April 2015 Newsletter

Welcome to the April 2015 newsletter. In this newsletter we will discuss:

New ways in how you must pay super

New rules for SMSF’s

Insurance in Super Funds

New ways in how you must pay super

New rules have been implemented in how you must pay super to your employees and this includes paying super to yourself if you are a director of a company. The new rules are defined as SuperStream and they are summarised below:

20 or more employees: From 1 July 2014 if you have 20 or more employees then you must start implementing SuperStream. You have until 30 June 2015 to meet the SuperStream requirements when sending superannuation contributions on behalf of employees.

19 or fewer employees: From 1 July 2015 if you have 19 or fewer employees then you must start implementing SuperStream. You have until 30 June 2016 to meet the SuperStream requirements when sending superannuation contributions on behalf of your employees.

What is SuperStream?

SuperStream is the new way the Government wants to improve the efficiency of the superannuation system. Under SuperStream, employers must make super contributions on behalf of their employees by submitting data and payments electronically in a consistent and simplified manner.

Employers must collect the following now before making a super contribution payment:

• unique superannuation identifier (USI) for APRA-regulated funds

• ABN for SMSF funds

• bank account details

• electronic service address

What software do I use to conform with the new requirements?

You have a choice in what software you can use and there simple and free alternatives available. The purpose of these new rules are to make it easier for the employer to pay super and for employees to ensure that they are being paid their mandatory super contributions. At the moment youmay manually pay super into various super fund accounts andthis is quite time consuming but with the new system you will only have to pay super once and this will save you a lot of time. Legally super only has to be paid 28 days following the end of each quarter, it should also be paid by 30 June to claim a tax deduction for the relevant year so the new reporting requirements only have to be fulfilled once a quarter.

All the major software providers are ready for SuperStream.Please see links below to find out further information on how to implement SuperStream.

Xero https://www.xero.com/blog/2013/11/superstream-means-business/

MYOB http://myob.com.au/blog/superstream-is-coming-are-you-ready/

Reckon https://community.reckon.com/reckon/topics/superstream-is-coming-for-reckon-accounts-hosted

What are my other alternatives if I don’t want to use the software providers?

There are free providers who can help you comply with the new SuperStream rules.

If you have 19 or fewer employees you can use the Small Business Superannuation Clearing House provided by the ATO.The website link is below. The only issue with this clearing house is that you will have to manually enter eachsuper contribution every time that you make a payment. There is an alternative and this is the Australian Super clearing house. The Australian Super clearing house can be used by anyone, even if you have 19 or more employees and the other benefit is that you can upload a CSV file (this is basically an excel spreadsheet) to help you comply with the SuperStream rules and this can be more efficient. We can help you with creating the CSV file if required.

https://www.ato.gov.au/Business/Super-for-employers/Paying-super-contributions/Small-Business-Superannuation-Clearing-House/

http://www.australiansuper.com/employers/manage-my-fund/making-payments.aspx

Please contact us to help you comply with the new SuperStream rules and to also make it easier for you to payyour super to your employees.

New Rules for SMSF’s

In relation to the new SuperStream rules it is important that SMSF’s which receive employer contributions register to have an Electronic Service Address so that they can receive super contribution information. There are a number of providers but some do charge a fee for their service. The website below is a free service to help you comply with the new rules. If you would like any assistance in registering please notify us so that we can assist.

http://www.smsfflow.com.au/home/trusteeinfo

Insurance in Super Fund

Insurance in super is a fantastic way of protecting you andyour family if anything goes wrong in a tax-effective manner, please read the summary below:

Life insurance

Life insurance premiums in a super fund are tax deductible while having premiums paid outside of your super fund are not tax deductible.

The payout on life insurance will be received tax-free in your super fund and can then either be paid out to your family in a tax effective manner and/or the funds can be reinvested in the super fund to earn tax-free income to fund your family’s future.

Trauma cover

This cannot be paid from a Super Fund, this should only be paid for under your personal name and Trauma cover premiums are not tax deductible.

TPD

TPD premiums are not deductible if paid under your personalname but can be deductible in super. The premium payments in super must cover your permanent incapacity. This means because of your ill-health (whether physical or mental), you are unlikely, because of the ill-health, to engage in gainful employment for which you are reasonably qualified by education, training or experience. You can take out the money received in your super fund in either a lump sum or as an income stream to cover your medical costs and living expenses. The money can also be taken out even if you are under 55 years of age.

Income Protection

Income protection insurance is deductible in super but it is also deductible personally so there is really no need tohave income protection in your super fund. The issue in having it in super is that you can only withdraw the money as an income stream so you cannot take out lump sums to cover large medical expenses.

Having insurance in super can be a cash flow effective way of protecting you and your family. Please discuss this withus to ensure that you and your family maximise the opportunities available.

We hope you have enjoyed the article and please contact us if you have any questions.

Disclaimer - The material contained in this newsletter doesnot constitute advice. DPL is not responsible for any action taken in reliance on any information contained in this newsletter. Anyone reading the newsletter should not act upon material contained in this newsletter without appropriate consultation.