Superannuation Discussion + market volatility

[cove]

With something like 2.4 trillion in superannuation we do need some of it to make Australia great. I don’t know how much but if everyone goes fully international with their investing Australia won’t go so well.

 

[exceladdict]

With something like 2.4 trillion in superannuation we do need some of it to make Australia great. I don’t know how much but if everyone goes fully international with their investing Australia won’t go so well.

[Politics] if super funds don't keep investing in our infrastructure projects and buying out our utilities, I don't know who else will! (That won't be denied by FIRB that is). [/Politics]

It will be interesting, in case of a credit crunch, what role super plays in propping up the banks. It seems almost impossible to invest in an asx diversified portfolio avoiding the financial stocks!

 

[burmans]

With something like 2.4 trillion in superannuation we do need some of it to make Australia great. I don’t know how much but if everyone goes fully international with their investing Australia won’t go so well.

True but this change doesn't make International shares more attractive, it just removes an artificial incentive to prioritise Australian shares over international. I certainly have good Australian shares in my portfolio but I have them because they are good investments, not just because of a jingoistic "buy Australian" theory.

 

[RooFlyer]

SMSF went to my medium-sized accounting firm for tax prep, auditing and ATO submission, as usual.

Chaos! It appears that these are now audited by an external auditor - and this one has requested, amongst other things, details on my off-market investments as if I'm a related party for all of them - including the 'financials' for a small unlisted company that I'm a small investor in, and have been for 3 years (not a founder, or 'insider' by any definition). As this company is preparing to go to IPO, I have zero chance of getting anything from that company! Have explained this to the Auditor, but they are insistent, so its a stand-off. No time frame for IPO, so likely to exceed time (already extended) for ATO lodgement.

I understand the obligations of an external auditor pretty well, but why would this one want the share register, unit register, trust deeds of the unit trusts, financials and more of each and every off-market investment I have? What are they going to do with them when they get them, I wonder? Read each line and column? Or is it a backside-covering exercise for them 'we did our due diligence...', for which I pay generous fees and spend lots of my time and the time of the people I have to get this info from?

I'm also annoyed at my accounting firm for not alerting me that something like this might come up so i could at least prepare for it.

[/rant]

 

[cove]

I am annoyed by folks in their pre-retirement gaining access to their super fund money. One I know has done it for a second time leaving $10,000 for his retirement. I am unsure what bs story he gave but he is spending $50,000 on frivolous stuff.
Meanwhile our taxes keep funding him as he coasts towards retirement age in five years time and is drawing unemployment benefits.
RooFlyer you could change accountants/auditor for your fund. I don’t think that is impossible.

 

[blacksultan]

I am annoyed by folks in their pre-retirement gaining access to their super fund money. One I know has done it for a second time leaving $10,000 for his retirement. I am unsure what bs story he gave but he is spending $50,000 on frivolous stuff.
Meanwhile our taxes keep funding him as he coasts towards retirement age in five years time and is drawing unemployment benefits.
RooFlyer you could change accountants/auditor for your fund. I don’t think that is impossible.

How is he accessing his super?

 

[cove]

Asking for it seems to work. He is quite a dill and may have told them a bs story about health.

 

[tgh]

Our audit is easy as because we are mainstream, but I do sympathise rooflyer.
Problem is that for every "off market" legit investment there are likely five dodgy examples.
Audits "should" keep the system relatively clean.

Market is looking toppy

 

[RooFlyer]

<snip>
RooFlyer you could change accountants/auditor for your fund. I don’t think that is impossible.

Yes, I am thinking about doing that. Accounting firm is in Sydney (me in Tasmania), a hang-over from when I used to live there (left 15 years ago). The firm started out as a 2-man partnership, then they merged with another partnership and then got consolidated into the current mid-sized firm about 8 years ago.

The individual looking after me has only changed once, and I've been happy with the service/performance. Use of Xero on-line has made life pretty simple.

But something has happened in the past 18 months and its all gotten a bit 'remote'. I think they've got bigger and in fact I've shrunk my business footprint, so I guess even the person looking after me has re-prioritised, even if its not a conscious thing.

Time to get a firm in Hobart I think, more suited to my needs going forward. But I'm stuck with current schemozzle for this time.

 

[cove]

RooFlyer you can switch any time. I was an auditor and CPA a long time ago.

 

[RooFlyer]

That's interesting. I have a call into the accountant today anyway. Might ask about it. Bit surprised that you can 'shop' for external auditors.

Call went through the firm's switch. Was told that my person was unavailable. "They are all very busy with clients, you know". I replied tartly that yes, I am a client and I'm busy too!

Change is coming.

 

[cove]

Don’t ever forget that it is Your Retirement Money.
We have done ok with E Super but my 81 year old friend needed help so it isn’t for everyone.
We received two ATO letters telling us to set up a separate fund or each draw out some money by 31st August. I think the ATO added the franked income refund into our total despite it getting paid after 30th June.

 

[Flying mermaid]

SMSF went to my medium-sized accounting firm for tax prep, auditing and ATO submission, as usual.

Chaos! It appears that these are now audited by an external auditor - and this one has requested, amongst other things, details on my off-market investments as if I'm a related party for all of them - including the 'financials' for a small unlisted company that I'm a small investor in, and have been for 3 years (not a founder, or 'insider' by any definition). As this company is preparing to go to IPO, I have zero chance of getting anything from that company! Have explained this to the Auditor, but they are insistent, so its a stand-off. No time frame for IPO, so likely to exceed time (already extended) for ATO lodgement.

I understand the obligations of an external auditor pretty well, but why would this one want the share register, unit register, trust deeds of the unit trusts, financials and more of each and every off-market investment I have? What are they going to do with them when they get them, I wonder? Read each line and column? Or is it a backside-covering exercise for them 'we did our due diligence...', for which I pay generous fees and spend lots of my time and the time of the people I have to get this info from?

I'm also annoyed at my accounting firm for not alerting me that something like this might come up so i could at least prepare for it.

[/rant]

i am surprised you haven’t had an external auditor before - I thought the law changed some time ago that your accountant couldn’t also audit the smsf and you had to have an external audit.

We had a few issues the first time, where we had to get certificates from banks etc verifying the deposit amounts, but after that it was fine, it was almost as though they checked you thoroughly and then if all was OK they were happy to accept the accounts the next time. We are pretty vanilla - one property that the SMSF own outright and has had for 20 years and then listed shares and a bit of cash, so I guess there is not that much to check up on,

 

[RooFlyer]

i am surprised you haven’t had an external auditor before - I thought the law changed some time ago that your accountant couldn’t also audit the smsf and you had to have an external audit. <snip>,

Wasn't my accountant who did the audit, but another member of the firm. i never met them, but knew they were on the auditing side, not client-facing side.

 

[blacksultan]

Asking for it seems to work. He is quite a dill and may have told them a bs story about health.

i thought they were quite stringent about fraud etc in such situations.

 

[Flying mermaid]

Wasn't my accountant who did the audit, but another member of the firm. i never met them, but knew they were on the auditing side, not client-facing side.

My accountant always got someone else in the firm to do the audit, but they are small, so he said they needed to go arms length and get an external audit done. Like you we are using a company that we started with when we were in Melbourne in the 70s and have just stayed with them through a few changes in control, but fortunately they have always stayed small.

 

[QF WP]

I am annoyed by folks in their pre-retirement gaining access to their super fund money. One I know has done it for a second time leaving $10,000 for his retirement. I am unsure what bs story he gave but he is spending $50,000 on frivolous stuff.
Meanwhile our taxes keep funding him as he coasts towards retirement age in five years time and is drawing unemployment benefits.

How is he accessing his super?

Asking for it seems to work. He is quite a dill and may have told them a bs story about health.

Will depend on a number of areas:

1. His age
2. His employment status
3. Any relevant health issues

There is a term “preservation age” which relates to the relevant age at which a person can access their superannuation. It used to be 55 (if they were born before 1 July 1960) but there is now a tiered structure increasing it to age 60. Let’s presume he is age 55 or older.

If he has retired after age 55 (having met the preservation age for his DOB) and has made a declaration to the super fund that he does not intend to work for more than 10 hours a week, he may be eligible to access his super. Alternatively, if he is over the age of 60 and he has left an employer who has contributed to super for him, he may similarly be eligible. Finally, over the age of 65, there are no constraints to eligibility.

He also could have accessed a Transition to Retirement Allocated Pension. Probably less likely given the account balance.

Finally, he could have tried for access via the severe financial hardship provisions or Total & Permanent Disability. For the former, he needs to prove that he is currently on Centrelink benefits (and has been for at least 6 months) and has to advise his income, assets and liabilities to the fund as part of the application, including proof of debt. I’ve done a number of these for 1 client and they’re not easy.

For access via TPD, it is significantly harder and more onerous - generally two doctors (one your own and the other one recommended by the super fund) do medical reports that in their medical opinion the person cannot perform their usual occupation. There are further complications but I haven’t addressed them as unlikely.

Ultimately, if he has made false declarations to the super fund then he is liable if caught.

 

[QF WP]

SMSF went to my medium-sized accounting firm for tax prep, auditing and ATO submission, as usual.

Chaos! It appears that these are now audited by an external auditor - and this one has requested, amongst other things, details on my off-market investments as if I'm a related party for all of them - including the 'financials' for a small unlisted company that I'm a small investor in, and have been for 3 years (not a founder, or 'insider' by any definition). As this company is preparing to go to IPO, I have zero chance of getting anything from that company! Have explained this to the Auditor, but they are insistent, so its a stand-off. No time frame for IPO, so likely to exceed time (already extended) for ATO lodgement.

I understand the obligations of an external auditor pretty well, but why would this one want the share register, unit register, trust deeds of the unit trusts, financials and more of each and every off-market investment I have? What are they going to do with them when they get them, I wonder? Read each line and column? Or is it a backside-covering exercise for them 'we did our due diligence...', for which I pay generous fees and spend lots of my time and the time of the people I have to get this info from?

I'm also annoyed at my accounting firm for not alerting me that something like this might come up so i could at least prepare for it.

[/rant]

@RooFlyer, I’m currently in a session with a technical adviser who specialises in SMSF, hoping to talk with him about this in the 25min break. Quite a conundrum.o

Seems that the external auditor is being absolutely certain as you are a new client and this is the base year, after the information is received once it’ll get easier.

The consultant I spoke to says that you may need to prove that you aren’t a related party - a listing of shareholders available from the company, or statement from the company secretary and/or directors stating that you aren’t a related party

 

[Pushka]

Asking for it seems to work. He is quite a dill and may have told them a bs story about health.

Surely they would need evidence of illness and excess medical bills? I thought that was always the deal.

 

[RooFlyer]

@RooFlyer, I’m currently in a session with a technical adviser who specialises in SMSF, hoping to talk with him about this in the 25min break. Quite a conundrum.o

Seems that the external auditor is being absolutely certain as you are a new client and this is the base year, after the information is received once it’ll get easier.

The consultant I spoke to says that you may need to prove that you aren’t a related party - a listing of shareholders available from the company, or statement from the company secretary and/or directors stating that you aren’t a related party

Yeah, I have a call into the company, but as we know, a company in 'lockdown' going for an IPO is tighter with information than the proverbial fishes a-hole. What would they care if my auditor wants something? But in respect to that philosophy of proving I'm not a related party, as far as the auditor is concerned, presumably they don't mind if I'm a related party to any of the listed companies?

It must be a very good year to be an external auditor - send out "notices that I want .. to everyone about everything" then keep the clock running and burn the expensive midnight oil going through it all (maybe).

I think my state of p-off-ness is resolving itself on my accounting firm rather than the auditor. They should have fore-warned me 'Hey, its a different ball game this year - new guy will probably want … '. Instead, when I called to see what an apparent delay was for around June, I found a whole bunch of them away! EoFY? So now we are in an ATO approved extension for lodgement but I'm unlikely to meet the new deadline.