July 11th, 2012 | Self Managed Superannuation, Financial Planning, Investment Advice.

We’re already half way through 2012, the Global Financial Crisis is unrelenting, and the unpredictable nature of the various international sharemarkets continue to unnerve us.  With this in mind, now is the time to think about important strategies for your Self Managed Super Fund.  Here are five helpful tips to help you start planning to achieve your investment goals.

1.    Consider the use of borrowing to acquire property

With the ATO providing clarification on key concepts using limited recourse borrowing arrangements (SIS Act) in September 2011, there is greater scope for SMSF trustees to consider the use of borrowing to acquire property.  With share market uncertainty, reasonably valued property prices and younger entrants into the SMSF market, now, more than ever, there appears to be a greater appetite for property investment using superannuation contributions.

The benefits of borrowing to acquire property are significant, in particular the capital gains tax exemption once a member reaches retirement, tax deductions through salary sacrificing and capital gains through future property growth.

2.    Carefully manage and maximise concessional contributions

For all super fund members, from 1 July 2012 the concessional contribution cap will reduce from $50,000 to $25,000 for the next two years, regardless of age.  It is therefore important to have maximised concessional contributions for members 50 years and over this financial year to make the most of the $50,000 concessional cap.  Going forward, this means considering salary sacrificing, implementing transition-to-retirement strategies and deductible member contributions.

3.    Proposed changes in Government legislation

The Government recently announced its plan to ban all off market transfers into SMSFs where a trading market exists.  This essentially means that SMSFs wishing to acquire listed securities from members would need to do so by having the member sell them on the stock market whilst the SMSF purchases them on market, instead of merely completing a transfer form.

The good news is that Treasury officials have confirmed a deferral in the introduction of this proposed off market transfer legislation which was to have taken effect from 1 July this year.

With this in mind, it is important to review your investment strategy as the current markets provide an opportune time to take advantage of the lower capital gains impact (or capital losses) and benefit from the lower prices to maximise contribution caps.

4.    Pension planning

Now is an opportune time to get professional advice to ensure that the tax free components of your superannuation/pension are maximised.  Take advantage of current volatile markets, by optimising superannuation interest proportions when drawing on income streams.  With proportions locked in at the commencement of an income stream, it is important to maximise the tax-free component to build greater tax efficiency under the age of 60 and for longer-term estate planning benefits.

5.    Establish a comprehensive SMSF estate plan

When planning your estate, it is important to know your potential risks and implement sound strategies for your estate, as having a death benefit nomination and a standard Will is not sufficient these days.  Think about issues such as when you are “no longer here” and life risks such as declining mental health.

A comprehensive SMSF estate plan needs to intertwine a member’s Will, Enduring Power of Attorney, death benefit nomination, and guardianship.  To avoid your death benefits from being distributed where you don’t want them, also consider setting up testamentary trusts within the Will for nominated beneficiaries, to help protect from marital, business and other risks.

Here at The Quinn Group our experienced team of Financial Planners, Accountants and Lawyers can assist you with all your investment strategies.  For more advice about how to plan for your Self Managed Super Fund, contact Peter Quinn by submitting an online enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.

 

The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it.  It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.