Welcome to the selfmanagedsuper trustee newsletter, a publication designed to provide you with all the critical information across a range of topics that will help you run your SMSF in the most effective manner.
On a monthly basis we will be attempting to let you know of all the latest developments affecting what remains the fastest-growing and largest segment, by asset value, of the superannuation industry.
More importantly, we’ll cut through the disruptive ‘noise’ regarding the sector and provide you with an accurate picture of what’s really going on in the SMSF landscape.
And that mission alone perhaps provides the greatest challenge for us as an editorial team as too much of the consumer media seems to be dominated by negative stories about SMSFs originating from sources acting in their own self-interest and not for the good of the industry.
Classic recent examples of this include some so-called industry experts attacking SMSF trustees because they supposedly receive too many tax advantages. Justification for these statements has been the ‘unfair’ ability of SMSF trustees to benefit from franking credits included in domestic company dividend declarations.
Well the reality of the situation is that franking credits are not the sole domain of SMSFs and are available for everyone to use to their betterment, including both industry and retail superannuation funds and any other investors for that matter.
Another hot topic of discussion has been the use of limited recourse borrowing arrangements (LRBA) in SMSFs, how rampant it is, and how they are overheating the Australian residential property market.
The misconceptions in this debate are so numerous it is hard to know where to start. I suppose the first thing to do would be to list some of the Australian Taxation Office (ATO) statistics to give the allegations some context.
As per the regulator’s latest statistics, only 2.7 per cent of SMSFs have an LRBA in place and less than 2 per cent of SMSF assets are under one.
In the words of ATO assistant deputy commission of superannuation Stuart Forsyth: “The sky’s not falling in – it’s 1.7 per cent of assets held by SMSFs.”
So the notion gearing in SMSFs is proliferating at a rate of knots is simply laughable.
Furthermore, the value of residential property assets held in SMSFs as at June 2014 was $19.5 billion. The size of the Australian residential property market was $5.2 trillion at January 2014, as measured by research house RP Data.
The truth is residential property is not even the most popular type of SMSF property investment, with commercial property assets valued at $65 billion in June 2014. How a $19.5 billion allocation to a market valued at $5.2 trillion can overheat it and cause a bubble just defies logic.
But the facts don’t get in the way of a good story when it comes to SMSFs and these are just a few current examples.
As I said before, this publication will seek to cut through this type of misinformation for you and provide you with more accurate and critical developments to help you adequately fund a comfortable retirement through your SMSF.
I hope you find the publication an interesting, useful and enjoyable read.''