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Top Tax Tips – 31 Jan 2018

Don’t cut corners when making binding death benefit nominations

On the death of a person, the balance of that person’s superannuation will not automatically form part of the deceased estate –  that is, superannuation balances are not automatically distributed according to a deceased’s will.

A valid binding death benefit nomination (BDBN) determines how superannuation death benefits will be distributed (e.g. as a reversionary pension to a dependant, as a superannuation death benefit to a dependant, a non-dependent child or as a payment of an amount to a person’s legal personal representative so that the superannuation balance can be dealt with according to the will of the deceased).

A BDBN not made according to BDBN requirements (e.g. not made writing, not signed in the presence of two witnesses over 18 years of age who are not potential beneficiaries, not containing a signed witness declaration and not sent to the trustee) may lead to BDBNs being invalid resulting in the death benefit nomination being rejected – causing delays and uncertainty about the payment of the death benefit – not an ideal situation!

Please speak to your authorised Nexia Edwards Marshall NT Adviser about the most effective way to manage your superannuation and how we can assist you to ensure you comply with all the requirements for a BDBN to be effective.

SMSF audits: If it’s too cheap, it’s probably more trouble than it’s worth

A number of our clients have received cold calls from various so-called “SMSF audit specialists” offering entire SMSF compliance and audit services for as little as $990.  Another supposedly fantastic offer includes being able to do a paperless SMSF audit for as little as $300 within 4 business days.  The ATO has warned that if an offer is too good to be true then that is probably the case.

Preparing the financial accounts, having them audited and preparing an SMSF’s income tax return requires a thorough knowledge of our complex income tax and superannuation laws.  All entries on the accounts and tax returns must be accurate otherwise the SMSF may be at risk of an ATO audit that may discover incorrect treatment of tax free and taxable amounts payable by the SMSF on the retirement or death of a member.

Preparing incorrect accounts and tax returns may cause the SMSF to become non-compliant – giving rise to the SMSF paying tax at 45% of its income and on the value of its assets in the year of non-compliance.  Such a high rate of tax will result in a very significant depletion of the SMSF’s assets – therefore SMSFs must be accurate in their reporting and operations.

We remind our clients to be vigilant of deals that seem too good to be true.  Fortunately, the ATO is investigating the low-fee offers because the ATO is well aware of the work involved in preparing accurate accounts and tax returns for SMSFs.   Your Nexia Edwards Marshall NT Adviser is always pleased to assist you with any enquiries regarding your SMSF, the pros and cons of having an SMSF and maximising benefits under our tax and superannuation laws.

How can Nexia Edwards Marshall NT help you?

For any questions or to discuss any of the above in relation to your personal situation, please contact Sarah McEachern or your Nexia Edwards Marshall NT Adviser.

The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall NT. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall NT Adviser.

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