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SMSFs urged to review segregation clauses in trust deed
With the rules around segregation changing, SMSF trustees wanting to run separate investment portfolios for different members may need to check the current terms in their deed allow for this, says an SMSF admin firm.
Heffron SMSF Solutions head of customer Meg Heffron says while a fund’s ability to segregate its assets will change from 1 July 2017 for those with larger balances, this will not impact their ability to run different investment portfolios.
“It doesn’t change the trustee’s ability to allow members to choose specific investments to underpin their account. It just means that arrangement can’t be reflected in the fund’s tax return,” Ms Heffron said.
Many trust deeds treat segregation and member investment choice as the same thing. However, “ruling funds out of some valuable strategic planning opportunities,” she said.
“[The deed needs] to make it very clear that the two things are different and that you can run a different investment portfolio to someone else without segregating the asset.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
Thanks Meg.
From reading this site, there appears much ongoing confusion arising from segregation and tax implications, and I have not as yet seen the many questions answered - only more questions.
After 1/7/17;
What defines segregation post 1/7/17? Does one have to have their accumulation and pension funds in 2 separate super funds for them to be segregated?
You mention " trustee’s ability to allow members to choose specific investments to underpin their account. It just means that arrangement can’t be reflected in the fund’s tax return" - could you please explain further as there seems to be much confusion on this. 2 asset piles will grow at 2 different rates , so it would appear the accumulation/pension accounts ratio will change constantly.
Is the tax implication 1) the sum or all the tax in accumulation and pension and then apply the ration of the accumulation/pension, or is it 2) the tax implication of either the accumulation or pension assets being that no tax is required for the pension assets and tax is applied to the nominated accumulation assets? IF it is 1) then why do you only have to nominate the new CG figure for the accumulation assets, but not the pension assets if pension assets are also to be subject to tax calculations?
Thanks.0- Thanks Meg.
From reading this site, there appears much ongoing confusion arising from segregation and tax implications, and I have not as yet seen the many questions answered - only more questions.
After 1/7/17;
What defines segregation post 1/7/17? Does one have to have their accumulation and pension funds in 2 separate super funds for them to be segregated?
You mention " trustee’s ability to allow members to choose specific investments to underpin their account. It just means that arrangement can’t be reflected in the fund’s tax return" - could you please explain further as there seems to be much confusion on this. 2 asset piles will grow at 2 different rates , so it would appear the accumulation/pension accounts ratio will change constantly.
Is the tax implication 1) the sum or all the tax in accumulation and pension and then apply the ration of the accumulation/pension, or is it 2) the tax implication of either the accumulation or pension assets being that no tax is required for the pension assets and tax is applied to the nominated accumulation assets? IF it is 1) then why do you only have to nominate the new CG figure for the accumulation assets, but not the pension assets if pension assets are also to be subject to tax calculations?
Thanks.0
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