Chartered Accountants Superannuation Bulletin Edition 11/08

Welcome to this edition of the Chartered Accountants Superannuation Bulletin.

Issue No 11 /2008 27 June 2008 1. News and media releases 2. ATO updates 3. Superannuation guarantee changes 4. First home saver account 5. New financial year - changes to SMSF's 6. Lodgement of member contribution statements 7. Training and development

Less paper in super

The Australian Securities and Investment Commission (ASIC) has been looking for ways to lift retail investor engagement with their super savings and at the same time help super funds better communicate with their members. ASIC have formulated two projects that will bring into line the annual reporting obligations of super funds with companies, while ensuring that super fund members get more meaningful information about their super. This means that super funds will be able to put their annual reports on a website as a default (consistent with companies), but only where they give each super fund member information about longer-term returns in their personal member benefit statement.

Relief from double super payments for employers

Tax Laws Amendment (2008 Measures No.2) Bill 2008, which provides relief to employers who make superannuation contributions after the due date, has received Royal Assent. This legislation now ensures late superannuation contributions will still count towards reducing the required superannuation guarantee payments of an employer. These changes mean employers will not have to pay the same amount twice.

Terminal medical condition legislation passed

Senator the Hon Nick Sherry, Minister for Superannuation and Corporate Law, has also welcomed the passage through parliament of Tax Laws Amendment (2008 Measures No.2) Bill 2008, which makes superannuation lump sum payments tax free when paid to individuals suffering from terminal medical conditions. The tax free treatment will apply to lump sums from both taxed and untaxed funds.

Advice to super fund members on long-term performance

Senator the Hon Nick Sherry, Minister for Superannuation and Corporate Law, has welcomed the release of two ASIC initiatives to help superannuation funds provide better information to their members.

ASIC last week issued a best practice guide (Superannuation: helping investors look at longer-term returns - ASIC's best practice guide) on how super funds can provide their members with a long-term picture of investment returns. In it, super funds are encouraged to work towards providing personalised historical fund returns over five and 10-year periods with annual statements.

SMSF newsletter - edition 5

Topics covered in this edition of the Australian Taxation Office's SMSF newsletter include:

• New ATO interpretative decisions
• New all–in–one SMSF annual return
• Illegal early access to superannuation
• New Super deduction rules

18 June 2008

Searching for lost super

You should complete this form if you want to search the ATO lost members register for any super you may have lost.

SuperUpdate June 2008

SuperUpdate is a monthly electronic newsletter issued to those working in the superannuation industry. It includes information about superannuation issues and changes in the administration of Australia's superannuation system.

21 June 2008

Changes to reporting of contraventions

From Tuesday 1 July 2008, approved auditors must use a new approved auditor/actuary contravention report (ACR) form and apply reporting criteria to determine which contraventions of the superannuation laws that must be reported to the Tax Office. The new form must be used, regardless of the financial year of income being audited.

Auditors should continue to apply their professional judgment and the Auditing and Assurance Standards to decide whether to report contraventions and other important facts, even if they do not meet any of the new tests.

The ATO has released on-line tools aimed to assist employers with their superannuation guarantee (SG) obligations this financial year. The changes will take effect from Tuesday, 1 July 2008 and will effect how SG contributions are calculated by employers.

Previously, employers were required to make a minimum SG contribution of nine per cent of each employee's ordinary time earnings (OTE). For members currently using an earnings base for calculating SG contributions that is less than the OTE definition, this may result in increased superannuation costs.

OTE is defined as the total of an employee's earnings in respect to ordinary hours of work. Importantly, this includes over-award payments, shift-loadings and commission. OTE does not include lump sum payments in lieu of unused sick leave, annual leave or long service leave made to an employee on termination of employment or earnings in excess of the maximum superannuation contribution base.

Members are encouraged to ensure their clients who have superannuation guarantee obligations for their employees are aware of these changes.

The ATO has new and re-released publications and tools to assist employers with the changes:

• Paying super a handy reference
  Refers employers to tools and resources that help work out and pay employee super
• Employers and tax file numbers
  Explains employer obligations to give employee tax file numbers to superannuation providers
• Super what employers need to know
  Introduces employers to their superannuation obligations
• Superannuation guarantee how to meet your super obligations
  Provides employers details on how to meet their SG obligations
• The Superannuation guarantee eligibility decision tool
  Assists employers work out their workers' eligibility for contributions under the superannuation guarantee law
• The Superannuation guarantee contributions calculator
  Helps employers work out the amount they need to pay each quarter for eligible employees
• The Superannuation guarantee charge statement and calculator tool will assist employers work out the super guarantee charge amounts for their employees, and prepare the super guarantee amounts owed as well as prepare the super guarantee charge statement that needs to be lodged with the ATO. The tool will be available on the ATO website from July 2008.

Members are advised that the Senate has passed the First Home Saver Accounts Bills on Wednesday, 18 June 2008. It is anticipated that the Bill will receive the Royal Assent by Monday, 30 June 2008.

The Institute received feedback from Treasury who expressed thanks to all Institute members for their constructive and valuable feedback on the drafts.

After Monday 30 June 2008, members are advised that there will be changes to Australia's superannuation industry that have an impact on SMSFs

Reporting time frames

A number of changes have taken place to the tax form for SMSFs, this includes the inclusion of member contributions reporting, questions relating to fund compliance and the lodgement of the fund return. A failure to respond to these questions accurately can result in a fine or a false and/or misleading statement.

This task will become simpler when the ATO releases the electronic superannuation auditor tool (eSAT), which will contain an optional button that will enable the auditor to advise when the audit is complete. The ATO will then test the information to ensure that it has been audited by the person who lodged the return.

Instalment warrants

There has been a lot of discussion around instalment warrants and the ability of SMSFs to enter into borrowing arrangements. There are two forms of these warrants. The first is a listed commercially available product which is readily traded on an exchange. The second is a created product where the SMSF has entered into a specifically developed structure.

Members are advised that each type may require different requirements prior to signing the audit report.

Contributions

The ATO will for the next financial year focus on contributions where near maximum contribution caps have been met.

Sole purpose

The ATO has released a ruling on the sole purpose test. The sole purpose test is to be considered on an asset by asset basis rather than a whole fund basis.

The Institute has also released an information tool, to assist members to communicate the changes (you will need your user name and password) please click here to access it.

In preparation for the new consolidated SMSF fund return outstanding member contribution statements for years ending prior to Monday 30 June 2008 must be lodged on paper returns.

SMSF Conference DVD 2008
Recorded at the successful inaugural conference in February 2008, this DVD contains all the papers and presentations to view at your convenience.

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.