Chartered Accountants Superannuation Bulletin Edition 16/08

Welcome to this edition of the Chartered Accountants Superannuation Bulletin.

Issue No 16 /2008 5 September 2008 1. ATO updates 2. News and media releases 3. Self managed superannuation fund independent auditor's report 4. Institute meets with the ATO 5. AASB revised superannuation standard 6. AFR Smart Investor Masterclass 7. Training & development

25 August 2008

Tax-free super for members with a terminal medical condition

Changes to the taxation of super lump sum payments paid to an individual with a terminal medical condition.

27 August 2008

Super co-contribution calculator

The super co-contribution calculator is a tool to help individuals and the self-employed estimate their co-contribution entitlement and eligibility.

Completing the self managed super fund annual return

This information will help you complete the Self Managed Super Fund annual return (NAT 71226).

28 August 2008

Super co-contributions

Provides information about the Super co-contribution. An initiative to help eligible individuals save for their future.

29 August 2008

Access to super for members with a terminal medical condition

Information about the legislation allowing tax-free lump sum payments to those with a terminal medical condition.

The Federal Parliamentary Library has released a research paper on superannuation. Written by Lesley Nielson the paper is designed to provide a summary of superannuation taxation, contribution, preservation and payment rules. Click here to access the paper.

Trustee of SMSF pleads guilty to criminal charge

Mr Atan Ona Kassongo, of Castle Hill, New South Wales, has pleaded guilty in the Downing Centre Local Court in relation to a criminal charge brought by ASIC under the Superannuation Industry (Supervision) Act 1993 (the SIS Act).

On 5 August 2008, Mr Kassongo, 51, was charged with dishonestly failing to ensure a self-managed fund known as the Kassongo Superannuation Fund (KSF) was maintained in accordance with the sole purpose test. Mr Kassongo was trustee of the fund at the time of the alleged offence.

This criminal charge followed an investigation conducted with the assistance of the Australian Taxation Office and was the first to be laid against a trustee of a self-managed superannuation fund under the SIS Act.

The matter will be heard in the Sydney District Court on Friday 12 September 2008.

Super income streams

Clarification on the use of payment summaries - 'PAYG payment summaries - superannuation income stream' are only needed by individuals who either receive superannuation income stream payments before their 60th birthday or individuals who receive payments that contain an untaxed element.

ASIC to shadow shop in 2009-10 financial year

ASIC chairman Tony D'Aloisio has flagged ASIC's intentions to conduct another shadow shopping exercise on Australian financial planners in the next financial year. This announcement was made to the Parliamentary Joint Committee on Corporate and Financial Services earlier this week.

This will be the first shadow shoping exercise carried out by ASIC since 2006.

FIDO news

ASIC has released the latest edition of its FIDO newsletter. Topics covered in this edition include:

• How does super perform over the long term?
• How to use annual reports to judge a company's performance
• Switching super accounts
• 'Early release' super scams.

The Superannuation Consultative Committee (SCC) has been notified of changes by the ATO to the self managed superannuation fund independent auditor's report. The revised form is now available and can be used for all financial years being audited. It can be obtained from the ATO website by clicking here

Please note the following changes to the form:

• Part B of the self managed superannuation fund independent auditor's report refers to some provisions of the SISA and SISR that are not contained in the list of reportable sections and regulations in the auditor/actuary contravention report. These provisions have been listed in Part B of the auditor's report as they are considered appropriate for the scope of the audit. If a contravention is detected for a section or regulation that is not in the list of reportable sections and regulations in the auditor/actuary contravention report, the auditor may still choose to report this contravention.
• The Self-managed superannuation fund independent auditor's report and auditor/actuary contravention report make reference to S121 of the SISA. This section has recently been repealed and reinserted as S126K. The current forms will not be withdrawn as this change is only to the numbering of the section. The Tax Office will update all relevant forms and publications as part of our ongoing review process. A contravention reported under S121 will be accepted as a contravention reported under S126K. However, we are also currently putting processes in place so that our systems can accept an ACR that reports a contravention under S126K. It is anticipated that system changes will be deployed by the end of the week.

The ATO have also released Auditing a self-managed super fund – questions and statements to consider when auditing a self-managed superannuation fund (SMSF).

On Tuesday, 2 September 2008, the Institute met with Neil Olesen, Deputy Commissioner of Superannuation, to discuss key issues in the superannuation and self-managed super fund (SMSF) industry.

Prior to the meeting the Institute invited members to submit views and comments that they believed the Institute should be addressing in regards to superannuation and SMSFs. More than 27 member sent through comments and feedback on the issues they believed were important to themselves and the industry as a whole. The Institute would like to thank members for their contributions. These comments will form part of a policy paper the Institute is developing to prioritise lobbying and advocacy issues. In addition this feedback will provide very valuable, practical examples of issues for the Government and the ATO.

The key issues that were discussed during the meeting included:

• Compliance levels in light of new competencies for auditors of SMSFs
• Statistical issues such as understanding the ATO statistical reports and what they represent.
• ATO help line – inconsistency of advice, poor feedback from auditor and fund reviews
• Borrowings and the need for timely guidance
• Errors relating to PAYG statements sent by large funds in error and mismatch issues
• Issues associated with combined annual return.

The Institute will provide further details in the next edition of the Super Bulletin. This will include an overview of the feedback and main areas of concern members have.

Last week's meeting, on Wednesday 27 August 2008, at the Australian Accounting Standards Board (AASB) saw rapid progress on the development of a revised superannuation standard to replace AAS 25 Financial Reporting by Superannuation Plans. Specific decisions made include the tentative agreement to:

• Exclude contributions and benefit statements from the income statement (or operating statement as it is currently called)
• Not require disclosure of a management expense ratio for the entity as a whole
• Require information regarding sensitivities on investment asset assumptions but not on actuarial assumptions involved in calculating accrued benefits
• Refer superannuation funds that offer insurance contracts to members to the specific requirements in the current insurance standards, rather than developing separate requirements in the superannuation standard
• Require recognition of past benefit costs in the period in which the amendment to the plan's trust deed occurs.

The AASB completed its first review of the standard component of the proposed exposure draft Superannuation Plans and Approved Deposit Funds. The AASB is yet to consider Application Guidance and Basis of Conclusions components. The standard component of the exposure draft is to be updated to reflect decisions made on seven issues papers discussed at the meeting (some of those are mentioned above), and for the review comments made by the AASB on the principles expressed in exposure draft. The AASB is likely to take at least two more meetings to finalise the exposure draft.

For the past 10 years, AFR Smart Investor's Masterclass for financial planning has given Australia's financial planners the chance to showcase their expertise and technical know-how and how they use it to add value for their clients.

The AFR Smart Investor's Masterclass tests planners understanding of financial structures, tax, superannuation (including self-managed super funds), asset allocation, social security and investment strategies and how they can apply that knowledge to real like situations. Questions must be completed by an individual in one sitting. Calculators and reference books are permitted.

The AFR Smart Investor Masterclass for financial planning is open for registrations on Wednesday, 1 October 2008 and runs until Friday, 31 October 2008. More information and entry details are available on the Asset magazine or AFR Smart Investor websites.

Chartered Accountants Technical Conference

Throughout October in Sydney and Melbourne. Addresses the latest legislation changes and technical details in separate streams for business and practice. The need–to–know updates that will make a difference to your growth.

Audit of Self Managed Superannuation Funds Workshop

Throughout October in Brisbane, Perth, Adelaide, Sydney and Melbourne. With the increase in the number of reviews and audits of self managed super funds to 11,000 and new competency requirements in effect, here’s your chance to understand those requirements and ensure you comply.

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.

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