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Non-lodgement numbers slashed, 30,000 funds still in ATO’s sights

There’s been a 38 per cent reduction in non-lodgers for SMSFs, but about 30,000 funds remain on the compliance agenda for the next financial year. 



Surveillance activities this year have so far identified about 12,000 SMSFs that have either never lodged an SMSF annual return or had more than two years of overdue lodgements.

“To date, over 6,000 funds have re-engaged with us and brought all their lodgements up-to-date; but we took harsher action against some 8,600 funds which resulted in the windup of the fund and the cancellation of their ABNs,” ATO Deputy Dommissioner James O’Halloran said in an address to the SMSF Association’s national conference.

As part of this process, the ATO contacted about 3,000 tax agents.

Overall, Mr O’Halloran said the ATO has seen a 38 per cent reduction in non-lodgers.

The remaining funds will be a key compliance target in the 2018-19 financial year.

SMSF lodgement has been a consistent area of focus and surveillance for the ATO for several years, but the advent of changes such as the transfer balance cap requires the tax office to have significantly more up-to-date data on a fund’s assets and activity.

Late last year, the ATO told SMSF Adviser that since the latest round of superannuation reforms, non-lodgement has become “a bad thing times 10” for the regulator.

“Non-reporting by SMSFs is a significant issue. It’s been a bad thing. With the advent of the retirement phase reporting in relation to the transfer balance cap… it’s become a bad thing times 10,” said outgoing director at the time, Howard Dickinson.


By: Katarina Taurian
​22 FEBRUARY 2018

Confusion lingers over post-death insurance

There is a lack of clarity around the post-death receipt of insurance and questions remain over which member accounts it can be credited to, according to the SMSF Association.



SMSF Association head of education and technical Peter Hogan said questions lingered over practical issues in relation to post-death insurance.

These issues include reversionary versus binding death benefit nomination pensions and transfer balance cap credits, whether insurance proceeds are credited like ordinary income for administration and tax component purposes, and whether pensioners are likely to retain insurance after commencing an income stream. 

“Whether it’s intended that insurance would be able to be added to a pension account but not be added against or be credited against a transfer balance cap has very much a question mark over it,” Hogan told delegates at the SMSF Association National Conference 2018 in Sydney last week.

“The alternative may well be that Treasury’s intention without spelling it out was insurance proceeds can only be credited to an accumulation account and can only be paid out as a death benefit lump sum and can’t be added to a death benefit pension account of assets.”

He said the issue needed resolving and there was clearly a difference between reversionary and non-reversionary pensions.

“We will be continuing to pursue that with Treasury to see if we can come up with some solutions to that and how insurance proceeds need to be sensibly dealt with going forward,” he noted.


By Malavika Santhebennur
​22 Feb 2018

Potential pension minefields

It has been a big year for the SMSF industry given the major policy changes the federal government made to super in the 2016 budget.



Last week the Self-managed Super Fund Association held its national conference in Sydney and it provided a natural forum for the leading practitioners in the SMSF industry to reflect on and debate the impact of the changes on SMSF trustees and how it will affect the operation of funds in the future.

Industry practitioners – be they advisers, accountants or lawyers – have had a busy 12 months getting to grips with a myriad of technical changes in the way funds can be managed and reported on.

A persistent theme running through the three day conference was that industry practitioners are concerned that their clients, the SMSF trustees, do not appreciate the complexity of the changes the government's policy changes bring with them.

At the core of the reform package was the reduction of concessional contribution caps and the introduction of the $1.6 million tax-free pension limit.

The government argued at the time the changes were announced that it would only affect about 4 per cent of superannuation accounts. No doubt many people with considerably less than $1.6 million in their super fund account filed the changes away under the category of nice problem to have, or wake me up when I get there.

But as always the devil is in the detail – particularly when unforeseen circumstances happen.

The SMSFA technical director, Peter Hogan, provided an overview of the administration of pensions under the new rules.

For example a key technical change that took effect in July last year was to the definition of a death benefit. The result is that upon the death of a fund member the death benefit has to be cashed out of the super system either by payment of a pension or a lump sum.

But complexity arises depending on the type of pension that is setup and how that works with other estate planning issues.

To illustrate this, consider a couple who are both comfortably under the $1.6 million cap in pension phase. Joe and Jane each have $1 million in their member accounts. As they are nearing retirement and about to commence pensions they are not concerned about the $1.6 million cap – now referred to in industry parlance as Total Balance Cap (TBC).

But if one of the couple was to die and leave their remaining superannuation to their spouse then the $1.6 million cap suddenly comes into calculations.

The cap is an individual entitlement and not transferable/inheritable to beneficiaries. So if Joe has died unexpectedly, Jane is in a position of now having $2 million in her pension account – her original $1 million pension balance plus the beneficial pension left by Joe.

People with accounts with much lower balances may well be unsympathetic to Jane's situation. However when you consider that a woman living beyond 90 is far from unusual today, Jane is looking at funding her retirement lifestyle for around 30 years. In this context, making her $1 million last that long can look challenging, particularly in a low-return world.

The complexity of the regime becomes painfully clear when you consider there are a range of different options available to Jane that involve cashing out her surplus pension amount (and therefore losing its concessional tax treatment), commuting part of her existing pension back into the accumulation phase, and using Joe's reversionary pension to pay the majority of her superannuation income to maximise the superannuation assets that are tax free.

There are complex regulations and potential minefields for the unsuspecting in making sure the SMSF fund is managed efficiently from the trustee's perspective and remains compliant with the new laws.

But depending on Jane's individual circumstances and needs, the differences between options chosen can involve significant amounts of money.

The regulations do not apply solely to self-managed super funds. The same rules apply to retail and industry super funds so these are challenges the entire super industry will have to grapple with over the foreseeable future. However, due to the role of trustees and their responsibility for the administration of the fund, this is emerging as a critical area for SMSF trustees to get specialist advice.

Estate planning has always been part of a professional financial plan but what emerged at the SMSFA conference is that the rule changes in the pension phase have opened up a new area where technical structures and strategies can have a significant impact on income in retirement.


Written by Robin Bowerman, Head of Market Strategy and Communications at Vanguard.
20 February 2018


Rates, inflation and yield – five graphs to help make sense of it all

The relationship between interest rates, inflation and bond yields is complex and as economists we spend a lot of our time trying to make sense of all the moving parts.



This time I'd like to share some valuable insights into what's happening in the US from my colleague Roger Alliaga-Diaz, Chief Economist – Americas for Vanguard's Investment Strategy Group.

1. Three hikes likely, four hikes possible: Downward pressure continues on inflation

Source: 2018 Vanguard Economic and Market Outlook: Rising risks to the status quo, Vanguard white paper, December 2017.

Our first graph plots core inflation in the form of personal consumption expenditure (PCE) against the US Federal Reserve's 2% target, with labour market slack in the form of the Phillips curve, which represents the inverse relationship between unemployment and inflation.

The contribution from the labour market to inflation is relatively small—about 15 basis points for every 1% lower unemployment—compared with the overall 50 basis point shortfall between the current inflation rate and the target rate. Supply-side shocks via globalisation and perhaps more importantly digital technologies continue to exert downward pressure on prices, as they have for the past 25 years.

Vanguard's outlook for US inflation is unchanged as we expect it to increase towards the 2% target, but not by as much as some commentators seem to fear. The expected cyclical upturn in inflation this year to 1.7-1.8% may be less than the Federal Reserve's forecasted 1.9%.

Still, the expected increase in inflation should embolden the Federal Reserve to move forward with its three rate hikes as planned this year. And there may be one more if inflation does exceed 1.9%, which only has a 20-30% probability in our view.

2. Accentuate the positive: Term premium back in black

Vanguard estimations based on Federal Reserve Board H15 Release CMT yields and Survey of Professional Forecasters.

This graph contrasts expectations about interest rate movements (taken from the Survey of Professional Forecasters) with the 10-year bond yield and the term premium—the difference between actual yields and the expected rate path.

With expectations that rates will normalise at 2.5%, the term premium has returned to positive territory after years of being negative. The rise in long-term rates is justified by fundamentals and should persist under fairly conservative assumptions about the term premium. At the same time, we don't expect long-term bond yields to continue marching upwards on a sustained basis given expectations about where the current rate cycle will end.

3. On the same page: Rate expectations converge

Sources: Federal Reserve, Survey of Professional Forecasters and FOMC Summary of Economic Projections

Here we compare how market participants and policymakers see rates—specifically, their expectations around the 'neutral' short-term rate of interest that will apply when the economy achieves a perfect balance.

The blue line shows market expectations, while the red line represents the Federal Open Market Committee's Summary of Economic Projections (SEP), or what economists like to call the 'long run dot'.

As you can see, expectations are converging. The neutral rate is currently between 2.6% and 2.75%, but may go down a little further to 2.5%. Overall we can see that market participants have been more responsive than the Federal Reserve in processing the implications of lower long-term rates. After all, it's the views of market participants that get priced in the bond market, not the Federal Reserve's forecasts.

4. Reasonable assumptions: 10-year bond yield at fair value

Vanguard estimations based on Federal Reserve Board H15 Release CMT yields and Survey of Professional Forecasters

This graph compares the actual 10-year bond yield with market expectations. We've also overlaid two scenarios for the term premium—continuing at zero or even slightly negative (which seems a little extreme given the QE tapering and aggressive fiscal policy outlook) and something closer to the pre-crisis average from 2000-2007.

The data suggests that the 10-year bond yield is at fair value, without taking into account the volatile term premium. It's important to note that the number of rate hikes would have a minimal impact on this fair value calculation.

5. No room for error: Fed looking for soft landing

Finally let's overlay the expected glide path for rates on the 10-year bond yield and market expectations, with the shaded area representing fair value.

As you can see, the Federal Reserve's margin for error when it comes to engineering a soft landing is small and the risk of a 'flat curve' is elevated for 2019. One way of reducing the risk (or at least err on the safe side) is to lower expectations as to what constitutes 'normal' rates in the form of the long run dot.


Qian Wang – Senior Economist
23 February 2018

The Goldilocks effect – Economic and market update 4Q 17

The year 2017 was defined by a near-perfect goldilocks backdrop of steady global growth, modest inflation, and still-accommodative monetary policy, the combination of which helped fuel a broad-based rally in asset prices.



Global equities took a step higher, with non-US equities outperforming their US counterparts for the first time in five years, bolstered by a weak dollar and widespread improvement in growth across countries. Even previous weak links of the developed world such as Europe and Japan posted above-trend growth numbers, as rising sentiment, a modest upturn in CAPEX, and the ease of the post-GFC deleveraging cycle gave fresh momentum to domestic demand. In emerging markets, fundamentals have also improved more broadly, against the backdrop of solid Chinese economic data, higher commodity prices, and narrowing current account deficits. On the other hand, Australia appeared to be de-synchronised with the global recovery for most of the year, though the economy did appear to pick up speed as the year progressed, in part due to the effect of coming off a low base from the corresponding quarter in the previous year. For the whole year, the local share market was able to lock in a solid return of 11.9%—its best annual performance since 2013.

All that said, the current backdrop of strong market returns and unusually low financial volatility do raise some concern, as it underscores widespread complacency among investors, despite potential risks being well-known. In particular, valuations in various risk asset classes appear stretched, and the start of monetary policy normalisation in many parts of the world could potentially lead to unexpected consequences. Overall, the odds of a bumpy adjustment in financial markets appear much higher than before, with downside risks, in our view, being more elevated in the equity market than in the bond market.

Of most major economies, the US seems most susceptible to a market correction, with our fair-value CAPE suggesting that US stock valuations are approaching overvalued territory—even after adjusting for lower inflation and interest rates. Meanwhile, the lack of strong inflationary pressures despite robust growth and tight labor markets was undoubtedly a key defining element of the US economy in 2017. Yet that did not stop the Federal Open Market Committee from voting to increase the Federal Funds Rate target range by 25bps to 1.25-1.5% in December. The risk in 2018 is that the tight labour market will grow tighter, driving the unemployment rate well below 4%. Expectations of additional rate hikes would inevitably follow, ending an era of extraordinary monetary support in the US and possibly leading markets to price in more aggressive normalisation plans elsewhere. None of this is status quo.

Global fixed income investments continued to deliver muted returns against a backdrop of low interest rates and low yields across regions, including Australia. Reflecting subdued wage growth and mild inflationary pressure, the Reserve Bank of Australia (RBA) held the cash rate unchanged at 1.5% in December, marking the 16th straight month it has been on hold. Annual returns for cash assets are expected to be muted as official policy rates remain near historic lows.

Europe—risks diminish
Near term Euroscepticism risks appear to have diminished, with rising popular support for the EU in most European countries, though Italian elections in March 2018 could result in a victory to the Eurosceptic populist party, the Five Star Movement. Risks around Brexit are also seen to be more balanced, after the EU and UK made sufficient progress in the financial settlement bill in December, which allowed Brexit negotiations to move into their second phase of discussing future relationships.

China—surprises to the upside
Growth surprised to the upside in 2017, with the full-year GDP growth number coming in at 6.9%, comfortably above the government’s annual 6.5% target. Nonetheless, ongoing policy and regulatory tightening should begin weighing on activity more heavily in 1H18, especially as the government becomes increasingly focus on the “quality” rather than “quantity” of growth this year. In 2018, we expect to see headline GDP slow to around 6.5%.

Japan—rising with the tide
The economy is marching along, with real GDP expanding for seven consecutive quarters, the longest streak for Japan in 16 years. While the expansion so far has come primarily from an acceleration in the export cycle and a mildly expansionary fiscal policy, we expect the recovery to become more broad-based in 2018, as rising confidence, a gradual increase in real wages, and solid profitability leave room for domestic demand to pick-up in 2018. The Bank of Japan is likely to adopt a gradual and flexible approach in 2018, staying vigilant against potentials risks to both the inflation outlook and financial stability.

Australia—rates dilemma
Locally we saw a mixed performance throughout 2017, though the latest national accounts showed an acceleration in year-on-year GDP growth to a slightly above-trend of 2.8% in Q3 2017. Nonetheless, Australia may struggle to sustain this level of growth next year, as the effect of coming off a low base fades and as high leverage and fading dwelling investments put a limit on how fast domestic demand can accelerate. The RBA faces a major dilemma over the next few years, on whether to hike “in the name of financial stability”, or cut “in the name of inflation and wages”. Against this backdrop, the RBA will probably “drag their feet” and wait until late 2018 at the earliest to raise the cash rate.


Qian Wang, Senior Economist
02 February 2018


Dissecting the downsizer contribution

The 2017 federal budget included an allowance for a new type of superannuation contribution for individuals looking to downsize their principal residence. Michael Hallinan details the rules around these unique contributions.



The downsizer contributions proposal was announced in the May 2017 budget to address the housing affordability crisis. The policy justification for downsizer contributions is to remove a hurdle for older taxpayers from selling their current homes for smaller homes, thereby freeing up the housing market by increasing supply.

The legislation to implement downsizer contributions has now been introduced in bill form: namely Schedule 2 to the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 1) Bill 2017. This bill was introduced into Parliament on 7 September 2017.   

In broad terms, the proposal is that from 1 July 2018 a taxpayer can apply up to $300,000 of the capital proceeds from the disposal of their principal residence as a superannuation contribution for themselves or for their spouse. The contribution will only qualify as a downsizer contribution if the beneficiary of the contribution is aged 65 or over at the time the contribution is made. This contribution will be considered as a non-concessional contribution (NCC). The contribution can be made despite the beneficiary of the contribution not satisfying the age work test and despite having no or insufficient NCC cap space. However, downsizer contributions will form part of the total superannuation balance of the beneficiary and will also be counted for the purposes of the transfer balance cap of the beneficiary if and when the downsizer contribution is used to commence an income stream. Consequently, downsizer contributions will have a similar treatment to capital gains tax (CGT) NCCs.

In order to make a downsizer contribution, the taxpayer must dispose of a property that satisfies two requirements. The first is that there must be a disposal of an ownership interest in relation to the property, which must have been continuously held for 10 years or more prior to its disposal.

The other requirement is that the interest relates to property that must have had the benefit of Division 118 treatment (in whole or in part) or would have been entitled to Division 118 treatment but for the fact the property is a pre-CGT asset. In order to satisfy the second requirement, the property must have a dwelling that was used as the principal place of residence of the taxpayer.

Where the ownership interest is held by one spouse and not both spouses, then the spouse holding the ownership interest could make a downsizer contribution for themselves and also make a downsizer contribution for their spouse. The age requirement applies to the taxpayer who is the beneficiary of the contribution and not to the contributor.

Downsizer contributions are not deductible to the contributor, they cannot be subject to a contribution split and will form part of the tax-free component of the superannuation interest of the beneficiary.

The beneficiary of the downsizer contribution must elect that the contribution be treated as a downsizer contribution. If, after making the election, it is subsequently determined the contribution does not qualify as a downsizer contribution, then the contribution will be treated as an NCC, and given that the beneficiary of the contribution is over the age of 65, it will be treated in whole (or at least to $200,000) as an excess NCC.

The principal negative feature of downsizer contributions is that $300,000, or $600,000 if a couple, may be transferred from a tax-exempt and Centrelink-test-exempt environment to a possibly taxed and Centrelink-tested environment. Consequently, downsizer contributions are only likely to appeal to super members who are already excluded from the age pension due to the assets test and who have sufficient transfer balance cap space so that the downsizer contribution can reside on the tax-exempt side of the SMSF. In short, downsizer contributions will appeal to non-super asset rich but super-poor clients who are currently excluded from the age pension by reason of the assets test.

The operation of downsizer contributions will be illustrated by two examples. The first will be the vanilla situation of Bert and Mildred. The second will be the more exotic situation of Dagobert and Amelie, which combines the bring-forward NCC provision and downsizer contribution into one contribution plan.

The vanilla – Bert and Mildred

Bert acquired Blackacre on 1 July 2005 and immediately occupied the property as his principal place of residence. On 1 July 2010, Bert married Mildred. On 31 December 2019, Bert sold Blackacre and received $1.8 million in net sale proceeds. At the time of sale, Bert was 70 and Mildred was just under 65.Bert’s and Mildred’s total superannuation balances at 31 December 2019 were, respectively, $1.7 million and $900,000. Bert makes a $300,000 contribution for himself on 15 January 2020. He also makes a $300,000 contribution for Mildred on 15 March 2020. The contributions are made to their SMSF.

Both contributions will qualify as downsizer contributions for Bert and Mildred respectively. The reason why the contributions will qualify is set out below.

The shopping list of requirements that must be satisfied is set out in proposed section 292-102 of the Income Tax Assessment Act 1997. The list, following the order of the section, is as follows together with the reason why the contributions by Bert satisfy the relevant requirements:

  • the contribution must be made to a complying superannuation fund (paragraph (1)(a)),
  • the beneficiary of the contribution must be aged 65 or more when the contribution is made to the superannuation fund (paragraph 1(a)).

Both Bert and Mildred satisfy this requirement as aged. Bert was 70 at the time his contribution was made. Mildred, while aged under 65 at the time of the disposal, had turned 65 by the time Bert made the contribution. Had Bert been 60, his own contribution would not qualify as a downsizer contribution, but Mildred’s contribution would still qualify.

The contribution is an amount equal to all or part of the capital proceeds received from the disposal of an ownership interest in the property (paragraph 1(b)).

As Bert applied $600,000 of the cash received from the sale of Blackacre directly as contributions for himself and Mildred, the capital proceeds requirement will be satisfied. It is an interesting question whether the cash proceeds requirement would have been satisfied had Bert in fact made the contributions using money not directly arising from the sale. The provision uses the text “the contribution is an amount equal to all or part of the capital proceeds” and not “the contribution of all or part of the capital proceeds”. Possibly the cash proceeds is the measure of the amount of the contribution and the source of the contribution. Typically the capital proceeds will be the source of the contribution.

The ownership interest must be owned by the beneficiary of the contribution or their spouse just before the disposal (paragraph 1(c)).

As Bert was the registered proprietor of Blackacre immediately before the disposal, this requirement will be satisfied.

The capital gain/loss arising from the disposal of the property must be wholly or partially disregarded under subdivision 118-B (paragraph 1(d)).

The sale proceeds are exempt from CGT due to the principal place of residence exemption. It should be noted that so long as Bert is entitled to a partial exemption, this condition will be satisfied. Further, the property need not be the principal place of residence at the time of disposal. If the dwelling predates CGT, then the sale proceeds will qualify if the only reason the exemption does not apply in part or whole is due to the pre-CGT status of the property.

The ownership interest must have been held at all times during the 10 years ending just before the disposal either by the beneficiary of the contribution, or their spouse or their former spouse (paragraph 1(e) and subsection 2).

The 10-year holding requirement will be satisfied as Bert was the registered proprietor of Blackacre for at least 10 years before 31 December 2019. This requirement will be satisfied even if Blackacre was not the principal place of residence of Bert and Mildred just before the disposal.

The time of the disposal is taken to be the date of settlement of the sale and not the date of exchange. Consequently, the holding period is determined from settlement date to settlement date. Also the date of settlement must be on or after 1 July 2018.

The dwelling is located in Australia and is not a caravan, houseboat or other mobile home (paragraph 1(f)).

The contribution is made within 90 days of the disposal (paragraph 1(g)).

The 90-day time period has been satisfied. It should be noted this period can be extended at the discretion of the consent of the commissioner of taxation and no “special circumstances” need to be satisfied to trigger the application of the discretion.

In the case of Bert and Mildred, each contribution was made within the 90-day period. The contributions need not have been made at the same time. Bert had to wait until Mildred turned 65 before making the contribution, which she did within the 90-day period.
The beneficiary of the contribution makes an election to treat the contribution as a contribution to which section 292-102 applies (paragraph 1(h)).

The election to treat the contribution as downsizer contribution must be made by the beneficiary (recipient) of the contribution and not made by the contributor. The election must be in the approved form and be made and given to the trustee of the super fund at or before the contribution is made.

No previous downsizer contribution has been made for the beneficiary (unless the previous contribution is sourced from the same proceeds of the same interest or from an interest held by the spouse and which was disposed of under the same contract of sale) (paragraph 1(i)).

The “no previous downsizer contribution” requirement imposes the restriction that while Bert may have owned two or more properties, each of which would have satisfied the downsizer contribution requirements, only one qualifying property can be selected as the chosen property of the downsizer contributions. All downsizer contributions made by or for Bert must (subject to one exception) be made sourced from the capital proceeds of the chosen property. The exception is where the contribution is sourced from an ownership interest in the same property held by Mildred and both interests are sold under the one contract of sale.

Finally, it is irrelevant that at the time contributions are made neither Bert nor Mildred satisfied the work test. Also, it is irrelevant whether Bert or Mildred were aged between 65 and 75 or aged 75 or more. The Superannuation Industry Supervision (SIS) regulations specifying the work test and age 75 test will be modified so that downsizer contributions are an exception to those tests.

It is also irrelevant that Bert has a total superannuation balance greater than $1.6 million so his NCC cap is nil. Again, downsizer contributions will be an exception to the NCC cap. However, NCCs will be included in the total superannuation balance and so affect the ability of further NCCs being made in subsequent financial years.

The exotic – Dagobert and Amelie

Dagobert and Amelie are a married couple and are both under 65 when they sell an investment property they jointly held for 11 years prior to the disposal on 31 December 2018. They occupied the investment property as their residence for eight years before buying their current residence. Dagobert and Amelie are aged 64 and 11 months and 64 and 10 months respectively when the now investment property was sold.The sale proceeds are $1.5 million net of tax. Dagobert and Amelie each decide to contribute a $300,000 NCC using the bring-forward condition of their NCC cap. Fortunately their total superannuation balances at the start of the current financial year, 2017/18, are $1.3 million and $1 million respectively, so they each have the maximum NCC cap space for the bring forward strategy and have not previously invoked the bring-forward provision. Within 90 days of the disposal and after they each have turned 65, they can now each make a $300,000 downsizer contribution.

Dagobert makes his second $300,000 contribution on 15 February 2019, after he has turned 65 and before 31 March 2019. Dagobert’s second contribution will qualify as a downsizer contribution. Amelie makes her second contribution of $300,000 on 15 March 2019, after she has turned 65 but before 31 March 2019. Amelie’s second contribution will qualify as a downsizer contribution.

Both Dagobert and Amelie have satisfied the age 65 and the 90-day requirements as the downsizer contribution was made after they each turned 65 but within 90 days of the settlement of the sale of the investment property. While the investment property was not their principal place of residence immediately before settlement, the property can be chosen as the source of the downsizer contributions as they are entitled to a partial exemption of the capital gain under Division 118-B. Clearly the 10-year holding requirement has been satisfied.

In short, they have been able to contribute $1.2 million in NCCs to super simply because the disposal occurred before they each turned 65 (thereby permitting bring-forward contributions to be made) and within 90 days of settlement. 


By Michael Hallinan – superannuation special counsel with Townsends Corporate and Business Lawyers.
14 Feb 2018


Plans for study into elder abuse

The government’s decision to follow one of the recommendations from the Australian Law Reform Commissioner’s report and adopt a national plan for elder abuse has been welcomed by a legal body.



National Legal Aid (NLA) said it welcomes the national plan to fund the study into the prevalence of elder abuse, announced by federal Attorney-General Christian Porter and the Council of Attorneys-General yesterday.

NLA chairman Dr Graham Hill said the national plan comes at a time where increased government funding is urgently needed to provide legal aid for the growing numbers of elder abuse victims.

“This study will show that growing numbers of socially disconnected elderly Australians are being financially abused by family members, carers and scammers,” said Mr Hill.

“To right that wrong, the national plan should allocate extra funding to ensure legal aid grants are readily available to elder abuse victims facing crippling civil law disputes.”

In particular, greater assistance is needed for victims dealing with crippling civil law disputes relating to their savings, property and access to grandchildren, according to Mr Hill.

“Civil law elder abuse matters often relate to money, property or access to grandchildren,” he said.

“Increased government spending is essential to ensure these vulnerable victims have a lawyer in their corner when faced with these disputes.

“Legal aid commissions routinely see victims who have been fleeced of their savings or assets by a relative or carer. Others have been forced to sell their property or pressured to go guarantor for an adult child’s home loan. Significant numbers of vulnerable older people are also falling victim to telephone and internet scams or door-to-door rip-offs.”

Ultimately Mr Hill described Australia as being “one of the lower-funding nations when it comes to per capita spending on legal assistance services”.

“The UK, for example, provides significantly higher levels of funding for legal aid and this ensures there is greater assistance in civil law matters,” he explained.

“Quite correctly, most grants of legal aid in Australia are for criminal law matters and family law cases regarding the care of children. Without those grants of aid, courts dealing with family and criminal matters would grind to a halt.”

Mr Hill added that the nation’s civil law assistance is about to get a whole lot worse because of its ageing population.

“Our nation is on a chronological conveyor belt: every year, more and more people move from the over-60 age group into the over-80 group. As those numbers increase, so too will the incidence of elder abuse,” he said.

“That incidence must be met with a corresponding increase in the legal assistance we provide to the victims of that abuse.

“Now is not the time to look away. This problem is hurtling towards us like a train. In any given year, about 4 to 5 per cent of people over 65 will suffer an incident of elder abuse. As the number of over-65s increases, so too will the incidence of elder abuse and the need for those victims to receive legal assistance.

“No one is getting any younger. It is imperative we act now to address this looming crisis that threatens to seriously harm many Australian families.”

SMSF Association chief executive John Maroney said elder abuse was also a key concern for the SMSF Association with 47 per cent of SMSF members aged 60 or older.

“Elder abuse is an emerging risk for the SMSF sector and the ALRC’s recommendations regarding superannuation and the issue of enduring powers of attorney (EPOAs) can help mitigate it without significantly increasing compliance for SMSF trustees or limiting choice on how to run their fund,” said Mr Maroney.

“Namely, these recommendations are for changes to the superannuation laws to ensure that trustees consider planning for the loss of capacity to an SMSF trustee and estate planning as part of the fund’s investment strategy and that the ATO is told when an individual becomes an SMSF trustee because of an EPOA.”

Mr Maroney said the Association also supports the recommendation to provide replaceable rules for the limited circumstances where an SMSF trust deed does not appropriately allow a new trustee to be added to a fund where an EPOA is required to be used.

“Similarly, we support the ALRC’s call for a review of the laws regarding binding death benefit nominations for superannuation fund members. We acknowledge this is an area of superannuation law where there is increasing disputation between a deceased’s beneficiaries and relatives,” he said.


By: Emma Ryan
21 FEBRUARY 2018

Why your retirement intentions are critical

Have you given much thought to the age that you might eventually retire?



Thinking well ahead about possible retirement timing is a fundamental part of financial planning – no matter whether you have spent years in the workforce or have just started your first job.

In short, having an intended retirement date in mind helps us to calculate how much we should regularly save to meet that target.

Fewer people than in the past leave full-time work on a Friday to begin full-time retirement the next day but rather ease their way into retirement, if possible by first switching to part-time work.

Of course, many of us would like to assume that we are in control of the timing and shape of our eventual retirement. Yet things often turn out differently in reality.

The most-recent Retirement and retirement intentions, Australia report, published by the Australian Bureau of Statistic (ABS) in December, provides an insight into our plans for retirement.

Of the 4.9 million people aged 45 and over in the labour force in 2016-17: 79 per cent intend to retire in the future. The remainder either hadn't made up their minds whether to eventually retire or intend never to retire.

Of those who aim to retire:

  • 50 per cent intend to retire between 65-69.
  • 23 per cent intend to retire between 60 and 64.
  • 7 per cent intend to retire between 45 and 59.

The average age for intended retirement is 65. By comparison, “recent retirees” – meaning those who retired over the past five years – had an average retirement age of just under 63.


Robin Bowerman, Head of Market Strategy and Communications at Vanguard.
22 February 2018

Beyond share prices

Investors shouldn't overlook that there are two components to sharemarket returns – dividend yield and capital gains (or losses).



Few investors would have missed the news reports of late pointing out that although Australia's sharemarket has broken through the 6000-point mark, it's still below the record pre-GFC high. (See What's in a number? – Smart Investing, November 24.)

But looking at share price movements alone can give investors a misleading impression and encourage them to overreact to short-term market shifts and other market “noise”.

And by excessively focussing on asset price movements, investors may overlook the rewards from compounding total returns (as returns are earned on past returns) and from taking a strategic, long-term approach to investing.

Once reinvested dividends are taken into account, the performance of the Australian sharemarket in the GFC aftermath looks much better – particularly considering the benefits of dividend franking.

On 1 November, 2007, the S&P/ASX200 (prices only) closed at 6828.7 points, its pre-GFC closing high. And on 6 March, 2009, this index closed at 3145.5, its lowest close in the depths of the GFC.

By contrast on 1 November, 2007, the S&P/ASX200 accumulation index (share price plus reinvested dividends) closed at 43,094.3, its pre-GFC high. And on 6 March, 2009, this index fell to 21,298.1, its lowest point in the depths of the GFC.

Now move forward to the beginning of 2018.

On 2 January, 2018, the S&P/ASX200 Index (prices only) opened at 6065.1 points. This was still below its pre-GFC closing high yet 93 per cent above its GFC closing low.

And on the same day, (2 January, 2018), the S&P/ASX200 accumulation index opened at 60,387.4. This was 40 per cent above its pre-GFC closing high and 184 per cent above its GFC closing low.

Figures from super fund researcher SuperRatings reinforce why investors should take a disciplined, long-term approach without being swayed by day-to-day movements in asset prices.

SuperRatings estimates that $100,000 invested in a median balanced super fund on November 1, 2007 – remember that is the day when the Australian market reached its pre-GFC closing high – would have increased to $163,218 by the beginning of 2018. Critically, the total doesn't include contributions.


Written by Robin Bowerman
Head of Market Strategy and Communications at Vanguard.
15 January 2018

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