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DIY Super For Dummies, 3rd Australian Edition

Book Description

Taking control of your super is easier than you think

Now in its third edition, DIY Super For Dummies contains all the expert information and advice you need to confidently set up and manage your fund, navigate the ever-changing super rules, and invest your fund wisely.

Written in the straightforward but fun language that has defined the For Dummies brand for more than twenty years, this friendly and easy-to-follow guide helps you figure out if DIY super is the right way to go for your unique circumstances, shows you how to establish a self-managed super fund, highlights the many ways to contribute to your fund, considers how to make the most of the super tax incentives, and so much more.

With comprehensive new content explaining recent super changes announced by the government, and guidance on SMSF changes that have occurred since publication of the previous edition, DIY Super For Dummies gives you unprecedented and independent information to help you make informed decisions about your DIY super fund, empowering you to develop a successful long-term plan for retirement.

  • Explores how much super is enough for a comfortable retirement

  • Explains the super rules and opportunities in plain English, and outlines how to create a SMSF in ten steps

  • Delves into the costs of running a SMSF, and steers you through your fund's super CART (Compliance, Administration, Reporting and Tax obligations)

  • Explains how to pay a tax-free pension from your DIY super fund

  • Offers sensitive and authoritative information on how to take care of your family after you're gone

  • Take control of your retirement plans! —let DIY Super For Dummies arm you with the tools you need to set up and run a SMSF, and help you create a comfortable retirement.

    Table of Contents

    1. Introduction
      1. About This Book
      2. Foolish Assumptions
      3. Icons Used in This Book
      4. Beyond the Book
      5. Where to Go from Here
    2. Part I: Taking Control of Your Super
      1. Chapter 1: Is DIY Super Right for You?
        1. Taking Control is a RIPper Plan
        2. Joining the DIY Super Club
        3. Taking the ‘6C Challenge’ — Your DIY Super Roadworthy
          1. Can you?
          2. Control, control, control
          3. Cost-effective, or not?
          4. Competence counts
          5. Compliance calls
          6. Commitment issues
        4. What Does a DIY Super Fund Look Like?
          1. Take your pick — the ATO or APRA
          2. Leading the charge with SMSFs
          3. Satisfying the SMSF definition
        5. Banking On Yourself, and Your CART
        6. It’s Your Super Money — Invest Wisely
        7. Your Retirement Super Star
      2. Chapter 2: Understanding How Super Works
        1. Facing Four Facts about Your Super Future
          1. Living longer — ageing in comfort
          2. Straining the government Age Pension
          3. Staying healthy costs more
          4. Expecting a reasonable lifestyle
        2. Appreciating a Super Fund’s DNA
        3. Recognising Your Super Type from a Distance
          1. Discovering seven fund types on your super safari
          2. Taking the wrap
          3. What makes a SMSF different from other funds?
        4. Getting Super-Fit —Your Start-Up Kit
          1. Considering ‘big three’ super decisions
          2. Understanding your member statement
          3. Accepting super taxes
          4. Starting a superannuation pension
        5. Finding Out the Facts about Fees
        6. Choosing Another Super Fund
          1. Do you have super fund choice?
          2. Deciding on your super options
      3. Chapter 3: How Much Super Is Enough?
        1. Deciding on the Lifestyle You Want
          1. Comparing basic, modest and comfortable lifestyles
          2. Living in comfort on $42,000 (or $58,000 for a couple) a year
          3. Living in comfort and claiming the Age Pension
        2. Wanting More Than $58,000 a Year
        3. How Long Do You Expect to Live?
        4. Earning Returns for the Long Term
      4. Chapter 4: Counting On Super Contributions of All Sorts
        1. Superannuation Guarantee — Compulsory Super
          1. Are you entitled to SG?
          2. How is your SG calculated?
        2. Getting Serious about Super Contributions
          1. Understanding the two types of contributions
          2. Business as usual for under-65s
          3. Different rules for over-64s
          4. No voluntary contributions for over-74s
        3. Making Before-Tax Contributions — Concessional
          1. If the concessional cap fits …
          2. Taking advantage of salary sacrifice
          3. Other tax-deductible contributions
          4. Splitting contributions with your spouse
        4. Making After-Tax Contributions — Non-Concessional
          1. Using the bring-forward rule
          2. Cashing in on co-contributions
          3. Contributing for your spouse may earn a rebate
        5. Special Contribution Rules
          1. Running a business
          2. Suffering permanent disability
        6. Investigating Asset Contributions to Your SMSF
      5. Chapter 5: Getting the Right DIY Super Advice
        1. Keeping It Clear and Simple
        2. Getting On the Super Soapbox — Independent Advice
        3. Who Can Give Advice about DIY Super Funds?
          1. Asking an accountant
          2. Finding a (licensed) financial adviser
          3. Looking up a lawyer
          4. Appointing an auditor
          5. Relying on the regulator
        4. Opting for Administration Assistance
        5. Unhappy with Your DIY Super Advice?
    3. Part II: Setting Up a DIY Super Fund
      1. Chapter 6: How Much Does a SMSF Cost?
        1. Appointing an Administrator or Accountant … or Not
        2. SMSF Start-Up Costs
          1. Costing trust deeds and trustees
          2. Opting for the DIY package deal
        3. Budgeting for Annual SMSF Costs
          1. Choosing from the administration menu
          2. Calculating investment costs and related expenses
        4. Accounting for One-Off Costs
      2. Chapter 7: Simple Steps to SMSF Start-Up
        1. Knowing When to Go Solo or Seek Help
        2. Setting Up Your SMSF in Simple Steps
          1. Step 1: Draft a trust deed (and choose a name)
          2. Step 2: Appoint the trustee (individuals or corporate)
          3. Step 3: Admit members (and supply Product Disclosure Statement)
          4. Step 4: Sign the ATO SMSF trustee declaration
          5. Step 5: Open a bank account
          6. Step 6: Establish accounting and administrative procedures
          7. Step 7: Accept contributions
          8. Step 8: Apply to be regulated (and other preliminary matters)
          9. Step 9: Draft your fund’s investment strategy
          10. Step 10: Prepare your fund for investing
        3. Before You Pop the Champagne
        4. Changing Super Funds
          1. Redirecting SG contributions to your fund
          2. Receiving employer contributions in SuperStream form
          3. Redirecting salary sacrifice contributions
          4. Transferring current benefits
      3. Chapter 8: Individual Trustees versus Corporate Trustee
        1. Drawing a Line between Trustee and Member
        2. Meeting the Standards of a SMSF Trustee
          1. Protecting your residency status
          2. No employer/employee relationships
          3. No dishonesty offences
          4. No undischarged bankrupts
          5. Previously naughty trustees
        3. Deciding between Individual Trustees or a Corporate Trustee
        4. Choosing a Corporate Trustee
        5. Single Member SMSFs: A Special Case
      4. Chapter 9: Trustee Declarations and Other Promises
        1. Signing the Trustee Declaration
        2. Keeping Mindful of Your Trustee Duties
        3. Meeting the Sole Purpose Test, Always
        4. Taking Note of Three Important Challenges
        5. Breaking Your Trustee Promises
          1. Reacting to your auditor’s concerns
          2. Asking for administrative penalties
          3. Allowing for rectification and education directions
          4. Dealing a death blow to SMSF trustees
          5. Losing your fund’s complying status
    4. Part III: Running Your Self-Managed Super Fund
      1. Chapter 10: Finding a Fund Administrator, or Not
        1. Taking Aim at SMSF Administration
        2. Debunking the DIY Super Myth
        3. Going It Alone
        4. Delegating Your CART Obligations
          1. Seeking service quotes
          2. Appointing your administrator
        5. Don’t Be a Clever Clogs on Tax
        6. Revving Up Arrangements for Retirement
      2. Chapter 11: Do the Right Thing — Compliance
        1. … Because It’s the Law
        2. Monitoring the Must-Do’s
        3. Penalising Pesky Trustees
          1. Copping an administrative penalty
          2. Forcing you to lift your super game
        4. Thou Shalt Comply with the Sole Purpose Test
          1. Doing your SPT homework
          2. Citing some examples of SPT
      3. Chapter 12: Act Like You’re the Boss — Reporting
        1. Raising the Bar on Record-Keeping
        2. SMSF Reporting (and Record-Keeping) in a Nutshell
        3. Delivering Accurate Accounting and Financial Reporting
        4. Keeping the ‘Taxman’ Happy — Tax Records
        5. Lodging SMSF Annual Returns
          1. Ticking off by lodgement date
          2. Combining tax and regulatory information
          3. Member contributions information
        6. Auditing Your SMSF Auditor
          1. Ticking four items on your auditor checklist
          2. Receiving a reprimand from the auditor
      4. Chapter 13: It’s Always Tax Time
        1. Unlocking the Door to a Tax-Free Future
        2. Reducing Income Tax the Super Way
        3. Copping Contributions Tax
        4. Earnings Tax in Accumulation Phase
          1. Including contributions as earnings
          2. Discounting capital gains
        5. Tax-Exempt Earnings in Pension Phase
        6. Paying Tax-Free Benefits to Over-60s
    5. Part IV: Investing Your DIY Super Money
      1. Chapter 14: Exploring the World of Super Investing
        1. Getting Ready for the Investment Roller-Coaster
        2. How Steep Is Your Investment Learning Curve?
        3. Understanding the Basic Ingredients of Super Investing
          1. Don’t forget about risk and return
          2. Investing for the long tomorrow
        4. Appreciating Asset Classes Leads to Investment Success
          1. Cool as cash
          2. Fuzzy fixed interest
          3. Betting on bricks and mortar — property
          4. Sailing in on shares
          5. Alert to alternative investments
        5. Take Your Pick: Investing Directly, Using Managed Funds or Wraps
      2. Chapter 15: Super’s Special Investment Rules
        1. SMSF Investing for Two Stages
        2. Remembering the Three Musts …
        3. Wait! Set Your Fund’s Investment Strategy
          1. Identifying your goals — your DIY super fund’s investment objectives
          2. Assessing the insurance needs of your SMSF members
          3. Getting into position — your DIY super fund’s asset allocation
          4. Ready, set, go! Selecting, and monitoring, specific investments
          5. Reviewing your fund’s investment strategy and asset allocation
        4. Benchmarking Your DIY Super Returns
        5. Walking the Investment Tightrope
          1. Meeting the sole purpose test
          2. Keeping fund assets separate
          3. Ensuring assets are in the fund’s name
          4. Lending money to members — don’t!
          5. Purchasing assets from members or relatives
          6. No direct borrowing of money
          7. Investing too close to home
          8. Keeping your investments at arm’s length
      3. Chapter 16: Borrowing and DIY Super
        1. No Borrowing is the General Rule
        2. Understanding the Three Special Borrowing Exceptions
          1. Borrowing to cover benefit payments
          2. Borrowing to cover settlement of a share transaction
          3. Purchasing an asset using a limited recourse borrowing arrangement
        3. ATO’s Call: Nine Borrowing Scenarios
      4. Chapter 17: Investing in Property
        1. The Short Story on SMSF Property Investing
          1. Investing directly in property
          2. Indirect property investing
        2. What’s All the Fuss about Residential Property?
        3. Special Opportunities for Business-Related Property
        4. Pumped-Up Property Plans — LRBAs
          1. Ignoring hype about LRBA magic pills
          2. Passing six LRBA tests
          3. Understanding the LRBA difference between repairing and improving
      5. Chapter 18: Investing and Super Tax
        1. Educating Yourself about Earnings Tax
          1. Accounting for 15 per cent earnings tax
          2. Accepting a higher tax bill for related-party income
        2. Eliminating Earnings Tax in Pension Phase
        3. Making Tax Magic with Franked Dividends
          1. Reducing tax during accumulation phase
          2. Receiving tax refunds during pension phase
        4. Coping with Capital Gains Tax
    6. Part V: Paying Super Benefits from Your Fund
      1. Chapter 19: Retiring is Just the Beginning
        1. Navigating Your Retirement Road
          1. Taking terminology to task
          2. Preparing for R day
          3. Retiring too early
          4. Working, and contributing, after retiring
        2. Preserving Your Super Fortune
          1. Gaining access to your super benefits
          2. Retiring is a must, in most cases
          3. Leaving your money in super indefinitely
        3. Taking a Lump Sum and/or Pension
        4. Retiring Early (Before 60) Means Tax — Usually
        5. Retiring On or After 60 Means No Tax
      2. Chapter 20: Your Super and the Age Pension
        1. How Does Your Super Affect Age Pension Entitlements?
        2. Claiming the Age Pension
          1. Reaching Age Pension age
          2. Receiving an indexed pension for life
        3. Passing Your Age Pension Exams
          1. Taking the assets test
          2. Taking the income test
        4. Deeming Income from Super Pensions and Other Financial Investments
      3. Chapter 21: Running a DIY Super Pension
        1. Facing the DIY Fork in the Road
          1. Retiring using your SMSF
          2. Cashing out and buying a commercial pension
        2. Changing from Accumulation to Pension Phase
          1. Considering the many SMSF combinations
          2. Preparing your SMSF pension paperwork
        3. Contemplating Your DIY Super Pension Options
          1. Activating your account-based pension
          2. Taking a TRIP
          3. Reminiscing about complying income streams
        4. Starting Your SMSF Pension — One Step at a Time
        5. Calculating Your Pension Components
          1. Calculating the tax-free component
          2. Calculating the taxable component
          3. Sliding along the proportioning rule
      4. Chapter 22: Making Contributions while Taking a Pension
        1. Retiree-Friendly Contribution Rules
        2. Running Two Phases Involves Extra Expertise
          1. Mixing it up equals actuarial certificate
          2. Contributing and starting a pension in same year
        3. Restarting Pensions Means New Components
          1. Recalculating your benefit components
          2. Running, or stopping, more than one SMSF pension
        4. Taking a TRIP Saves Tax
      5. Chapter 23: Divorce and Your SMSF
        1. Dissecting Your Super in Three Ways
        2. Doing the Super Splits
          1. Understanding the splitting process
          2. Splitting more than straws
        3. What Happens to Your SMSF After Divorce?
      6. Chapter 24: Looking After Your Family
        1. Protecting Your Health, Wealth and Family
          1. Introducing life insurance and protecting income
          2. Using your will
          3. Nominating beneficiaries
        2. Where Does Your Super Go When You Go?
        3. Depending On You — Your Dependants
          1. Paying lump sum death benefits
          2. Paying income stream death benefits
        4. Tracking the Taxman from Beyond
          1. No tax for dependants
          2. Non-dependants pay tax
        5. SMSF Succession Planning
    7. Part VI: The Part of Tens
      1. Chapter 25: Ten Special Features of DIY Super
        1. Becoming a Member of a Fast-Growing Club
        2. Having No More than Four Members
        3. Appreciating that You’re the Boss
        4. Finding Flexibility
        5. Understanding It’s a Super Structure
        6. Managing Tax for You, Not for Thousands
        7. Running Two Phases, on Your Terms
        8. ‘Frankly, My Dear, I Love Franked Dividends’
        9. Creating Family Wealth
        10. Considering a Refund of Contributions Tax
      2. Chapter 26: Ten Commandments of DIY Super
        1. You Shall … Always Remember You’re in Control
        2. … Comply with the Sole Purpose Test
        3. … Follow Your Fund’s Trust Deed
        4. … Comply with the SIS Act
        5. … Formulate an Investment Strategy
        6. … Not Break Any Investment Rules
        7. … Arrange for Your SMSF to Be Audited
        8. … Lodge Tax and Compliance Returns
        9. … Keep Your Fund Separate from Your Personal Finances
        10. … Seek Professional Advice When Necessary
    8. Part VII: Appendixes
      1. Appendix A: SMSF Compliance and Administration Checklist
      2. Appendix B: Handy Super Resources and ATO PublicationsIndex
    9. Index
    10. About the Author
    11. Business & Investing
    12. Connect with Dummies