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Junior Member
Group: Forum Members
Last Login: 6/06/2007 7:56:14 PM
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Hi - given that quite alot of SMSF people are self funded retirees, choosing to run their own fund, and that there are some potential problems (administration, reporting, tax, etc etc) with managing under the new rules of being in 'mixed mode' - ie pension and re-contribution for one or more members - what would you think of allowing a standard one-user license to run two funds? As distinct from a multiple fund license for managers and administrators who do stuff for other people?
I thought that one potential solution for us would be to set up Troubadour 2 as a second fund to receive re-contributions, leaving Troubadour 1 to run in 100% pension mode, which seems much cleaner, and would make my life easier (retirement was NOT about increasing bookwork!) plus open up some options down the track. It doesn't cost much to create a fund, and recycle the Trust Deed for #2 - and sure as hell would keep the bookwork straight.
Whaddya think?
Seems to me quite alot of people might find a 'dual fund' option useful for their own self-managed options.
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MySF Administrator
Group: Administrators
Last Login: Yesterday @ 4:36:44 PM
Posts: 133,
Visits: 630
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This seems like a good idea.
The software will allow you to run a second fund so you are clear to go with this - there is no issue with the licence
Regards
MySF
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Master Member
Group: Forum Members
Last Login: Today @ 3:41:34 AM
Posts: 107,
Visits: 1,358
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Hi, I know this is an old thread, but I was wondering if Troubadour did actually go down this path and, if so, how did it go?
I liked the idea of a clean separation - but then I started wondering about the downside. The doubling up of accounting/audit costs comes to mind but might be justified if the administration is simpler.
What concerns me though is the CGT implications - if the two funds are separate, with their own deeds then surely the transfer of shares etc will constitute a transfer (in the same way as in-specie contributions) and thus trigger a CGT event for the transferring fund.
(Though this could be much less of a problem than it was a year ago!!)
I'm not an accountant and I'm not about to start a pension - so this is of more general interest to me - but I was wondering if anyone has gone this route or had any more pros/cons to offer?
Cheers
Neil H.
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Master Member
Group: Forum Members
Last Login: Today @ 3:41:34 AM
Posts: 107,
Visits: 1,358
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Nobody else gone this route or looked at it?
Any thoughts on pros/cons?
Cheers
Neil H.
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MySF Administrator
Group: Administrators
Last Login: 17/05/2010 6:31:15 PM
Posts: 464,
Visits: 632
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Hi,
For funds with members that are in pension mode, and are still also contributing we typically recommend that they set up the "pension & accumulation" member as two distinct members. This can be done through System Setup > Members. You should enter the surname of the pension member as " - Pension" this allows them to be identified easily in reports.
The system will then allow you to split the equity, assets, profits etc between these two images of the same member. The income allocated to this member during the year end's member allocations step will be deemed as non-taxable. This breakdown is now also shown clearly in the tax calculation section of the profit and loss report which clearly identifies what percentage of the otehrwise taxable income is deemed to be non-taxable due to pension mode.
The approach described above helps to deliver the same sort of benefits of clean separation, without the duplication of costs and other admin items associated with running two completely separate funds.
However, as stated before, single fund licensees are welcome to run two funds provided that both of these funds are their own. You are also permitted to set up "tester funds" or tester copies of your own fund if you are not happy with the included MySF Sample Fund or if you find that it is not suitable for testing something.The restriction of a single fund license is that users are not permitted to administer funds for others or on behalf of others as an income generating activity.
Regards,
MySF
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Regular Member
Group: Forum Members
Last Login: 23/08/2010 6:27:09 PM
Posts: 24,
Visits: 59
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Hi
This is almost on topic but with a twist.
I've got a member who is in allocated pension mode and is 62 yo / fully retired. He is taking advantage of the $150k per annum contribution permitted up to $450k before he turns 65. He has already made one contribution last financial year (in January) and I was told by the tax office that he can make the contribution in the morning and then commute the pension in the afternoon of the same day, thereby increasing his allocated pension fund rather than having both an accumulation fund and an allocated pension fund. How do I enter this (and the next 2 in 09/10 and 10/11) contribution and commutation?
Kat
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MySF Administrator
Group: Administrators
Last Login: 17/05/2010 6:31:15 PM
Posts: 464,
Visits: 632
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Hi,
Do you mean that the member will basically remain in pension mode, but make some contributions? If so, you should put the member into full pension mode (tick the box on the System Setup > Members screen) and record contributions for them anyway using the usual approach.
Their contributions will be taxed as normal since contributions by definition are not tax exempt due to pension mode, but all other income for this member will be tax free if they are in pension mode for all of the financial year.
Please let us know if this information helps, or if there is anything that we have misunderstood.
Regards,
MySF
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Regular Member
Group: Forum Members
Last Login: 23/08/2010 6:27:09 PM
Posts: 24,
Visits: 59
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Dear MYSF,
Thanks for the really prompt response. Very impressive.
Yes, the member reamins in pension mode but makes contributions. Officially, we create an accumulation fund in the morning, put $150k into it and then in the afternoon commute the pension fund and include the $150k into the "new" pension in the afternoon. But because the money doesn't actually "earn" anything between the morning and the afternoon, there's no tax on the earnings of the fund throughout the year.
However, the contributions aren't taxed as normal because they are non-concessional contributions (ie after tax). Per the ATO fact sheet:
Generally, non-concessional contributions are the contributions made by or for you to a complying super fund that are not included in your fund's assessable income.
Assessable income is income that is subject to tax.
Non-concessional contributions are sometimes known as 'after-tax' contributions.
These contributions include:
personal contributions that you aren't allowed an income tax deduction for for (this includes personal contributions made to defined benefit funds and untaxed (constitutionally protected) funds).
Does this make any difference to your answer?
Thanks
Kat
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MySF Administrator
Group: Administrators
Last Login: 17/05/2010 6:31:15 PM
Posts: 464,
Visits: 632
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Hi,
Yes, there is a small change to the answer. Contributions will be taxable only if they are recorded to a taxable contributions account. In your case, you will be recording the contribution as a non-concessional contribution (which is not taxable) so there will be no tax calculated on that amount.
The rest of the answer is the same, you should simply put the member into pension mode and leave them there. You will still be able to record contributions for the member in question.
Regards,
MySF
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