John Calabro RMIT C5343 Financial Planning 代写

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John Calabro C5343 Diploma of Financial Planning 代写

National Unit Code and Name: FNSFPL502 Conduct financial planning

analysis and research

RMIT Code and Name: BAFI5213C Conduct financial planning analysis and

research

National Unit Code and Name FNSINC501 Conduct product research to

support recommendations

RMIT Code and Name: MKTG7921C Conduct product research to support

recommendations

National Unit Code and Name: FNSASICU503 Provide advice in

superannuation

RMIT Code and Name: BAFI5218C Provide advice in superannuation

John Calabro C5343 Diploma of Financial Planning 代写

John Calabro RMIT
John Calabro RMIT C5343 Financial Planning 代写

The School of Vocational Business Education

Assessment Record & Cover Sheet

Assessment information

Program Name: C5343 Diploma of Financial Planning

Course(s)

CLUSTER 3A: CONDUCT RESEARCH ANALYSIS IN

SUPERANNUATION

National Unit Code and Name: FNSFPL502 Conduct financial planning

analysis and research

RMIT Code and Name: BAFI5213C Conduct financial planning analysis and

research

National Unit Code and Name FNSINC501 Conduct product research to

support recommendations

RMIT Code and Name: MKTG7921C Conduct product research to support

recommendations

National Unit Code and Name: FNSASICU503 Provide advice in

superannuation

RMIT Code and Name: BAFI5218C Provide advice in superannuation

Semester & Year Semester 1, 2017

Teacher Name &

Contact Details

John Calabro

john.calabro@rmit.edu.au

Date handed out Week 4

DUE DATE Week 13

Student to Complete:

Student Name(s)/Number(s):

Title of Assessment Task: Workplace Simulated Project

Student Declaration:

I declare that in submitting all work for this assessment I / we have read, understood and agree to the

content and expectations of the Assessment declaration.

Assessor to Complete:

Assessment Result:

Comments/Re-submission Arrangements (if

applicable):

Teacher Name:

DATE:

Resubmission Assessment Result: (if applicable)

Comments

Teacher Name:

DATE:

Assessment Information – Task 2 –Workplace Simulated Project – Financial Plan in Superannuation

Overview of Assessment

This is assessment Task 2 of a total of 3 assessment tasks. You must successfully complete all 3 tasks to

achieve competency in this cluster.

Assessment Task/Title: Workplace Simulated Project Financial Plan in Superannuation

Context/purpose of Task 2

In week 4, you will be provided with a contract and position description for a Financial Planner at Swanston

Banking Group Ltd. You will assume the role of a financial planner at the Swanston Banking Group Ltd and

follow the company policies and procedures as if you were a real employee of the bank. You will be

allocated and electronic client file that you will be able to access from the Swanston Bank Portal within the

Learning hub for the program. The client file will include client details, background of their particular

circumstances, a bank statement, pay slips and a superannuation statement. You will require all these

documents in order to address all the requirements of this project.

The Workplace Simulated Project requires you to complete three parts: Part 1, Part 2 and Part 3.

For the first part of the project you will assume the role of a para planner at the Swanton Banking Group

Ltd and you will prepare a financial plan that includes superannuation advice for the simulated client you

interviewed in Cluster 2. The financial plan that you will prepare must demonstrate that the level of risk

matches the client’s risk profile and demonstrate how the needs of the client have been met.

In the second part of the assessment you will be required to i undertake a role play with your client for the

second time at the premises of Swanston Banking Group Ltd. You will need to continue building a good

rapport with the client and present the financial plan that you drafted to them.

You will need to ensure that the client understands all the information provided particularly the concepts in

reference to superannuation. The main aim of the second part is for you is to be able to explain all the

relevant terms in the financial plan, answer the questions that the client may have and to negotiate the

contents of the financial plan.

The purpose of the assessment is to enable you to demonstrate a breadth of understanding across all of

the course material at an independent level. It assesses the knowledge you have obtained through

undertaking the concepts of superannuation, your communication skills in presenting that knowledge and

your problem-solving skills in answering the questions posed in a live interview with the simulated client.

The assessment will be available on Blackboard in Week 4 and your teacher will provide you with guidance.

You will have the opportunity to seek advice from your teacher on a number of learning date audits points

throughout the semester.

What you need to do

You are required to address all questions in Part 1, Part 2 and Part 3 to successfully complete this task.

Part 1 – 2,000 - 2500 Words must be submitted prior to role play

Part 2 - Submission of interview script and pre planned questions, prior to the role play

Part 3 – Submission of revised financial plan

You will require access to the course resources on the Learning hub, recommended textbooks and the

website links prescribed for the program and the list of resources below specific to this task.

You must reference all your work using the Harvard referencing System.

Available via the Library website

http://www1.rmit.edu.au/library/referencing-guides

Choose RMIT Harvard - download Harvard referencing examples document

Learning Audit Dates

You will be required to show drafts of your work to the teacher to received regular feedback before the

final submission. The Assessment Schedule includes the weeks of the scheduled Learning Audit Dates.

List resources and specification relevant to Task 2

Resources on the learning hub

You will be required to access templates and samples from the banks portal under “advice tools”

Web resources:

National Unit Code and Name: FNSFPL502 Conduct financial planning

analysis and research

RMIT Code and Name: BAFI5213C Conduct financial planning analysis and

research

National Unit Code and Name FNSINC501 Conduct product research to

support recommendations

RMIT Code and Name: MKTG7921C Conduct product research to support

recommendations

National Unit Code and Name: FNSASICU503 Provide advice in

superannuation

RMIT Code and Name: BAFI5218C Provide advice in superannuation

https://www.superannuation.asn.au/

https://www.moneysmart.gov.au/

Free subscription to this link:

https://www.superguide.com.au/

Assessment Support and Advice

Report writing is an important job skill The RMIT Study and Learning Center provide useful and helpful

tutorials and tips to enhance your report writing skills, these resources are available at

https://emedia.rmit.edu.au/learninglab/content/reports-0

Submission Instructions

You should fill in this sheet with your name, number and the title of the assessment, attach your

assessment and submit to Blackboard on or before the due date.

You should:

 Ensure that you submit assessments on or before the due date.

 Always retain a copy of your assessment tasks. (hard copy and soft copy)

 When you submit work for assessment at RMIT University you need to use a cover sheet that

includes a declaration and statement of authorship. You must complete, sign and submit a cover

sheet with all work you submit for assessment, whether individual or group work. On the cover

sheet you declare that the work you are presenting for assessment is your own work. An

assignment cover sheet for submission of each assessment task is available on blackboard.

 Each page of your assessment should include footer with your name, student number, the title of

the assessment, unit code and title and page numbers. For example, Callie Harvey, 324567, Task 2,

Cluster 1, Overview of Financial Services , Page 1 of 10

Marking Criteria

Competency Criteria

Competency Requirements Demonstrated

YES/NO/Comm

ents

Resubmission Outcomes (if applicable)

Demonstrate an analysis of

superannuation products so as to

provide effective advice to the

simulated client.

Discuss the use of risk profile when

recommending advice to the simulated

client.

Explain the use of products and

benefits as to the advice provided.

Identify research requirements to

provide accurate information.

Document in the advice a range of

effective superannuation strategies

that work in best interest of the

simulated client.

Describe key features of relevant

legislation when informing the client

and when providing advice around the

key superannuation and retirement

products.

Provide a range of data to assess the

superannuation products that are in

the market suitable to the client needs.

Re-enforce the key FOFA legislation

that is to be documented as part of the

Appendix i.e. best interest duty.

Document research findings when

informing clients.

Discuss a range of products in the

advice process as part of the Appendix.

Document in the advice the range of

superannuation products and

associated risks when providing advice.

Identify the requirements of

superannuation products.

Highlight the fee and cost structures in

the advice document.

Document two types of contributions

to superannuation in the advice

Describe the range of products in

retirement when setting up income

stream in the advice specific to the

simulated client

Discuss the risks associated with

products in the advice.

Demonstrate to the client in the

interview how super products are

administered.

Document the use of preservation

rules in your advice.

Demonstrate how investment

strategies benefit clients in the advice

process.

Discuss the possible restrictions placed

upon client’s superannuation strategy

as the part of the advice.

Document and discuss the impacts of

tax on client’s financial situation and

around the products recommended

including:

▪ impact on investment earnings

▪ employer and employee

contributions

▪ benefit payments and expenses

▪ tax deductions

▪ capital gains tax treatment

▪ roll-overs

▪ reasonable benefit limits

▪ superannuation surcharge

▪ social security pension eligibility

▪ retirement planning

▪ death benefits

▪ franking credits

Workplace Simulated Project Financial Plan in Superannuation

The aim of using a simulated client for each workplace project is for you to develop the following

knowledge and skills:

a) Create rapport with the client

b) Collecting, analysing and organising information

c) Discuss financial plan with the client

d) Planning and organising activities

e) Negotiate effectively

f) Working with others and in teams

g) Complete and maintain necessary documentation

At the beginning of the semester you will be allocated an electronic client file to use for the workplace

simulated projects. You will be required to complete the projects individually.

For the purpose of the projects, you will assume the role of a financial planner at the Swanston Banking

Group Ltd. To assist you with your research a number of key documents used by the bank have been

uploaded on learning hub for your use:

a) Swanston Bank letter head,

b) Authority to Access information

c) Best Interest Duty – Client File Note (annotated and blank)

d) Best Interest Duty – Client Checklist

e) Best Interest duty – Working paper

f) Client Acknowledgement Form

g) Fact Find

h) Plan Preparation Fee Form

i) Style Guide

Part 1

You will be required to develop a financial plan for the simulated client that you interviewed in cluster 2.

The financial plan (advice) will need to be based on the advice template and must demonstrate the

following requirements:

a) the level of risk matches his/her risk profile

b) how the needs of the client have been met

c) include an appendix that includes the calculations and findings

A copy of the banks templates can be located on the banks portal under “advice tools”.

You will attach to the advice an Appendix comprised of evidence of your research, assumptions made and

any working out.

Part 2

Once you have completed the written part of the assessment you will be required to demonstrate your

adviser communication skills and present your recommendations, responses and research to your client.

You are expected to find someone to role play the part of the client that you have you prepared the advice

for.

You are to assume the role of the adviser while role playing with the client.

You need to record the role play using your smart phone or MP3 player and upload it to the Learning Hub

Submission section.

Once your teacher has assessed the whole assessment (written submission and recorded role play) he/she

will contact you to provide feedback and discuss your understanding of the assessment you have

submitted. You will be expected to clearly answer a series of questions based on the answers that you have

provided in your project. This role play will be part of the authentication process for your project

You will be required to conduct the second interview with the client at the Swanston Banking Group

(Practice Firm). You need to prepare for the interview and be able to do the following:

a) Explain complex terms specifically those relating to superannuation included in the financial plan to

the client

b) Test the understanding of the client

c) Answer questions from the client

d) Negotiate a solution with the client to ensure that he/she happy with the proposal

e) Ask for the authority to proceed with implementation of financial plan.

In preparation for the role plays, you will observe live role plays during the semester in your classes that

will demonstrate good practice/techniques.

Part 3

You will be given one week after the initial interview Part 2 to revise and complete the advice and submit it

as part of this task.

Additional Requirements

Quality of content - Are definitions of financial terms accurate and explanations of economic concepts accurate and

relevant? Does it apply the theory learnt in course?

a) Relevance of material - Does the material collected answer the assignment questions? Is the material

accurate?

b) Quality of research - Are a variety of references used? Is the material detailed and complete in addition to

being relevant?

c) Statistical data and graphs - Is statistical data, graphs and tables included where appropriate? Are graphs and

data accurate and relevant?

For each workplace simulated project you are required to attach to the advice an Appendix comprised of evidence of

your research, assumptions made and any working out.

Guidance for Client Interview

Introduction and Brief Overview (1 minute)

Welcome the clients and introduce yourself as an authorized representative for Swanston Banking Group Ltd Financial

Planning. Confirm with the client that your advice is limited in the specific area of advice. Your main focus is to discuss

merits/impacts of each strategic advice area: Financial Planning, Life Insurance, Managed Investments and

Superannuation.

Present Strategy and Explain why the advice is appropriate for the clients (10 minutes)

You should always confirm clients understanding of strategy and encourage them to ask questions.

 Provide an overview of the strategy

– What is the impact on their assessable income and benefits

– Why are your recommending the client makes the co-contribution;

– What are the risks / disadvantages (such as accessibility of super benefits, impact on overall cashflow etc)

 Demonstrate how you calculated the amount of insurance cover you have recommended to be sacrificed in to

superannuation.

Once the strategy’s implemented will the client have enough cashflow to meet their annual living expenses – please

explain?

Confirm and explain the clients Risk Profile (2 – 3 minutes)

You must discuss the fees as they are detailed:

What are the product fees and commissions and how are they paid – for example, from the money invested in the

super fund, or is it paid directly by the client with after-tax dollars from their bank account? Use Fees outlined in PDS,

Balanced Funds.

Explain the Fees and Commissions (1 minute)

You must discuss the fees as they are detailed:

What are the product fees and commissions and how are they paid – for example, from the money invested in the

super fund, or is it paid directly by the client with after-tax dollars from their bank account? Use Fees outlined in PDS,

Balanced Funds.

Explain the Implementation Process to the Clients (2 – 5 minutes)

You must:

Confirm if the client is happy with the recommendations

Explain the steps involved in the implementation process – how you, as the Adviser, will liaise with the Product

Providers on the client’s behalf to set up the regular contributions and choose another, more appropriate, investment

option within the super funds.

Explain that once all the recommendations have been implemented, you will send the client a Confirmation Letter

containing a detailed summary of their new position

Client Research and

Analysis

Part 1 – Client Research and Analysis - Introduction

Under the Corporations Act the need to consider “one or more of the person’s objectives,

financial situation and needs” is a defining characteristic of product advice. By collecting

information about a client’s financial situation, an adviser is complying with Corporations

Act requirements, such as the “reasonable basis” requirement of Section 945A.

Part 1 – Client Research and Analysis (cont.)

Failure to collect information about the client’s current financial situation may be held by a

court to be failure to properly consider the needs of the client, and therefore a breach of

fiduciary duty that can, if the client suffers a financial loss, lead to an action for damages.

Financial Position

Importance of Current Financial Position

A consideration of the client’s current financial situation is also an important starting point

for considering his or her wealth creation needs. There are also immediate benefits as

well .

Gathering the Information

The importance of gathering information on the client’s financial situation should be

evident by now. The task should therefore not be taken lightly.

Proceeding towards the provision of financial advice without attempting to have financial

statements that are completed with reasonable accuracy runs the legal risks that have

already been outlined.

Gathering the Information (cont.)

It is important that the information provided by the client is verified as much as possible.

The client’s estimates of the value of some items, such as the family home or an

investment property, may have to be accepted, but other important items – such as the

size of any borrowings, can be given precise dollar values.

Likewise outgoings to service borrowings can be given precise dollar values. Information

such as this should be verified by supporting documentation such as bank statements.

Gathering the Information (cont.)

Obtaining supporting documentation ensures that the information that is recorded is as

accurate as possible.

This is necessary because:

• memory on its own is rarely sufficient to achieve accuracy, and

• clients may not properly realise all the information that is required.

Identify problems

Problems may include:

• inadequate insurance;

• inadequate retirement saving;

• spending exceeding income;

• excessive high interest and non-deductible debt, such as credit card debt;

• poor financial administration and record keeping; or

• tax inefficient ownership of assets and structures that do not maximise social security

entitlements.

The Financial Statements

The financial information obtained is used to prepare two financial statements:

• A Statement of Net Worth (Balance Sheet)

• A Cash Flow Statement (Income and Expenditure Statement)

Both of these statements appear in a completed Fact Finder.

Statement of Net Worth

The statement of net worth is a simplified version of the “balance sheet” prepared by

accountants ‐ it lists the assets and liabilities of the client.

Assets are the items that are owned by the client, such as house, car, investments etc.

Liabilities are borrowings and other amounts owed by the client. They include items such

as housing loans, borrowings for property investment, credit card debt, etc .

Statement of Net Worth (cont.)

Since the liabilities are usually linked to specific assets or asset categories, e.g. housing

loan, car loan etc., statements of net worth usually begin with a listing of assets. These

may be categorized as:

• personal

• investments, and

• superannuation

Statement of Net Worth (cont.)

Personal assets include the family home, house contents and personal effects, motor

vehicles, boats etc.

All borrowings used to finance each asset, such as a housing loan, car loan etc. should

also be shown next to the information on the asset.

Statement of Net Worth (cont.)

Investment assets include rental properties, bank accounts, bank term deposits,

corporate bonds, shares, managed investments etc.

Again, any debt associated with the asset should also be shown, along with date of

purchase, purchase cost and ownership details.

Statement of Net Worth (cont.)

Credit cards are usually listed as an investment asset with a zero balance, and with the

current balance as associated debt.

Superannuation is also listed as an asset, although the fact that it is not normally

available until retirement means that it is treated as a separate category.

Discussion topics

How do financial statements fit into the personal financial planning process?

Practice questions

Which of the following CANNOT be perfectly revealed by an analysis of a client’s assets,

liabilities, income and expense?

a. Pattern of cash flow

b. Liquidity and solvency

c. Financial objectives and risk profile of the client

d. Ability to save and to invest

Jewellery and artwork are normally reflected in the household statement of net worth as ...?

a. liquid assets.

b. investments.

c. real property.

d. personal property.

Part 2 - The Financial Statements

Cash Flow Statement

Cash flow statements should not be confused with profit and loss statements prepared by

accountants.

This is because:

• they are based on cash flows and not revenue and

• all cash flows, including investment cash flows, are included.

Usually, cash flow statements prepared for financial plans show the client’s cash flows for

yearly intervals.

Cash Flow Statement (cont.)

The “bottom line” of the cash flow statement is the client’s surplus, which is simply cash

inflow less cash outflow. If positive, this is the amount available for investing or reducing

debt after basic needs have been met.

It shows the increase in the client’s net worth during the year.

Cash Flow Statement (cont.)

The cash flow statement should always be prepared as accurately as possible.

This is not easy. Clients may know their incomes, but they usually have difficulty detailing

their expenses.

There is a final test of the accuracy of cash flow estimates. If the first draft of the cash

flow indicates a surplus, but the client’s records of investments and loans indicate that net

worth has either been stationary or decreasing, the surplus figure is plainly wrong

Cash Flow Statement (cont.)

A cash flow statement provides enough detail for the client’s cash flows to be discussed

in detail.

The adviser can have a firm idea of the amount that is available for wealth creation, debt

reduction or additional contribution to superannuation each year, shown by the Surplus

figure.

Use of Debt

Debt can enhance the returns from an investment provided the cost of the debt is less

than the returns from the investment.

Using debt to enhance an investment return is known as either “gearing” or “leveraging”.

The two terms are used interchangeably, although the term “leveraging” which was

originally American, appears to be gaining ground on its more British rival.

Use of Debt

A further advantage of leveraging an investment is that the financing cost is normally

tax‐deductible.

This is not an argument for placing all clients into a leveraged investment.

The benefits of leveraging can, however, be borne in mind for the times when leveraging

an investment is an appropriate recommendation.

Discussion topics

What is an cash flow statement? What role does it serve in personal

financial planning? Name the four basic types of expenditures.

Part 3 – Use of Financial Information Statement

Benefits from Statement of Net Worth

Although client data forms usually allow for Statements of Net Worth to be prepared after

the client’s goals have been established, it actually helps to have the figures available for

discussion when the client’s goals are being set.

Use of Financial Information Statement (cont.)

Benefits from Statement of Net Worth -examples

Sale of non‐ ‐income earning assets

Client’s preferences should always be taken into account, but one strategy that is

sometimes possible is the sale of non‐income earning assets so the proceeds can be

used more effectively

Transferring asset ownership

If an income is going to be earned from a holiday home, some thought could be given to

transferring ownership of the asset to spouse

Use of Financial Information Statement (cont.)

Benefits from Statement of Net Worth -examples

Debt restructure

Replacing non‐deductible debt on the family home with deductible debt on the investment

property.

Reduce credit card debt

Consider using some of their cash management money to eliminate their credit card

balance.

Use of Financial Information Statement (cont.)

Benefits from Cash Flow Statement-examples

Surplus available for investments

One use of the cash flow statement is that it shows the amount that is available for

investment from after‐tax income, after all normal household expenditures have been

taken into account

Adjustments to spending

Benefits can also be gained from scrutinising clients’ income statements

Caution about budgets

Budgets should always be realistic.

There are two reasons for this. Firstly, if a budget is too tight, clients are unlikely to stick

to it anyway.

Secondly, current lifestyle is a legitimate goal in itself. In this case it is also the clients’

choice of lifestyle, not the adviser’s. Money spent on entertainment, holidays, gifts etc. is

all spent as part of a lifestyle choice, and the choice is always the clients’.

Using a real rate of return

Care needs to be taken with the preparation of projected financial statements. Produced

badly, they can either give rise to a false sense of security or cause clients to

over‐prepare for the future.

The most common cause of confusion – and source of error – is over how the effect of

inflation should be treated.

Using a real rate of return (cont.)

The easiest and most meaningful way to allow for inflation is to prepare the projected

financial information in today’s dollars.

That way, the income and expense details remain unchanged, and the only asset values

that require changing are those that increase because of investment returns, such as

superannuation and other investments.

This is the rate of return after allowing for the effect of inflation.

Explaining the information to the clients

Clients can become confused very easily over projected financial data. It is therefore

important to explain:

• the assumptions on which the projections are based, and

• the meaning of the figures.

The need to explain the assumptions, apart from anything else, is a Corporations Act

requirement.

Explaining the information to the clients (cont.)

In explaining the meaning of the figures, it helps if the client is told that they are in

today’s dollars. This might be further explained by telling the client that future dollars

have been converted into today’s dollars so that they are more meaningful.

Discussion topics

Is it possible to have a cash deficit on an cash flow statement? If so, how?

Practice questions

The following was reported in Rex’s household accounts:

Salaries 450,000

Household expenses paid 200,000

Loan payments 15,000

Interest paid 10,000

Utilities bills unpaid 5,000

Taxes due 10,000

School fees paid 7,000

What was the cash surplus?

a. 218,000

b. 228,000

c. 233,000

d. 243,000

Superannuation

Resource material – Superannuation

Web pages:

http://www.superguide.com.au/comparing-super-funds/list-of-all-superannuation-funds

https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/choosing-a-

super-fund/types-of-super-funds

https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?page=23

Part 1 - Superannuation

Overview

Many rules apply to the taxation and operation of superannuation funds.

Superannuation is a very important tool of financial planning.

A well constructed financial plan is the basis of a well-financed retirement.

Financial planners must be able to apply the rules of superannuation to a variety of client

circumstances.

Superannuation The need to save for retirement

There are a number of ways people can save for their retirement: for example, a person

may invest in shares or property or use the proceeds from the sale of a business, or save

for retirement through superannuation.

Superannuation is a long-term savings method designed to provide money to live on in

retirement.

History

Superannuation in Australia can probably be traced back to the mid-1800s. At that time,

superannuation was provided to senior employees of banks and insurance companies.

The large industrial companies began providing superannuation to senior employees in

the 1940s.

History

It was not until the 1980s when industrial awards required that an employer contribute a

minimum amount of superannuation for employees.

Because of the difficulties with enforcing awards and because not all employees were

covered by an award, the government introduced the superannuation guarantee system

in 1992.

Super system

Super fund

Super Guarantee

Salary sacrifice

Self-employed /

Personal deductible

contributions

Non-

concessional

contributions

15%

Nil tax

Preservation

15% tax on earnings

Tax-free earnings in pension

Pension

Lump

sum

Tax payable

depends on

your age

Super is not an investment - it is a structure for holding assets

The overall problem

What is a retirement income policy?

The Australian Government’s Retirement Income Policy is designed to encourage

Australians to achieve a higher standard of living in retirement than would be possible

from receiving a Commonwealth support payment such as the Age Pension.

In addition, Australia’s ageing population also highlights the need for retirement income

policy to be fiscally sustainable in the long term.

What is a retirement income policy?

The World Bank has broadly endorsed Australia's 'three pillars’ approach to providing

retirement incomes. The three pillars comprise:

• A tax-payer funded means-tested age pension

• A minimum level of compulsory employer superannuation contributions; and

• Voluntary private superannuation and other savings

Three Stages of Superannuation

Contributions

The contributions stage usually involves cash being paid into the superannuation fund for

its members. Contributions may be made:

• by an employer for employees;

• by employees; by people who do not receive superannuation support, for example,

self-employed people and those who receive income solely from investments;

Three Stages of Superannuation (cont.)

• for a person’s spouse;

• for children under 18; or

• by the government as a co-contribution

Three Stages of Superannuation (cont.)

Accumulation

During the accumulation stage, contributions are invested by the fund trustees for the

benefit of members.

The trustees of a superannuation fund who have the responsibility for its operation are

required to invest the money in the fund.

Three Stages of Superannuation (cont.)

Accumulation (cont.)

Investments may be in shares, fixed interest investments or property. A financial planner

can play an important role to assist the client if the fund allows a choice of investments.

Three Stages of Superannuation (cont.)

Benefits

The benefits stage of superannuation occurs when contributions and the income earned

by the fund are paid to the member or, if the member has died, to the member’s

dependants, such as his or her spouse or child.

Benefits may also be paid from the fund in other circumstances, such as the permanent

invalidity of the member.

Three Stages of Superannuation (cont.)

Benefits (cont.)

The type of benefit which may be paid from the fund depends on the fund rules and the

preference of the member or his or her dependants.

Benefits may be paid as a lump sum, pension, or a combination of both.

Discussion topics

Given that we have the age pension in Australia, why do we need superannuation?

Practice questions

Why the need for superannuation?

a. an ageing of the population

b. the government will not have the tax revenue base to afford its social

security commitments into the future unless changes are made

c. falling fertility rates

d. all of the above

Australia’s system of superannuation is based on how many pillars?

a. 3

b. 4

c. 7

d. none of the above

Part 2 - Regulating Superannuation

Legislation

The Superannuation Industry (Supervision) Act 1993 (Cth) aimed to establish greater

control over the superannuation industry and to ensure that there was greater security

over superannuation savings through:

• requiring superannuation funds to have a ‘prudential framework’;

Regulating Superannuation (cont.)

• restricting funds from investing in particular areas;

• ensuring members are notified about their benefits; and

• requiring trustees to ensure the security of funds

Regulators and Regulations

APRA

ASIC

ATO

Superannuation Complaints Tribunal (SCT)

Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act)

Regulatory agencies

APRA ASIC

ATO

SCT

Industry regulation

The superannuation industry is mainly regulated through:

The Superannuation Industry (Supervision) Act (SIS) 1993:

• Administered by APRA

The Corporations Act 2001:

• Administered by ASIC

The Income Tax Assessment Act 36/97:

• Administered by the ATO

APRA

Prudential regulator of the financial services sector:

• Banks, superannuation funds, credit unions, building societies etc.

Imposes stringent requirements:

• Trustees must determine through self assessment the compliance status of the fund

Main concern is compliance with SIS

Superannuation licensing

ASIC

Responsible for consumer protection and market integrity

Role is to ensure consumers receive adequate information to make an informed decision

The Corporations Act provides:

• Investigatory powers

• Access to the penalty regime

Responsibility for the SCT

SCT

Deals with members’ complaints about decisions made by trustees

Looks at whether a decision made is ‘fair and reasonable’

Alternative mechanism to the courts

Established under the Superannuation Resolution of Complaints Act 1993

ATO

ITAA provides tax rules on:

• Contributions

• Earnings

• Benefits

Administers the SG Act, ROCS and Lost Members Register

Process new fund registrations where election is made to comply with SIS

Prudential supervision of SMSFs

SIS legislation

SIS sets out:

• AREAS in which funds must comply

• PENALTIES for non-compliance

Aim of SIS:

• to create an environment in which superannuation savings are managed and protected

in the interest of the member until retirement

SIS legislation

Specific areas covered under SIS include:

• Trustees

• Trust deeds

• Compliance with operating standards

• Investment management

• Fund accounts and administration

Regulated funds

In order for a fund to receive tax concessions:

• The fund must already be complying with SIS requirements

• The trustee must submit an election to the ATO to become regulated

Regulated funds must:

• Have a corporate trustee; or

• State that the main purpose is the provision of old age pensions

Risk management

Risk management strategy (RMS) and plan (RMP) required by licensee

RMS is about risks to the trustee:

• Governance, outsourcing, potential fraud

RMP is about risks to the fund:

• Investment strategy, outsourcing

Licensees must identify all risks that can adversely affect benefits or impact the

business

Corporations Act

Administered by ASIC

Changes to the Corporations Act under the FSRA include:

• Australian Financial Services Licence (AFSL)

• Member reporting obligation transferred from SIS to Corporations Act & Regulations

• New product disclosure requirements

FSRA

The intention of the FSRA?

• to provide a uniform financial services industry

Provides a single licensing regime for all advisers providing investment advice

and dealing in financial markets

Seeks to provide a consistent and comprehensive disclosure regime for all

financial products

Discussion topics

Distinguish between the roles of APRA, ASIC and the ATO with respect to the

regulation and control of the superannuation industry.

Practice questions

The government Act which requires employers to make superannuation contributions on behalf

of employees is the:

a. Superannuation Guarantee Charge Act

b. Superannuation Industry (Supervision) Act

c. Superannuation Industry (Supervision) Regulations

d. Australian Prudential Regulatory Authority

Part 3 - Types of Funds

There are many ways in which superannuation funds can be classified. However, under

the SIS legislation there are five classifications:

industry funds;

standard employer-sponsored funds;

public sector funds;

public offer funds; and

small superannuation funds.

Superannuation vehicles

Employer-sponsored funds:

• Employer is linked directly to the fund

• Fund membership is limited to employees

Public offer funds:

• Open to anyone eligible to contribute to superannuation

Superannuation vehicles

• Corporate funds

• Industry funds

• Public sector funds

• Retail funds

• Self-Managed Superannuation Funds

• Small APRA Funds

Corporate funds

• Been around for over 100 years

• Decreasing in numbers

• In the past tended to exclude women, part-time workers etc.

• Contribution level often above compulsory amount

• Also known as company or enterprise funds

Industry funds

• Usually industry specific

• Fastest growing sector (apart from SMSF)

• Usually set up as a joint venture by trade unions and employer organisations

• Portable

• Low fees

• ‘Not for profit’ or ‘profit for members’

Public sector funds

Available to State & Federal Government employees

Established under an Act of Parliament

Previously quite generous in benefits

May be ‘unfunded’:

• Financed on a ‘pay as you go’ method

• ‘Future Fund’.

Retail funds

• Publicly offered funds run by life offices, banks and other registered organisations

• Available for employers & individuals

• Less costly for employers than individual corporate funds

• Largest sector in terms of assets

Self Managed Superannuation Funds (SMSFs)

Suitable for those who want control and flexibility over investments

Fewer than 5 members:

• All must be trustees

Prudentially regulated by the ATO

Subject to less stringent member reporting requirements

SAFs

Desire to have a small fund, yet no trustee responsibility

Fewer than 5 members

Supervised by APRA

Must have a public offer trustee:

• Meets relevant solvency, capital adequacy and operational capacity requirements

MySuper

Many super funds offer a new type of account called MySuper. MySuper will eventually

replace existing default accounts offered by super funds. A default super account is one

chosen by your employer if you don't choose one yourself. MySuper accounts offer:

• Lower fees (and restrictions on the type of fees you can be charged)

• Simple features so you don't pay for services you don't need

• Single or life stage investment options

MySuper will only be offered for accumulation funds and not for defined benefit funds.

Retail, industry and corporate funds can all offer MySuper accounts.

Accumulation funds

Also known as defined contribution funds

Final benefit is equal to:

Contributions

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Earnings

Fees & charges

Insurance & tax

Accumulation funds

Operates in a bank account style:

• Savings progress over time

Member bears investment risk

Certainty of costs for employers:

• Easiest way to meet SG obligations

Simple to understand

Defined benefit funds

Benefits are generally determined by a formula which includes:

salary near

retirement

a benefit

percentage

no. of years

service with

employer

X X

Benefit % will vary - typically between 10 - 17.5%

Defined benefit funds

No identifiable individual member account:

• All contributions are pooled together

Member often contributes a fixed % of salary

Actuaries play an active role in these plans

Defined benefit funds

Employer contribution is not defined

Employer pays whatever is required to finance the cost of benefits:

• After allowing for member contributions and investment returns

Discussion topics

Why has there been a shift away from defined benefit schemes and towards

accumulation schemes in Australia?

Part 4 - Superannuation and Retirement

Preservation Standards

Superannuation is a method of saving for retirement. It may be compulsory, for example

under an industrial award or through the superannuation guarantee, or voluntary, by

personal contributions or contributions made for a fund member by someone else.

If superannuation could be paid from a fund prior to a person’s permanent retirement

from the workforce or earlier death then its true aim would not be achieved.

Superannuation and Retirement (cont.)

Preservation Standards

There are three categories of preservation that may apply to a member’s benefit:

•preserved benefits:

–no access until a condition of release is met.

•restricted non-preserved benefits:

–may be accessible on termination of employment.

•and unrestricted non-preserved benefits:

–no restrictions on access; a condition of release has occurred.

Superannuation and Retirement (cont.)

Conditions of Release

A benefit may be paid from a superannuation fund when a condition of release occurs.

The effect of a member satisfying a condition of release is that all preserved and

restricted non-preserved benefits will change to unrestricted non-preserved benefits.

Superannuation and Retirement (cont.)

Conditions of Release

The conditions of release are:

• retirement — when a person has permanently ceased employment after age 55 (if born

before 1 July 1960) and before age 60. After age 60 benefits and before age 65

benefits can be paid on ceasing any employment in which they were engaged.

Retirement prior to a person reaching age 65 is working less than 10 hours in each

week. After age 65 benefits can be paid at any age; or

• death.

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Superannuation and Retirement (cont.)

Conditions of Release

• Terminal illness – where the prognosis as certified by two doctors, one who is a

specialist, is that the person is not expected to live beyond 12 months.

• Permanent incapacity — a person is unable to ever work again in a job for which the

person is qualified by education, training or experience.

• Being the holder of a temporary visitor’s visa and returning permanently overseas.

• Leaving employment where the amount of preserved benefits is less than $200.

• A lost member who has found a ‘lost benefit’ and the amount of the benefit is less

than $200.

Superannuation and Retirement (cont.)

Conditions of Release

• Severe financial hardship — as determined by eligibility for certain Centrelink benefits.

• The amount that can be paid annually is limited to amounts between $1000 and

$10,000.

• Reaching preservation age – payment of a transition to retirement income stream.

• Reaching age 65.

Superannuation and Retirement (cont.)

Conditions of Release

• Compassionate grounds as approved by APRA; includes release to make mortgage

payments where a home is subject to foreclosure.

• Temporary incapacity — an income benefit may be payable for the period of

temporary incapacity.

• Leaving employment — a pension which cannot be converted to a lump sum may be

paid.

Superannuation and Retirement (cont.)

Conditions of Release

• A release authority which is to pay an amount of excess concessional or non-

concessional tax liability.

• Commencing a non-commutable income stream after reaching preservation age.

• Other circumstances as approved by the regulator (APRA).

Types of benefits

Death

Disablement

Retirement

Resignation

Discussion topics

Briefly discuss why a superannuation fund member’s benefit balance is subject to the

preservation rules.

Part 5 – Investing in Superannuation

In Australia, superannuation encourages a person to save for retirement or for other

similar events in an environment that provides significant tax benefits. The tax

advantages of superannuation allow people to accumulate a greater amount than if they

had made the same investments in their own name.

If you ‘invest’ in superannuation, contributions are made on your behalf to a

superannuation fund. Those contributions are invested by the fund to earn income so

that, by the time retirement takes place, a person will have a greater amount to live on

after they have ceased working.

Methods to estimate retirement needs

• proportion of income earned immediately before retirement and calculate its

equivalent value based on the time that the person is expected to be retired.

• estimate the amount required to satisfy a person’s lifestyle needs during retirement

and discount those costs to an estimated retirement date.

Stages to the retirement savings cycle

1 the contributions stage — payment of amounts to the fund for a member;

2 the accumulation stage — investment of contributions on which income is earned;

3 the benefit stage — withdrawal of lump sums and pensions for a member during their

life or by their dependants in the event of the member’s death.

Advantages of Superannuation for investing

By using the tax concessions available for superannuation, a financial planner can

ensure the amount accumulated for retirement is greater than if the same investments

had been made in other ways.

For example, tax-deductible contributions to superannuation are taxed in the fund at the

rate of 15%. If the amount were paid to an employee as salary and wages, tax may be

payable at personal tax rates of up to 46.5%, including Medicare.

Investment Strategy

The SIS legislation requires trustees to make investments in line with an investment

strategy which takes into account the objectives of the fund.

An investment strategy for the fund consists of the following three elements:

1 that the investment objectives and strategy are recorded in the minutes of the trustee

meetings;

2 that the trustee carries out the investment strategy and invests the money of the

superannuation fund money; and

3 that the trustee outlines the details of the final investment strategy and objectives to

members in the regular fund report.

Contributions

A contribution to a superannuation fund or RSA is usually an amount of cash which is

paid to the fund and credited to an account held in the name of the member.

The most important considerations of a financial planner in advising a client about

superannuation contributions are:

• what is meant by ‘contributions’ to a superannuation fund;

• whether the contribution can be accepted by the fund;

Contributions (cont.)

• the tax deductibility of the contribution;

• the advantages of salary sacrificing to superannuation;

• the ability to split contributions to the client’s spouse;

• the impact of any excess contributions taxes on the client;

• availability of the co-contribution or tax off sets for the relevant contribution.

Contributions (cont.)

SPOUSE CONTRIBUTIONS

Where a partner contributes to superannuation for their spouse they may be entitled to a

tax offset for the contribution

CHILD CONTRIBUTIONS

Where a contributions is made for a child under 18 it will not be a taxable contribution in

the superannuation fund

Contributions (cont.)

CONCESSIONAL CONTRIBUTIONS

A concessional contribution is a tax deductible contribution made by an employer or a

contribution made by an individual for themselves or, in some circumstances, for another

person.

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NON-CONCESSIONAL CONTRIBUTIONS

are generally amounts contributed to the superannuation fund which are not tax

deductible. They include personal after tax contributions, contributions made for a child

under 18 or for someone’s spouse.

Contributions (cont.)

EMPLOYER CONTRIBUTIONS

An employer is permitted a tax deduction for superannuation contributions made for

employees or, in certain circumstances, previous employees.

SALARY SACRIFICE CONTRIBUTIONS

Many employees make agreements with their employer to have part of their salary paid

for various purposes before tax has been deducted.

Concessional and Non – concessional Contributions

A concessional contributions are a contribution for which a tax deduction has

been claimed

Concessional contributions are taxed at 15%

for the 2015/2016 year, there are 2 annual concessional contributions caps

you need to be aware of when considering before-tax contribution strategies,

namely:

Concessional and Non – concessional Contributions (cont.)

$30,000 cap for anyone aged 48 or under as at 30 June 2016.

$35,000 cap for anyone aged 49 years or over as at 30 June 2016

• Excess contributions taxed at 46.5%

If a person is self employed the process now works the same way…

Concessional and Non – concessional Contributions (cont.)

A non-concessional contribution is one for which a tax deduction has not been claimed

• -i.e. the contribution has been made with after-tax dollars

• Non-concessional contributions are not subject to contributions tax

• Non-concessional contributions are limited to 6 times the concessional contribution limit

or $180,000 (this may be calculated on a 3 year rolling basis)

• This will change come 1st July 2017

Salary Sacrifice

It is useful for most people to salary sacrifice up to the concessional contributions cap of

$30,000 because it can provide the most effective tax benefit.

While it is possible to salary sacrifice to superannuation amounts greater than the

contributions cap, it is not as tax effective.

While salary sacrifice has the benefit of resulting in a lower income tax liability for an

employee, it may impact on a person qualifying for other benefits and concessions.

Salary Sacrifice (cont.)

Income tax saving from salary sacrifice of $10,000 at various MTR’s

Marginal

tax rate

Cash in

pocket

Money

invested in

superannua

tion @ 15%

tax

Saving

15% $8,500 $8,500 $0

30% $7,000 $8,500 $1,500

37% $6,300 $8,500 $2,200

45% $5,500 $8,500 $3,000

Discussion topics

What are the advantages of salary sacrifice to superannuation?

What is the role of a financial planner for retirement planning?

Practice questions

Concessional (tax deductible) contributions to a superannuation fund are:

a. tax-free when received by the fund

b. taxed at 10% when received by the fund

c. taxed at 15% when received by the fund

d. taxed at 15% when withdrawn from the fund

Part 6 - Contributing to Superannuation

Superannuation Guarantee

The superannuation guarantee system is regarded as the backbone of Australia’s

retirement income system.

There is a maximum amount that is required to be contributed for superannuation

guarantee purposes.

The charge percentage is now gradually being increased to 12%.

Penalties apply if the obligations required by the Act are not met.

Who is an Employer

An employer is:

• A person or entity that employs workers under a contract for employment and may

include

• a sole trader

• partnership,

• company

• corporation,

• trust,

• public authority,

• a government

• or an individual

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Who is an Employer

Also considered employers for superannuation guarantee purposes are:

• The Commonwealth, state and territory governments;

• non-resident employers who employ staff in Australia;

• and non-profit organisations that are exempt from tax.

Who is an Employer

An employee is taken to be a person who works for an employer in the traditional sense

in a master–servant relationship. However, the meaning of employee is extended to

include:

• contractors who are engaged principally for their labour;

• directors of companies;

• members of parliament; and

• artists and sportspersons.

Employees outside the Superannuation Guarantee scheme

Employers are not obliged to provide superannuation for particular employees. These

include:

• an employee who earns less than $450 in a calendar month;

• employees who are under 18 and work no more than 30 hours each week;

• part-time domestic workers who work less than 30 hours each week;

• members of the Defence Reserve Forces;

• Australian residents who are employed overseas; and

• non-resident executives who work in Australia for short periods.

Ordinary Time Earnings (OTE)

Under the legislation, the amount of contributions to be made to a fund is the contribution

percentage multiplied by the person’s ordinary time earnings.

Ordinary time earnings are the total earnings paid to an employee for ordinary hours of

work.

This may include over-award payments, shift-loadings and commissions.

It does not include overtime and payments in lieu of leave as these payments are not

made for the ordinary hours that are worked by the employee.

Timing of Superannuation Guarantee Payments

All contributions which are to count for superannuation guarantee purposes must be

made 28 days after the end of each quarter (i.e., 28 October, 28 January, 28 April and 28

July).

If contributions are not made within these deadlines the employer is liable to pay the

Superannuation Guarantee Charge.

Superannuation Guarantee Charge

The superannuation guarantee charge has three components:

1 the total amount of the superannuation guarantee shortfall for each employee if it has

not been paid prior to the time the ATO is required to be notified;

2 an interest charge equal to 10% per annum of the superannuation guarantee shortfall

component from the beginning of the contribution period until the time the payment is

made to the ATO

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3 an administration fee of $20 per employee per quarter

Choice of Fund

An employer is required to provide a written offer to all new employees within 28 days of

commencing employment. The written information provided by the employer must

include:

• employee’s choice of fund;

• the name of the employer’s default fund to which contributions will be made if the

employee doesn’t choose a fund and contact information about the default fund (e.g.,

the default fund’s insured death benefit); and

• if the employee’s fund is a defined benefits fund, information must be provided about

the effect of the employee choosing another fund.

Personal Contributions

A tax deduction is available for individuals who are able to contribute to superannuation

and meet certain additional conditions. Those conditions are:

• the contribution must be made to a complying superannuation fund;

• that the 10% rule is satisfied;

• if the contributor is under age 18 at the end of the year of income, that they must

have earned income from carrying on a business or from being employed — for

example, self-employed;

Personal Contributions (cont.)

• the contribution has been made before the 28th day in the month after the person has

reached age 75;

• a written notice has been given to the trustee of the fund that the individual intends to

claim a deduction and the amount of the contribution to be claimed; and

• the election has been acknowledged by the fund’s trustee

10% Rule

The rule determines the amount of a person’s income that has been earned from

employment sources.

If contributions from employment sources is less than 10% of the person’s total adjusted

income from all sources, the 10% rule will be satisfied.

If the amount earned from employment sources is at least 10% of total adjusted income

the person will not qualify for a tax deductible personal superannuation contribution.

Government Co-contributions

If a person contributes to superannuation from their after-tax income or their personal

savings, they may be eligible for the government’s co-contribution. To be eligible for the

co-contribution, a person must:

• earn less than $50,454 (which is the person’s net assessable income plus reportable

fringe benefits plus reportable employer superannuation contributions);

• be under 71;

• make a superannuation contribution to a complying fund;

• lodge an income tax return for the income tax year in which the co-contribution is

being claimed;

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• not hold a temporary resident’s visa; and

• earn at least 10% of their net assessable income plus reportable fringe benefits from

employment as an employee and/or from self-employment.

Low Income Spouse Tax Offset

The maximum tax offset is equal to 18% of the contribution made for the spouse up to a

maximum offset of $540 (this equates to a contribution of $3,000).

The full offset is available for a spouse who earns less than $10,800.

A reduced tax offset applies to incomes of between $10,800 and $13,800.

No tax offset is available where the partner earns more than $13,800.

Excess Concessional and Non-Concessional Contributions

The amount of super contributions you can make are subject to contributions caps. If

your contributions exceed those caps, the level of contributions above the cap are known

as excess contributions. Excess contributions can be subject to penalty tax in the form of

excess contributions tax, although more likely, the excess contributions will be withdrawn

from the super fund.

Excess contributions tax is a penalty tax applicable when an individual exceeds the

concessional contributions cap or the non-concessional contributions cap, and chooses

to keep the excess contributions in the super fund. The penalty tax is imposed on the

individual rather than the super fund, although the tax can be deducted from the

individual’s super account

Splitting

It is possible for a member of a superannuation fund or RSA to split concessional

contributions to superannuation that have been made on their behalf with their spouse.

The maximum amount of concessional contributions that can be split is 85% of the

contribution up to the relevant concessional contributions cap for the member.

Taxation of Superannuation Funds

Framework basically similar to the taxation of individuals:

• Assessable income

Includes ordinary income and statutory income (or contributions) and capital gains (2/3

of any gain is assessable where the asset is held > 12 months) but not non concessional

contributions or income from investments dedicated to paying current pensions

• Less allowable deductions =

• Taxable Income

Taxation of Superannuation Funds (cont.)

The income of a complying superannuation funds is taxed at 15% Less any tax credits

The two most important tax credits are:

• Dividend imputation credits and

• Foreign tax credits

Additional tax may be due where:

• A TFN has not been supplied

• Where an individual has made excess contributions or

• where a fund has become non-complying

Summary

In this topic we have discussed the many aspects of superannuation in

Australia in detail

Internationally, the Australian superannuation system is regarded as significant

and has many desirable characteristics

However, the rules and regulations that surround superannuation at all stages

are regarded as highly complex and very technical

Discussion topics

What is the purpose of the introduction of compulsory superannuation contributions

and the government’s superannuation guarantee scheme?

Provide an explanation for the introduction of the choice of fund provisions.

Part 7 - What is a SMSF?

A Self-Managed Superannuation Fund (SMSF) is a vehicle designed to provide

retirement benefits to Members of that Fund. It may also be an efficient tax structure that

offers significant benefits to investors.

A SMSF is established by Trustees and operates in accordance with its Trust Deed.

A SMSF is a special type of trust.

Self-managed superannuation funds

The cognisance and popularity of Self Managed Superannuation Funds (SMSF) is high

as shown by the growth in funds under management, accounts and members for the

sector (Russell Investments/SPAA 2014). SMSF’s are now the single largest element in

the Australian retirement system by asset value, representing 31% ($505 billion) of its

total super assets as at 30 June 2013 with the next largest sectors of Retail at 26% and

Industry at 20%. (www.apra.gov.au annual bulletins 2013).

Self-managed superannuation funds

There are more than 509,000 SMSFs with 964,000 members, constituting 7% of the 11.6

million superannuation account holders (www.ato.gov.au 2013). The Australian Taxation

Office (ATO) reports that SMSFs were the fastest growing sector of the Australian Super

industry for the 5 years to 30 June 2013.

During this 5 year period, SMSF assets grew by 53%, while total assets of all other

superannuation funds grew by 42%.

Self-managed superannuation funds

Growth in SMSF’s is being driven by members wanting control of their retirement funds

together with key professions and self employed persons opting for their own fund

(Russell Investments/SPAA 2014) .

Advantages of an SMSF

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You stay in control of your retirement savings. For example, you as Trustee, make the

decisions about investments of the Fund. You also decide who will be Fund Administrator

and how much you will pay for these services.

A SMSF offers greater flexibility of investments .

How is the fund taxed?

A SMSF is an efficient tax vehicle as it has a lower tax rate on earnings of 15% compared

to 30% for companies and up to 46.5% for individuals. Capital gains tax on assets held

for more than a year is 10%.

When is it worthwhile to establish an SMSF?

You generally need to have a significant amount of superannuation benefits, or be

looking to build up your super quite quickly, to warrant starting a SMSF.

What are the costs involved in an SMSF?

To establish a SMSF costs are incurred for the preparation of the governing rules,

various registers and minutes as well as registration of the Trustee and SMSF with the

Regulator.

There is also an advice component ranging from establishment through to formulating

and implementing investment and insurance strategies.

Who is responsible for ensuring that the SMSF is properly run?

The Trustees of the SMSFs have the legal responsibility to ensure the SMSF operates at

all times within the requirements of superannuation law.

As the law governing superannuation is complex and constantly changing most Trustees

engage professionals to assist them with the various duties under the law.

Who can be a member?

Membership of your SMSF is not restricted to employed persons. If you are not working

but have benefits in another superannuation fund it is possible to roll those benefits into

your SMSF.

You can include for example spouses and children (including those under age 18) in your

SMSF provided you do not have more than 4 Members in total.

How much can I contribute to my SMSF?

There are two types of contributions that can be made into superannuation, concessional

and non-concessional contributions.

Where can the fund invest the money?

The Trustees are required to formulate a written investment strategy for the SMSF in

accordance with the superannuation law.

It is generally prudent to seek professional financial planning advice to determine the

appropriate asset allocation benchmarks and ranges for the SMSF

Is the SMSF allowed to borrow?

SMSFs are only able to borrow money for specific purposes such as under the limited

recourse borrowing provisions and for short- term financing to pay a benefit or cover a

securities settlement .

Under the limited recourse borrowing arrangement, a SMSF can borrow funds from a

third party lender to purchase an asset such as a property

Is the SMSF allowed to borrow?

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As the limited recourse borrowing rules need to be operated precisely, professional

advice and assistance should be sought before undertaking this type of arrangement.

Steps in establishment

A number of super, corporate, trust and tax laws must be followed in order to properly set

up an SMSF that is also a complying super fund eligible for tax concessions.

An SMSF is usually established by making a contribution to the fund at the same time as

the trust deed is executed. A contribution can take the form of money or a transfer of

certain assets, for example, listed shares and securities.

Finally

Managing an SMSF takes time, knowledge, skill and money, so before you decide to set

up an SMSF, it is important for you to understand:

• the costs and benefits of running an SMSF compared to their current fund ,

• what is involved in managing an SMSF ,

• the obligations of becoming an SMSF trustee.

Discussion topics

Provide a brief overview as to some of the principal reasons for the continued growth in

the number and asset value of self-managed superannuation funds (SMSFs) in recent

years.

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Practice questions

Self-managed superannuation funds (SMSFs) must have:

a. less than 4 members

b. more than 4 members

c. less than 5 members

d. none of the above restrictions apply

Self-managed superannuation funds (SMSFs) are supervised by the:

a. Australian Taxation Office (ATO)

b. Australian Prudential Regulatory Authority (APRA)

c. Australian Securities and Investments Commission (ASIC)

d. both a and c

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analysis and research

RMIT Code and Name: BAFI5213C Conduct financial planning analysis and

research

John Calabro RMIT

National Unit Code and Name FNSINC501 Conduct product research to

support recommendations

RMIT Code and Name: MKTG7921C Conduct product research to support

recommendations

National Unit Code and Name: FNSASICU503 Provide advice in

superannuation

RMIT Code and Name: BAFI5218C Provide advice in superannuation

John Calabro C5343 Diploma of Financial Planning 代写

John Calabro RMIT C5343 Financial Planning 代写