Chartered Accountants Superannuation Bulletin Edition 08/05

Welcome to this edition of the Chartered Accountants Superannuation Bulletin.The Institute is keen to hear from members regarding governance issues with self-managed super funds.

This Superannuation Bulletin includes a short member questionnaire on the topic, which will add weight to the Institute's forthcoming submission to government. Other updates include: uncommercial trust arrangements under the microscope and how aged care reform will affect super.

Issue No 05 /2008 4 April 2008 1. News and Media Releases 2. ATO Updates 3. Institute Report on Governance of Superannuation Funds 4. Aged Care Reforms 5. Uncommercial Trust Arrangements Under Review 6. SMSF Governance Questionnaire 7. Training and Development

Compensation Requirements

On 28 March, the Australian Securities and Investments Commission (ASIC) released an information sheet reminding Australian financial services licensees that the compensation requirements in s912B of the Corporations Act 2001 commence, for most licensees, on 1 July 2008.

Building Your Super Fund

ASIC's consumer website Fido has released an article providing tips on how to build on your superannuation funds.

The Australian Prudential Regulation Authority (APRA)has released two statistical reports on superannuation. The first is its December 2007 Quarterly Superannuation Performance publication.

The second report is its Annual Superannuation Bulletin which includes a wide range of statistics for the full financial year to 30 June 2007.

The Hon. Senator Nick Sherry, Minister for Superannuation and Corporate Law, spoke at the IFSA Luncheon in Sydney on 3 April 2008. The topic was the Rudd Government's plans for financial services and super.

The Hon. Senator Nick Sherry also spoke about trustee duties and education at the Self Managed Superannuation Member’s Association Launch on 1 April 2008.

20 March 2008

Senator the Hon Nick Sherry announced the introduction into Parliament of Tax Laws Amendment (2008 Measures No. 2) Bill 2008 which will provide fairer treatment for employers who make super contributions after the due date.

27 March 2008

SMSF Annual Return

When reporting for the 2007-2008 financial year onwards, self managed superannuation funds (SMSFs) will have only one return to complete. The fund income tax return and regulatory return have been merged with the member contributions statement to produce a single annual return for self-managed funds.

The Tax Office says the new return and associated supporting documentation is expected to be available during June 2008. The Tax Office says that, for the first time, it will be asking trustees ongoing disclosure questions. The questions will include, whether:

• the SMSF had/has financial involvement with related parties
• the SMSF has lent money to members or their family
• investments have been undertaken on an arm's length basis
• the SMSF has allowed members access to assets and money before retirement
• the trustees have paid themselves for their services
• non-cash contributions (known as "in-specie" contributions) have been made to the SMSF
• any of the fund's trustees have become disqualified during the year
• the SMSF has engaged in activities of selling goods and/or services
• all assets are appropriately secured through appropriate documentation as owned by the SMSF
• the approved auditor has provided services other than auditing the fund to the SMSF.

2 April 2008

SMSF Newsletter - Edition 4

The ATO has released the latest edition of its SMSF Newsletter. Some of the included topics are: Tax concession for lump sum payments paid to terminally ill members, applying to disregard or reallocate contributions and overpaid super co-contribution

ATO Law Updates

There are two updates which concern superannuation. These can be found at the following links: Interpretative decisions and Draft Self Managed Superannuation Fund Ruling Please note that the Institute needs comments on the draft ruling by 22 April 2008.

Late last year, the Institute and Deloitte conducted a survey to understand the current governance practices of Australian superannuation funds and to identify and recommend further improvements where appropriate.

The survey revealed that since the Registrable Superannuation Entity (RSE) licensing regime was introduced in 2004, the majority of superannuation industry experts believe that discipline around governance practices has tightened and that standards have improved.

The report based on the survey, entitled The Governance of Superannuation Funds – three years on from trustee licensing is available on the Institute's website.

On Thursday, 20 March 2008, important reforms to Australia's residential aged care system took effect. The reforms change the system of accommodation fees and government subsidies for new people entering residential aged care from Thursday, 20 March 2008 and they address existing inequities in relation to income tested fees, to the benefit of many self-funded retirees.

People who can afford to contribute more towards the cost of their accommodation and care will be asked to do so. Those people who cannot afford to pay more will be protected, with the amount the Australian Government contributes in subsidies towards accommodation and costs to increase. The current income test for new aged care residents will also become fairer from Thursday, 20 March 2008, with self-funded retirees to be treated the same as pensioners with respect to their income. It is expected that approximately 45 per cent of self-funded retirees will pay less under the new system.

People considering their financial arrangements with respect to their future aged care needs should be aware of these reforms. To assist you in advising your clients, information about these reforms is available on the Department of Health and Ageing

This will include information sheets on the new accommodation supplement; new basic daily care fee arrangements; and the new income test.

Tax Commissioner Michael D'Ascenzo has warned taxpayers and trustees of self-managed super funds to be cautious of claiming deductions in relation to trust arrangements.

If taxpayers and trustees are concerned about their trust arrangements they should obtain their own independent advice or seek a formal determination of the Tax Office's position through a private ruling.

Senator the Hon Nick Sherry has recently called for submissions from industry bodies regarding self managed superannuation fund (SMSF) governance issues including, the set-up, administration, audit, education, estate planning and legal obligations of trustees of SMSFs.

In its submission the Institute would like feedback and comments from members on the key issues to be addressed in its submission. Members should forward their comment and feedback here

In addition, the Institute is looking to use in it’s submission data collected from members who operate in practices involved in the SMSF sector. Members operating in the SMSF sector are invited to fill out the questionnaire which includes questions based on:

• The size of the practice
• The fees involved in the audit of an SMSF
• The number of SMSFs managed within the practice
• Whether the practice performs both the accounting and auditing of SMSFs
• Whether there is involvement from a financial planner
• Comment on the general improvement of the sector.

The Institute will present its submission to Senator Sherry when it meets with his office in April.

1. Chartered Accountants Financial Planning Day
Seminar one - Asset protection
Seminar two - Tax and planning issues
Throughout March and April in Brisbane, Melbourne, Sydney, Adelaide & Perth. Essential information you need to correctly identify and implement tax and planning issues necessary for implementing a business succession plan.

2. Chartered Accountants Business Forum 2008
Throughout April, May & June in Brisbane, Melbourne, Sydney, Canberra, Adelaide & Perth
Whats your strategy for the year ahead? Join industry leaders and your peers as vital topics are addressed, key technical updates explored, and new ideas and options examined.

3. Audit of Self Managed Superannuation Funds Workshop
Throughout May and June in Brisbane, Melbourne and Sydney. Now that there are competency requirements for auditors of self managed super funds, don't miss out on ensuring your audits are compliant with the regulatory requirements.

4. Audit of Self Managed Superannuation Funds Update
Throughout May and June in Brisbane, Melbourne, Adelaide, Perth and Sydney. For those who attended the Audit of Self Managed Super Funds Workshops in 2007, the Audit of Self Managed Super Funds Workshops Update will give you thorough knowledge of the final competency requirements in just a few hours to be ready for 1 July 2008.

Disclaimers

This is an initiative of, and has been prepared by the Technical Standards Team of the Institute of Chartered Accountants in Australia. While every effort has been made to ensure the accuracy of the information contained therein, neither the Institute nor its employees shall be liable on any grounds whatsoever in respect of decisions or actions taken as a result of using this publication. The information provided is a general guide only and should not be used, relied on or treated as a substitute for specific professional advice or referral to the relevant specific standard.

The information is this email is confidential to the named addressee and subject to copyright. No one else may read, print, store, copy, forward or act in reliance on all or any of this email or its attachments. If you are not he intended recipient, any use, reliance upon, disclosure or copying of this email is prohibited and unlawful. If you have received this email in error please notify the sender. The Institute of Chartered Accountants in Australia (ABN 50 084 642 571) does not warrant that this email and any attachments are error or virus free and recommends that all attachments be checked for computer viruses.