Add value and charge higher fees with Advanced Strategies using a - - PDF document

Who should you trust?

Add value and charge higher fees with advanced strategies using SMSF

Chris Craggs MIPA Argurion Finance Group

Add value and charge higher fees with Advanced Strategies using a SMSF

Our Primary Aim

Our primary aim is to develop lifetime plans for clients by clearly understanding their personal situations and financial goals. Our first step is to understand their values and their most important goals so the decisions they make are aligned to things that matter most to them.

General Advice Warning

The information in this seminar is of a general nature only and has been prepared by Argurion Finance Group Pty Ltd), without taking into account your objectives, financial circumstances or needs. Before acting on any of this information, you should consider whether it is appropriate to your objectives, financial circumstances and needs, and seek appropriate professional advice. You should not rely on this presentation to determine your personal tax obligations, please consult a registered tax agent. The presenter is authorised by Argurion Finance Group Pty Ltd to provide general financial product advice in respect of superannuation and life insurance products. This presentation is correct as at 12/03/2017.

Agenda

Understanding super Current and proposed state of super Super Boost: Advanced SMSF Strategies Questions Advanced SMSF Strategies

Understanding super: The Good

• Sources: Financial Services Council/UBS State of the Industry 2016

$2 Trillion FUM 23,309

Number of Financial Advisers

# Funds APRA: 2,429 SMSF: 562,466

Understanding super: The Bad

• Sources: Longevity Savings Gap Research & Policy Options (September 2012) by Rice Warner for the

Financial Services Council.

• ATO as 30 June 2016 https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-

statistics/Super-accounts-data/Super-accounts-data-overview/

Just over $14 billion

Value of lost super

5.7 million

Number of lost super accounts

43% of Australians

Have an average of two super accounts

Did you know that Australia has a

1.8 trillion super gap

?

• Around 4.6 million Australians receive an income support

payment of some kind: 27% of the population

• 77% of over 65 years old's receive income

support

• 13% of Australians are over 65

years of age

• This grows to 25% by 2047

Understanding super: The Really Bad

Sources: Department of Social Services: Pension Review Background Paper

• 2. As at 30 June of previous financial year.

Current and proposed state of super

*Includes reportable fringe benefits and reportable employer super contributions

age 49 or over2

$13,800 $37,000

Proposed from 1 July 2017

$100,

0,00 000pa

Current rules

$300,000

0,000pa

• ver a three year period if certain

conditions are met

• r
• You now control how and when you make tax deductible

contributions to super

• If you receive a large tax windfall you are able to reduce

your taxable income by making personal deductions to super

• Limited to those with account balances below $500,000

Current and proposed state of super-Catch up

Catch up payments. Cap amounts unused from 1 July 2018 can be carried forward for up to 5 consecutive years Concessional Cap only Bring forward 3 years No ability to catch up

Proposed from 1 July 2018 Current rules

Tax on concessional contributions

30% 15% 15% 30% 30% 15% $250,000 $300,000 Now 1 July 2017

* Income for these purposes is determined according to the Tax Law

• 4. Where eligible for the capital gains tax discount

Current and proposed state of super: Pensions

Under $3,000 $3-$6,000 $6-$10,000 $10,000 + Contribution Contribution reserve Self -insurance reserve Transfer of business real property using a related party and /or bank loan TTR Income Stream TTR income stream with auto- revisionary In- specie contribution of property Transfer of residential business real properties using a related party and /or bank loan Lump Sum Payout In-specie contribution of shares Convert lifetime pension to market linked pension and reserve Administering a deceased SMSF estate for a member with more than 1m Investment Strategy Paperwork In-specie payout of lump sum payout of shares Limited recourse borrowing arrangement Establishing long term SMSF -pensions and reserves for members with personal injury claims Pension Reserve In-specie payout of lump sum payout of shares Estate planning using an SMSF will Asset restructure from family trust or company into an SMSF

Charging fees for Advice

Under $3,000 $3-$6,000 $6-$10,000 $10,000 + Allocation from a reserve Investment strategy development with investment allocation and placement Administering a deceased SMSF estate for a member with less than $1m Contribution reduction and concessional caps review Investment transfers between accumulation and pension accounts under investment and strategy guides Creation of SMSF living will to protect incapacitated and disabled members for their protection Upgrade of trust deed Effective use of the CGT retirement exemption Establishing a SIS Reg 13.22C trust or company for transfer to the fund Change of Trustee Establishing a SIS Reg 13.22C trust or company within the fund

Charging fees for Advice

Strategy One: Contribution Reserve

With Reserve

Without Reserve $50,000 Deduction $25,000 contribution $25,000 Reserve Credited as received next financial year $25,000 Deduction $25,000 contribution $25,000 contribution

Reserving-Why you need to start early

Accumulator

• Once you exceed

$1.6million you can no longer make Non Concessional Contributions

• Once you exceed $500k

you can no longer make catch-up payments

Pension

• Once you exceed $1.6

million the balance of your monies will be taxed at 15%

• Your non-dependant

beneficiaries are taxed at 17%

• Increase tax deductible contributions
• Capital Gain tax reduced to 10% or 0%
• Capital Protection of Asset
• Access to small business concessions

Strategy Two: Transfer of Business Real Property

• From a general reserving perspective

section 115(1) of the SIS Act 1993 provides:

– (1)A trustee of a superannuation entity may maintain reserves of the entity. (2)Subsection (1) does not apply if the governing rules of the entity prohibit the maintenance of reserves.

Strategy Three: Establishing and Using Reserves

How a SMSF works

=

Profits

How a SMSF works-Allocation to Reserve

=

Profits Reserve

The current situation…

• 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 Current

Understanding super: How much is enough?

Single Couple $43,372 pa $59,619 pa

A comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.

What is actually needed…

• 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 Current Required Balance

Market Risk

• 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 Market risk Required Balance

Consequence of Poor timing

500000 1000000 1500000 2000000 2500000 3000000 3500000 4000000

• 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 Market risk Required Balance Consequence of capital fall at retirement

Some of the Options

Benefits of a Reserve

=

Profits Reserve

? ?

Questions

“Without good advice everything goes wrong - it takes careful planning for things to go right.“

Proverbs 15:22