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.

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.

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.

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