Virginia Heyer

Professional services group, AZ NGA, has acquired Sydney-based financial planning firm, StrategyOne Advice Network (StrategyOne), continuing the group’s record of partnering with mature, high quality advisory businesses.

Established in 1984, StrategyOne is led by Managing Director, Virginia Heyer, and Senior Private Client Adviser, Duncan Derrington.

The firm specialises in wealth management, retirement planning and risk advice, and has four advisers, eight support staff and around 600 clients.

Alongside Heyer, StrategyOne has an impressive pedigree of founders including financial advice pioneers Venn O’Neil, Linda Hogan, and Linda’s husband Peter Hogan, formerly Head of Technical at the SMSF Association.

Chesne Stafford, AZ NGA Executive General Manager, said: “StrategyOne has a strong reputation for excellent service and advice, and a team of a dedicated, capable professionals”.

“When we do a deal, we don’t just look at individual businesses in isolation but rather how they fit into our broader community. We consider things like values, complementary services and potential opportunities to collaborate,” she said.

“We believe there are a lot of synergies with StrategyOne and we’re excited to work together.”

Heyer said the AZ NGA partnership secured the firm’s ongoing success by adding scale and enabling it to invest in the next generation.

“It is getting harder and more costly for advice SMEs to operate effectively so we sought a large, experienced partner to help future proof our business and ensure a sustainable future,” Heyer said.

“StrategyOne has been around for 40 years and we want to be around for another 40 years to take care of our people and clients. We had a good look around at our options and AZ NGA is the right fit. We’ve been thoroughly impressed by the team and we’re excited about the group’s proposition and plans for the future.”

AZ NGA’s latest acquisition follows the group’s recent strategic alliance with AMP and advice business services group, Entireti, to create a compelling offer for AMP’s financial advisers.

“We have the capacity, capability and capital to do transactions of all shapes and sizes and we’re able to innovate to satisfy the needs of different stakeholders,” Stafford said.

“While our recent focus has been on large deals, we’re always looking to partner with quality accounting and advisory SMEs to help grow their business, drive efficiencies and capture opportunities.”

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Peter Hogan

Peter Hogan, Head of Technical for the SMSF Association and a highly respected and revered SMSF specialist, is retiring after four years in the role, effective 30 September.

A lawyer by training, Hogan started his career at the Australian Taxation Office (ATO) before working for some of Australia’s largest financial and consulting institutions – he held senior positions with Ernst & Young, Mercers, Macquarie Bank, Colonial First State and MLC – in the fields of superannuation, investment and tax.

Over the journey he acquired enormous industry experience and knowledge, especially on tax issues, and, as a consequence, was is in constant demand on the SMSF speaking circuit.

SMSF Association Chair Andrew Hamilton says: “It’s been an enormous privilege to have known Peter over a long period, not just because of his contribution to the Association in various roles, but because of what he gave more broadly to our superannuation sector.

“There are few people who can claim to have such a positive impact on the SMSF sector over many years – someone whose advice was keenly sought and counsel widely regarded. The industry, governments, and regulators all profited from his insights over many years.

“But it wasn’t just his knowledge, experience and commitment that endeared Peter to so many people. It was also his professional approach, warm manner, kind word, and genuine interest in everyone who entered his SMSF world, that people will fondly remember Peter for.”

Association CEO John Maroney says: “Peter’s commitment, loyalty and enthusiasm for our Association was infectious, and we all benefited from his deep understanding of all things SMSF, irrespective of whether he was serving in an Executive or Board role. [He was a Board member from 2003 to 2012 and Chair from 2004 to 2007.]

“He gave generously of his time and knowledge, especially as it related to the National Conference, helping to ensure it remains the preeminent event for SMSFs.”

Hogan says it’s been a privilege to have worked for the Association in various roles over many years. “As an inaugural Board member, Chair for three years, and then serving on the Executive for the past four years as Head of Technical, it’s been a source of great pride and pleasure to me to see our super sector not only grow but flourish, and to know our Association has been an integral part of this.”

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John Maroney

Advisers attending this year’s round of Technical Day events in the five mainland capital cities will get an important update on what the result of the last federal election means for self-managed super funds (SMSFs).

SMSF Association CEO, John Maroney, says Jenneke Mills, Manager, MLC Technical Services, one of the five key speakers at each Technical Day, will give advisers “fresh insights” into what the election result is likely to mean for their clients and businesses.

“This was an election where SMSFs were very much in the limelight, so it will be fascinating to get from Jenneke her considered views on what the likely upshot will be for the SMSF sector of a Coalition victory.”

Other key addresses at the Technical Day will be delivered by Louise Biti, Director, Aged Care Step, who will look at the issue of “Incapacity in all its shapes and forms, while Craig Day, Executive Manager – First Tech, Colonial First State, will use a workshop to examine “the importance of keeping SMSF investments at arm’s length”.

The two-hour workshop in the morning session, to be run by the Association’s Head of Education and Technical, Peter Hogan, and Senior Technical Manager, Mary Simmons, will allow attendees to role play how to manage a client’s affairs when retirement and estate planning affairs are disrupted.

Maroney says: “The feedback we have got in the past in that advisers really appreciate the hands-on role facilitated by these workshops, especially when provided by independent experts. I’m confident that Peter and Mary, as well Louise and Craig, will offer highly inter-active sessions that will actively engage them.”

The first Technical Day will start in Brisbane on 23 July, before moving to Perth (25 July), Melbourne (30 July), Adelaide (31 July) and ending in Sydney on 1 August.

Registrations are now open with the Early Bird offer available until 5 July. To register: https://www.smsfassociation.com/smsf-tech-day/

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Peter Hogan

A strong focus on the fundamentals of self-managed super funds (SMSFs), from setting a fund up to alternative investment strategies, will be a dominant theme at this year’s SMSF Association Technical Day.

SMSF Association Head of Education & Technical, Peter Hogan, says advisers will benefit from the expertise the five key speakers will bring to the Technical Day as they explore different issues critical to their clients’ interests.

“Individuals establish SMSFs for the control it gives them to achieve their retirement income goals, and these sessions will provide fresh insights for advisers on how they can help their clients meet this worthwhile ambition.

“In particular, there will an emphasis on advisers’ legal responsibilities when they are either advising individuals on setting up a fund or when assuming responsibility for an established fund.

“In this respect the address by the Australian Tax Office, “Fledgling SMSFs – the first 18 months of an SMSF’s life” will be highly instructive, as will the topic “Topical tips, tricks and traps when taking on new trustees”.

Attendees will also gain valuable insights on asset ownership in retirement and the “bricks and mortar” on holding property in an investment portfolio. Finally, the important role insurance plays in an SMSF will be examined by Natasha Panagis, Technical Manager, at life insurer AIA Australia.

The first technical Day will start in Adelaide on 14 August, before moving to Melbourne (15 August), Sydney (16 August), Brisbane (21 August) and ending in Perth on 23 August.

Aside from Panagis, other key speakers will be Mark Ellem, Executive Manager, SMSF Technical Services, SuperConcepts; and Peter Bobbin, Managing Principal, Argyle Lawyers.
The SMSF Association Technical Day Series is open for registrations: https://www.smsfassociation.com/smsf-tech-day/

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Peter Hogan

Members of self-managed super funds (SMSFs) should seek specialist advice on the possible impact of receiving a pension on the death of their spouse, says SMSF Association Head of Technical Peter Hogan.

He says that under the new superannuation rules that took effect on 1 July 2017, the assets supporting the deceased’s pension are counted towards the surviving spouse’s Transfer Balance Cap (TBC) that has been set at $1.6 million.

“The end result can be that where an SMSF is paying pensions to two spouses who are comfortably within their respective TBCs of $1.6 million, and one of them dies, the surviving spouse can suddenly exceed their TBC.

“It is an outcome of the new superannuation regime that has received little attention and the Association is concerned that many SMSF members and their advisers are ‘blissfully ignorant’ of the impact of these changes regarding the payment of death benefits.”

Hogan says it’s wrongly assumed that any excess above the $1.6 million TBC of the surviving spouse can automatically be moved back into an accumulation fund where it will be subject to the usual superannuation taxes.

“This is wrong. The rules for death benefits have changed in that any excess above the recipient spouse’s $1.6 million cap ‘inherited’ because of the death of a spouse must be paid out of superannuation as a lump sum; transferring it to an accumulation fund is not an automatic option under the new regime.

“Although it is possible to plan to influence this outcome, SMSF members need to receive specialist advice addressing their fund’s particular circumstances to get the best possible result.

“This may mean that members who have addressed their estate planning needs in the past will need to review those plans in the light of the changes that took effect on 1 July 2017.”

He says there would be many instances with SMSFs where the death of one spouse would trigger a situation where the surviving partner would receive a death benefit that took their TBC above $1.6 million cap. “This is not just a problem for SMSFs with large pension account balances already exceeding the $1.6 million cap.”

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Peter Hogan

A weaker investment outlook that indicates returns will be lower for longer means SMSF retirees need more savings to achieve their retirement goals.

The amount needed for a 65-year-old SMSF couple to afford a comfortable retirement (as defined by ASFA^[1]) has increased by 17% from $702,000 to $824,000.

However, 66% of SMSF trustees can remain confident (with an 80% probability) that they are well placed to live comfortably in retirement on $60,063 a year, according to a new research report from the SMSF Association and SMSF retirement experts Accurium that examines the changing financial health of SMSFs.

At a higher spending level of $70,000 a year, 50% can be confident of achieving this goal, while 39% can be very confident of doing so.

The report, titled SMSFs Treading Water, reveals that the median desired spending level in retirement for an SMSF couple is $78,800, up from $75,000 a year earlier. However, 24% of SMSF couples aim to spend over $100,000 a year in retirement.

At an aspirational level of $100,000 a year spending, 28% can be confident and just 20% very confident.

Another key finding is that the median balance for a two-member SMSF at retirement rose to $1.137 million for the 2016 financial year compared with $1.124 million for the previous year. SMSF median balances at retirement have risen 17% since 2010.

Contrary to the widely-held belief that bequests are central to SMSF retirement plans, only 7% of SMSF households have specific inheritance plans.

Report highlights

• Despite small gains in balances, an investment outlook of lower returns for longer means many SMSFs need more savings to achieve their retirement goals.
• Median SMSF balances were up 1.2% for FY16, based on a median investment return of 1.0%; however, a weaker investment outlook means retirees need to save more to afford their desired lifestyles in retirement.
• The amount needed for a 65-year-old couple to afford a comfortable retirement has increased by 17% from $702,000 to $824,000.
• 66% of 65-year-old SMSF couples can be confident of affording a comfortable retirement, down from 70% in 2016.
• 28% of 65-year-old SMSF couples can afford to spend $100,000 a year, slightly up on last year.
• More than half of SMSF retirees cannot be reasonably confident (80% probability) of achieving their desired lifestyle in retirement, although about 25% can be very confident (95% probability).
• One in four are unlikely (less than 50% chance) to achieve their goals.

SMSF Association Head of Technical Peter Hogan says the report highlights that most SMSF trustees are still on track to meet their retirement goals, despite a difficult investment environment and low interest rates.

“But for trustees and their specialist advisors, these are challenging times, especially on the investment front. From our perspective, this is why it’s critical superannuation has a sustained period of stability free from significant changes to give trustees greater confidence in the system.”

Accurium’s General Manager, Douglas McBirnie, said: “The upshot for the average SMSF household approaching retirement is that their improving balance has not been able to keep up with the increased cost of meeting their desired lifestyle in retirement.

“This is largely due to an increased probability of a ‘lower for longer’ situation where interest rates and equity returns remain low. This was reflected by the Reserve Bank noting in July that the neutral nominal cash rate, a key indicator, is now 3.5% rather than 5% previously.

“Even so, SMSF households are still better placed than most sectors of the community to meet their financial goals in retirement.”

The SMSF Association and Accurium study is the first report to provide detailed figures on how the retirement wealth of Australia’s SMSFs has changed post the 2016 SMSF annual tax returns.

Based on Accurium’s extensive database, it looks at how SMSFs have fared in the 2016 financial year and considers how well prepared trustees are for retirement.

The research report shows that although SMSFs are generally well prepared for retirement, lower expected investment returns means that trustees need to review their retirement plans to ensure their capital remains sufficient to support their retirement goals.

Research database

Accurium’s research takes a probability-based approach which factors in more than 2,000 investment scenarios to show the capital levels required for trustees to retire with confidence of achieving the retirement lifestyle they want.

Statistical analysis is drawn from a database of over 65,000 SMSFs (approximately 130,000 SMSF trustees) which precedes the Australian Taxation Office’s Statistical Overview for 2016, which is likely to become available in late 2017.

Accurium’s dataset represents SMSF households who are phasing into retirement and, together with its industry-leading retirement healthcheck model, gives unmatched insight into how well prepared SMSFs are to face retirement.

———

[1] ASFA Retirement Standard as at June 2017 – a comfortable lifestyle for a 65 year old couple requires spending of $60,063 p.a

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John Maroney

SMSF specialists attending the SMSF Association Technical Day, being held in the five mainland state capitals starting in Sydney on 18 July, will enjoy the opportunity to hear first-hand insights from the Australian Taxation Office in the first session, titled “Total Super Balance unpacked”.

The ATO will outline their concerns as regulator in the wake of the introduction of the new superannuation rules starting on 1 July.

In addition to highlighting key issues as part of their workshop session, the ATO will also set out how it plans to deliver administrative functionality around reporting of key data that will allow specialists’ clients to make better-informed decisions as part of a proposed “real time reporting” regime to be introduced.

SMSF Association Chief Executive Officer John Maroney says conference delegates will welcome the chance to hear directly from the ATO about the impact that the introduction of the concept of “Total Superannuation Balance” will have on their clients and the new proposed reporting regime.

“More specifically, these specialists will come away with a better understanding of their clients’ ability to make non-concessional contributions and their eligibility to bring-forward their non-concessional contributions cap, including the impact of transitional arrangements.

“They will also be told about the opportunity to utilise any unused concessional contributions cap carry-forward and what they should look for when delivering this advice.”
Jordan George, Association Head of Policy, will explore the ongoing implementation issues of the Transfer Balance Cap, examining issues relevant to different income streams and what strategies are available to clients to address the application of this new Cap.

Maroney says: “Delegates will have a clear understanding of where the tax office is likely to draw the line between acceptable and unacceptable strategies post 1 July – a critical insight into what is a new regulatory regime.”

Delegates will also hear from the Association’s Head of Technical, Peter Hogan, about the CGT relief opportunities, and how they can maximise the transition of their clients’ pension accounts into the new transfer balance cap regime when preparing annual accounts and returns for the 2017 financial year. Associated taxation concerns will also be addressed.

Craig Day, Executive Manager, Technical Services, at Colonial First State, will explain how the broad policy objectives for estate planning have significantly shifted, and how this will affect specialists’ clients that have established plans in place and how they may need to respond to the new environment.

Maroney says that the 1 July changes have driven the agenda for this year’s Technical Day with four intensive workshop sessions to allow delegates to get a better understanding of what the new regime means for clients.

“The Technical Day is an important event on the Association’s calendar. The fact it is held in the five mainland state capitals over 10 days gives specialist SMSF advisers and their staff the opportunity to attend, thereby ensuring that as a business they are totally across the new rules.”

Register now for SMSF Association Technical Day (Early bird registrations close 3 July).

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Liz Ward

The SMSF Association Technical Day will be one of the first superannuation conference offerings in the post 1 July super landscape, giving members the opportunity to discuss the new measures that took effect on that date and share with fellow professionals what the practical consequences have been for their clients and businesses.

SMSF Association Head of Education and Technical Day organiser Liz Ward says: “With the most significant changes to superannuation for a decade taking effect on 1 July, we want this year’s Technical Day to support delegates by providing time to reflect on, work through and resolve the key technical challenges they are experiencing day to day.”

To ensure the Technical Day achieves these goals, the format has shifted to a more in-depth, hands-on program to better allow delegates to come to grips with the key technical issues most concerning them.

The Association has used extensive member feedback and meetings to determine the issues that are “top of mind” with members, and has structured the five SMSF Association Technical Days accordingly. The first event is in Sydney on 18 July, followed by Brisbane (19 July), Melbourne (20 July), Adelaide (25 July) and Perth (27 July).

Ward says there will two innovations at this year’s conference that will enhance delegate engagement.

“A conference workbook that delegates will use during the event will become a ready ‘how-to’ reference document after the conference, continuing the technical support available back at the office.

“The ‘SMSF Family’ concept, which helps illustrate how technical content plays out in a real-life situation that can be related to clients, will be used at the Technical Days following the positive feedback about this presentation approach after this year’s National Conference.”

The four sessions will cover the total super balance rules, the transfer balance cap, CGT relief for funds affected by the 1 July 2017 changes and estate planning under the new rules.

The key speakers will be the Association’s Head of Policy, Jordan George, Head of Technical, Peter Hogan, Colonial First State Executive Manager Craig Day and ATO representatives from its Tax Counsel Network who manage its most significant and complex technical issues.

SMSF Association Technical Day Series is open for registrations

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Peter Hogan

The SMSF Association has backed the ATO’s decision to give SMSF trustees an extra three months to declare any tax planning schemes where personal services income has been diverted to their SMSF.

The ATO’s deadline has been extended to 30 April 2017 to give trustees more time to come forward voluntarily to disclose their participation in such schemes and potentially reduce any penalties.

SMSF Association Head of Technical Peter Hogan says: “The initial Taxpayer Alert (TA) 2016/6 was issued in April last year with a deadline of 31 January, so the decision by the ATO to extend the deadline is welcomed.

“The Association encourages all SMSF professionals and trustees to consider carefully all their investments and arrangements with all parties, whether related or not, for compliance with the superannuation and tax laws as well as any other relevant legislation.

“They should also revisit TA 2016/6. The Association encourages all SMSF professionals to revisit this alert to review its potential impact on their SMSF clients.

“In addition, consideration should be given to disclosing any arrangements that give any concern in order to take advantage of this ATO extension deadline.”

Hogan says the extension highlights a wider concern that ongoing, day-to-day compliance of SMSFs is still extremely important and should not be ignored, despite the overwhelming focus on implementing the 1 July 2017 Government changes to superannuation.

“Although planning for and implementing strategies over the next five months in anticipation of the 1 July 2017 changes is critical, trustees and their advisors need to be diligent and cognisant of their ongoing obligations arising over this period, and take appropriate action in a timely manner.”

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Peter Hogan

Small business owners selling their business or business assets and using the proceeds to contribute to superannuation free of capital gains tax (CGT) need to be aware of the recent changes to concessional and non‑concessional caps, says Peter Hogan, SMSF Association Head of Technical.

Hogan says because there has not been any change to the rules surrounding the small business CGT cap, its potential impact on concessional and non-concessional caps has largely gone under the radar.

The small business CGT cap allows for the capital gain realised on the sale of any small business asset up to $500,000 per eligible taxpayer to be contributed to superannuation free of capital gains tax (when certain conditions are met). If the asset has been held for more than 15 years, that threshold rises to $1.415 million for the 2016/17 financial year.

It applies to small businesses with a turnover of less than $2 million or eligible taxpayers seeking to use the exemption having a net asset value of less than $6 million.

Hogan says: “What has to be remembered is that once this tax-free contribution is placed in an SMSF using the CGT cap, these amounts count as part of a member’s total superannuation account and are assessed accordingly in terms of eligibility for catch-up concessional contributions and available non-concessional contribution caps from 1 July 2017 onwards.

“It will also have an impact on the total amount in an SMSF that adds towards the $1.6 million transfer balance cap.

“So, although the small business CGT cap has been left alone by the legislation, small business owners need to carefully assess the impact of making such a contribution on the sale of a business or business asset.

“Ideally, any small business contribution should be made after any other contribution, especially where the small business CGT contribution will push account balances over the various account thresholds.

“In these circumstances, it is imperative that small business owners get advice from an SMSF specialist to maximise their retirement savings and the tax effectiveness of their SMSF.”

Examples:

Catch up concessional contributions:

Member has $300,000 in their SMSF in 1 July 2019. Only contributed $15,000 concessional contributions in earlier year of 2018/19, so has potential catch up CC of $10,000. If contributes full $25,000 concessional contribution (CC) for 2019/20 financial year first, they are eligible to contribute the $10,000 (or part thereof) as a catch up CC.

If, however, they had sold business or business asset and contributed more than $200,000 under the small business CGT cap into their SMSF in the 2018/19 financial year, they are no longer eligible to make the catch up CC in later 2019/20 year. The member account balance is tested as your account balance just before the start of the financial year. If they had delayed the small business CGT cap contribution until after 1 July 2019 (which is possible under the CGT cap rules in appropriate instances), then a catch up CC could have been made as well.

Non-concessional contributions:

Member has an accumulated account balance of $ $1,010,000 at 30 June 2016. Sells a business asset their company business owns in February 2017 and realises a capital gain of $500,000 on the sale. Elects to contribute the $500,000 into their SMSF under the small business CGT cap rules as soon as they receive the proceeds. They are not in a position to make any further contributions into their SMSF before 30 June 2017.
They wish in the 2017/18 financial year to make further non-concessional contributions of $200,000 (triggering the catch up rules). As their account balance at the beginning of the year was greater than $1.5 million, they are not able to make that $200,000 non-concessional contribution (NCC). They are limited to an NCC of $100,000 (being the new 1 year NCC cap). Again the member account balance test is just before the beginning of the financial year to determine eligible contributions allowed in the next financial year.
In both cases, the small business CGT cap is added to the member’s account balance and impacts on the contributions they are able to make under the catch-up CC rules and the NCC rules which apply from 1 July 2017 onwards.

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