April 2022

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April 2022 Newsletter

Welcome to our April newsletter. In this quarter’s issue, we have provided articles on the following topics:

Staff and Office Updates

We are happy to welcome back Jess from Maternity Leave, Allison will be returning in May so we will be back to full staff which will be great.

Tracey’s daughter Rhiannon and Jess’s daughter Ella are both excelling in their chosen sports, Rhiannon in basketball and Ella in dance. Both families are very proud indeed as we here are as well.

 The Budget 2022

50% minimum super drawdown extended

Super pension drawdown 50 per cent reduction extended to 2022-23 – the temporary 50 per cent reduction in minimum annual payment amounts for superannuation pensions and annuities will be extended by a further year to the 2022-23 income year.

 Super Guarantee rate unchanged

The Budget did not contain any change to the legislated Super Guarantee rate rise from 10 per cent to 10.5 per cent for 2022-23.

Personal tax rates unchanged for 2022-23; Stage 3 start from 2024-25 unchanged

The Stage 3 tax changes commence from 1 July 2024, as previously legislated. From 1 July 2024, the 32.5 per cent marginal tax rate will be cut to 30 per cent for one large tax bracket between $45,000 and $200,000. This will more closely align the middle tax bracket of the personal income tax system with corporate tax rates. The 37 per cent tax bracket will be entirely abolished at this time. Therefore, from 1 July 2024, there will only be three personal income tax rates – 19 per cent, 30 per cent and 45 per cent. From 1 July 2024, taxpayers earning between $45,000 and $200,000 will face a marginal tax rate of 30 per cent. With these changes, around 94 per cent of Australian taxpayers are projected to face a marginal tax rate of 30 per cent or less.

 Directors ID for SMSF

If you are a corporate trustee of a self-managed super fund (SMSF), you need to apply for a director ID. Applying for a director ID is free, quick and easy.

You can apply via Australian Business Registry Services (ABRS) online. You will need a myGov Account with a Standard or Strong identity strength to apply for your director ID online.

Alternatively you can ring the ATO on 13 62 50. You will need to have two forms of identification

Such as:

Latest personal ATO Tax Assessment

Bank details of where your personal refund is paid

Drivers Licence

Passport

Birth Certificate and Marriage Certificate if applicable

When you need to apply for a director ID depends on when you first became a director.

If you:

  • were appointed on or before 31 October 2021, you have until 30 November 2022 to apply
  • were appointed between 1 November 2021 and 4 April 2022, you need to apply within 28 days of your appointment
  • will be appointed on or after 5 April 2022, you need to apply before you’re appointed.

Please note that because you need to verify your identity, so no one can apply on your behalf.

 

The Importance of an Investment Strategy

 Your investment strategy is your plan for making, holding and realising assets consistent with your investment objectives and retirement goals. It should set out why and how you’ve chosen to invest your retirement benefits in order to meet these goals.

The superannuation laws require that you must prepare and implement an investment strategy for your self-managed super fund which you must then give effect to and review regularly.

What needs to be included in my SMSF’s investment strategy?

SMSF investment strategy should be in writing. It should also be tailored and specific to the relevant circumstances of your fund. Your strategy should explain how your investments meet each member’s retirement objectives

Are there any restrictions under the super laws with respect to SMSF investments?

You are free to choose what type of assets you may invest in, providing those investments:

  • are permitted by your fund’s trust deed
  • are not prohibited by the super laws
  • meet the sole purpose test

Can I invest all my retirement savings in one asset or asset class?

While a trustee can choose to invest all their retirement savings in one asset or asset class, certain risks such as return, volatility and liquidity risks can be minimised if a trustee chooses to invest in a variety of assets.

Investing the retirement savings in one asset or asset class can lead to concentration risk. In this situation, your investment strategy should document that you considered the risks associated with a lack of diversification. It should include how you still think the investment will meet your fund’s investment objectives.

How often do I need to review SMSF’s investment strategy?

You should review your strategy regularly to ensure it continues to meet the current and future needs of your members depending on their personal circumstances.

Certain significant events should also prompt you to review your strategy, such as:

  • a market correction
  • when a new member joins the fund or departs a fund
  • when a member commences receiving a pension. This is to ensure the fund has sufficient liquid assets and cash flow to meet minimum pension payments prior to 30 June each year.

You should also review your strategy at least annually and document that you have undertaken this review and any decisions made arising from the review.

What is the auditor’s role in relation to SMSF investment Strategy?

When conducting the annual audit on your fund, the auditor will check whether your fund has met the investment strategy requirements under the super laws for the relevant financial year. 

Where you don’t comply with the investment strategy requirements, your auditor may need to notify ATO about this by lodging an auditor contravention report (ACR)