold. 

life insuranceThat is why we believe in the importance of regularly reviewing your insurance cover to ensure that it continues to reflect your current situation, needs and wants. 

To help you understand if your insurance policies suit your current situation, needs and wants we have added some common life and financial events below that may help you to determine if an insurance review is needed. If any of the events have occurred, or you think anything else may impact your insurance needs, please contact us directly and we will organise a meeting to review your insurance.

If you answer 'Yes' to any of these Life or Financial events, we suggest you contact us for a review:

  • Would you like to pay the premiums of any superannuation insurance policies so your superannuation value is not depleted by your premiums i.e. salary sacrifice?
  • Have you changed occupations and/or has your pay significantly changed?
  • Have you purchased a bigger or smaller house and have your debt levels increased or decreased?
  • Has your relationship status changed i.e. single to married or married to separated?
  • Have you had any more children?
  • Have you built up a significant amount of cash, equity in your home or other assets?
  • Have you retired or stopped work?
  • Have you had any changes to your health that may result in the removal or an exclusion or loading on your existing insurance policy?

And, if you are funding your insurance policies from your superannuation balance each year it is important to ensure, where possible, you contribute extra to your superannuation to cover these costs. Those contributions may be tax deductible, so please discuss this with your accountant.

We are always ready to help, so please contact Collins Hume's Wealth Specialist Adam Vermillion on 02 6686 3000 if we can be of any further assistance.

Essential Wealth and Retirement Pty. Ltd. ACN 603 149 837 is a Corporate Authorised Representative of GPS Wealth Ltd. ABN 17 005 482 726 | AFSL 254544 | Australian Credit Licence 254544
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