Repeat buyers are one of the strongest measures of confidence in any apartment development.

At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.

Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/FH_1EzB-1vs?si=XScVlP1ERsTDJoME" title="YouTube video player" width="560"></iframe>

"I had some boxes I wanted to tick," he says.

Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.

“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.

He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.

[smartcode_project:default project_id=135096 project_image_fid=356818]

After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.

"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."

Today, Keith says the move has completely changed how he experiences Newcastle.

"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."

[smartcode_project:default project_id=135096 project_image_fid=356828]

Beyond the location, he says it's the sense of community that has surprised him most.

"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."

For Aimee and Lyle Goodman, the journey started almost by chance.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/tsioMLcnjas?si=zq-ys3JuWpfa5hFv" title="YouTube video player" width="560"></iframe>

The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.

"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."

As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.

"We actually catch up more as a family now," Aimee says.

"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."

[smartcode_project:default project_id=135096 project_image_fid=356829]

Lyle says their confidence came from GWH's reputation within Newcastle's building industry.

"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."

That confidence only grew throughout the buying process.

"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."

[smartcode_project:default project_id=135096 project_image_fid=351104]

Aimee says one moment stood out.

"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."

The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.

Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.

[smartcode_project:default project_id=135096 project_image_fid=356822]

ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;

The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.

[smartcode_project:default project_id=135096 project_image_fid=356826]

For Keith, the appeal remains straightforward.

"You feel at home even before you've moved into your home."

For Aimee, the change is measured in time.

“I just felt like I had more time,” she says.

[smartcode_project:default project_id=135096 project_image_fid=351102]

Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.

ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.

[smartcode_project_cta:default project_id=135096]

Joel Robinson

From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

Virgate Property Group is preparing to commence construction of Verdé, its new apartment development in Melbourne's Arts Precinct at Southbank, following a strong run of sales that has seen more than half of the project's 173 apartments secured.

Verdé has attracted a broad mix of first home buyers, owner-occupiers upgrading from nearby inner-city suburbs and investors, with younger owner-occupier couples aged between 28 and 45 accounting for the strongest enquiry. Many are already living in Southbank, South Melbourne, Albert Park, Port Melbourne, South Yarra and the CBD.

"Verdé is located in one of the most desirable pockets of southern Melbourne," Blair Property Group Director Darren Blair, who is managing sales at Verdé, said.

"It's within walking distance of the Arts Centre, Royal Botanic Gardens, Albert Park Lake, and Southbank's restaurants and retail. It's a great lifestyle location with strong amenity and liveability, which made it a very attractive choice for the project."

[smartcode_project:default project_id=4661 project_image_fid=372549]

Virgate was already familiar with the precinct, having previously delivered the successful Domain House development in neighbouring South Melbourne. That experience gave the developer confidence to acquire the Coventry Street site and continue expanding its presence in Melbourne's inner south.

"We had been keeping an eye on the site and the broader precinct for a few months before deciding to move forward with the acquisition," Virgate said.

The project was ultimately secured in 2020 following feasibility studies, planning assessments and due diligence, with the brief centred on delivering "a high-quality, considered design that feels both refined and fit for purpose."

[smartcode_project:default project_id=4661 project_image_fid=314259]

Designed by <a href="https://www.apartments.com.au/architects/bruce-henderson-architects">Bruce Henderson Architects</a>, Verdé comprises 173 one, two and three-bedroom apartments priced from $599,000. The architecture is distinguished by a faceted glass façade that responds to both the site's outlook and Melbourne's changing light conditions.

According to Bruce Henderson Architects, the coloured glazing gives the building a distinctive identity while also providing privacy and solar shading, with residences oriented to capture views across the bay, city skyline and surrounding parklands.

Inside, <a href="https://www.apartments.com.au/interior-designers/designoffice">DesignOffice</a> has created interiors focused on natural light, efficient planning and enduring materials. Apartments feature engineered oak flooring, natural stone benchtops, floor-to-ceiling glazing and SMEG appliances, while a restrained material palette aims to complement the expansive outlooks rather than compete with them.

[smartcode_project:default project_id=4661 project_image_fid=372550]

Resident amenity has also been designed around everyday functionality rather than occasional use. Facilities include a concierge-serviced lobby, residents' lounge with fireplace, library and co-working space, gym, terrace garden with barbecue facilities, ground-floor café, and package delivery management.

The project's location continues to be one of its strongest drawcards. Positioned on Coventry Street, Verdé sits within walking distance of the National Gallery of Victoria, Arts Centre Melbourne, Royal Botanic Gardens and Albert Park Lake, while Southbank's dining precinct, Sturt Street trams and the new ANZAC Station are all nearby. The surrounding education catchment also includes Melbourne Grammar, Melbourne Girls Grammar, Mac.Robertson Girls' High School and several major university campuses.

The sales team says buyers have responded particularly well to the combination of location, design quality and long-term liveability.

"They're responding really positively to the quality of the design, premium resident amenities and the uninterrupted views. Many also appreciate the location and how connected it is to everything they need."

The ability to secure stamp duty savings before completion has also been a key factor for purchasers, alongside the opportunity to personalise finishes ahead of settlement.

With construction set to commence soon and more than half the apartments already sold, Verdé enters its next phase as one of the Arts Precinct's more established apartment developments, offering remaining buyers an opportunity to secure a residence before construction advances further. Expected completion is scheduled for late 2027.

[smartcode_project_cta:default project_id=4661]

Virgate's Verdé Southbank moves toward construction as sales fly past halfway stage

Downsizer-focused apartment development Kooyongkoot in Hawthorn has been recognised at the 2026 Better Future Melbourne Design Awards, taking home Gold and Silver awards in two categories.

<a href="https://www.apartments.com.au/new-apartments/kooyongkoot-hawthorn-1-kooyongkoot-road-hawthorn-vic-3122">Kooyongkoot</a>, currently being delivered by developer PQD and designed by Cera Stribley, received Gold in the Interior Design – Proposed category and Silver in the Architecture – Proposed category.

The dual recognition reflects the design approach behind the boutique development on prestigious Kooyongkoot Road, where the focus has been on creating homes for downsizers seeking the space, quality and functionality of a detached house within a low-rise apartment building.

Rather than maximising apartment numbers, <a href="https://www.apartments.com.au/developers/pqd">PQD</a> and <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a> limited the development to just 18 residences, allowing for larger floorplans, greater privacy, generous landscaping and expansive communal spaces.&nbsp;The majority of the apartments also benefit from corner aspects, allowing for dual sources of natural light.

Now around 70 per cent complete and on track for completion in November 2026, Kooyongkoot will comprise a mix of garden residences, ter​race apartments, sub-penthouses, and is crowned by two half-floor penthouses with direct lift access and private rooftop terraces.

[smartcode_project:default project_id=102717 project_image_fid=355297]

The Silver Award for Architecture recognised the way the building responds to its prominent corner position at the ent​rance to Hawthorn's Scotch Hill precinct, one of Melbourne's most established residential neighbourhoods.

Rather than competing with the grand homes that line Kooyongkoot Road, the architectural approach focused on restraint and longevity, using curved brickwork, generous landscaping and carefully considered proportions to integrate with the existing streetscape.

"The form feels fluid and timeless, as though shaped by the landscape itself – architecture that belongs, rather than competes," said Chris Stribley, Co-Founder and Managing Principal of Cera Stribley.

The judging submission also highlighted practical innovations throughout the building, including lift cores servicing only nine homes each, a central landscaped lightcourt designed to bring daylight and ventilation into the building, and fully enclosed private storage rooms with lighting, power and shelving to better accommodate residents transitioning from larger family homes.

[smartcode_project:default project_id=102717 project_image_fid=355293]

The Gold Award for Interior Design recognised the project's focus on long-term liveability rather than display-home aesthetics.

According to the awards submission, the interiors were designed from the inside out, prioritising how homes would function over decades of daily use through generous proportions, practical storage, durable natural materials and flexible layouts.

The specification includes natural stone throughout, upgraded acoustic glazing, V-ZUG appliances and fully enclosed storage rooms, alongside an amenity offering focused on wellness, entertainment and everyday convenience.&nbsp;

Residents will have access to a gym and yoga studio, a wellness centre featuring traditional and infrared saunas, a cold therapy shower and treatment room, as well as a residents' lounge and golf simulator/cinema room for entertainment.&nbsp;Kooyongkoot has also considered the everyday convenience of its residents by offering a private carwash and pet wash facilities on site as well as dedicated parcel lockers and oversized fully enclosed storage rooms.&nbsp;

[smartcode_project:default project_id=102717 project_image_fid=355303]

The project's attention to detail has already resonated with buyers. Earlier this year, Kooyongkoot recorded one of Boroondara's highest apartment sales when an $8 million penthouse was purchased by a Melbourne CEO downsizing from a nearby family home.

"Every detail feels deliberate, from the overall design down to the smallest touches," the purchaser said.

"The level of quality and refinement is exceptional, but what really sold it was how liveable it felt... It felt like a place where everything had been considered, not just a luxury building."

[smartcode_project:default project_id=102717 project_image_fid=355304]

Sustainability also formed a key part of both award submissions. Kooyongkoot is targeting a minimum 7.5-star NatHERS rating across all residences, supported by passive design principles, high-performance glazing, EV charging infrastructure, water reuse systems and a wellness model focused on lower-energy dry facilities rather than pools and large wet areas.

Located within walking distance of Scotch College, Methodist Ladies' College, Koo​yong Lawn Tennis Club, Aubur​n Village and Camberwell Junction, Kooyongkoot continues to target owner-occupiers looking to remain in Melbourne's inner east without compromising on space or quality. A limited selection of two, three and four-bedroom residences remains available, with prices starting from $1.9 million.

[smartcode_project_cta:default project_id=102717]

Kooyongkoot wins Gold and Silver at Better Future Melbourne Design Awards

New apartment supply has become increasingly constrained across <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a> in recent years, with fewer projects progressing through to completion as development conditions have become more challenging.

It makes <a href="https://www.apartments.com.au/developers/novm">NOVM</a>'s 2021-completed <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> one of the most recently completed residential towers on the Parramatta River, and among the newest apartment developments in Sydney's second CBD.

With the project largely completed before the sharp escalation in construction costs and inflation following the pandemic, The Lennox is now offering pricing that would be difficult to replicate in a comparable new development in Parramatta today, or across much of Western Sydney.

The majority of the 413 apartments at The Lennox sold before and shortly after completion. A limited release of the remaining apartments has recently been brought to market by capital partner <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a>, with entry-level pricing from $700,000 and two-bedroom apartments available from under $1 million.

Rising above the Parramatta River at 12 Phillip Street, The Lennox comprises one, two, three and four-bedroom apartments, appealing to first home buyers, young professionals, families, downsizers and interstate investors seeking a completed apartment in one of Australia's fastest-growing economic centres.

[smartcode_project:default project_id=5743 project_image_fid=372394]

Rather than positioning Parramatta as an alternative to Sydney's CBD, Equitifund believes the city has reached a point where it stands on its own merits.

"Parramatta is no longer simply an alternative to Sydney CBD, it's becoming a destination in its own right," Equitifund Executive Chairman Greg Huxley said.

"The Lennox captures that evolution with a level of quality and amenity that's difficult to match at its price point."

[smartcode_project:default project_id=5743 project_image_fid=953]

Designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, the tower responds directly to its riverfront setting through expansive glazing and open-plan layouts that maximise views across the Parramatta River and city skyline. Interiors feature engineered timber flooring, stone benchtops, stainless steel appliances and floor-to-ceiling glazing, while generous balconies extend the living spaces outdoors.

Marchese Partners says the project was conceived to balance high-quality apartment living with practical, long-term functionality, pairing larger, efficient floorplans with amenities more commonly associated with five-star hotels.

That emphasis continues through the resident facilities, which include a 20-metre rooftop swimming pool, fully equipped gym and wellness spaces, full-time concierge, a residents' lounge, function room, private lifts, secure basement parking and rooftop communal areas overlooking the Parramatta River. Ground-floor boardwalk retail and dining further activate the riverfront and integrate the building into the surrounding public realm.

[smartcode_project:default project_id=5743 project_image_fid=925]

Australian housing and finance group Equitifund has secured the remaining apartments, believing there are few completed apartment opportunities in Parramatta that offer the same combination of location, amenity and pricing.

Equitifund National Sales Director Ben Hamblett says buyers are increasingly recognising that premium apartment living no longer needs to come with Sydney CBD pricing.

"The Lennox is where aspirational living becomes attainable," Hamblett said.

"Wake to river and mountain views, step into Sydney's Second CBD, and arrive home to resort-calibre amenities, all without the harbour price tag."

Hamblett says owner-occupiers are also attracted by the convenience of having Westfield Parramatta, Church Street's dining precinct, Parramatta Park, Riverside Theatres, Western Sydney University and major transport connections all within walking distance.

"At The Lennox, lifestyle is not an afterthought, it is the foundation."

[smartcode_project:default project_id=5743 project_image_fid=5374]

The Lennox places residents within walking distance of Parramatta Square, Westfield Parramatta, Church Street Eat Street, Parramatta Station, the ferry wharf, Light Rail, the future Sydney Metro West, Parramatta Park and CommBank Stadium, reinforcing Parramatta's position as one of Australia's most connected metropolitan centres outside Sydney's CBD.

Equitifund says buyers visiting the display suite consistently comment on the quality of the finishes, generous floorplans, river and skyline views, and the walkability of the location. The project has attracted a broad mix of local professionals, upsizers, downsizers, buyers relocating from Sydney's inner suburbs and interstate investors seeking long-term growth opportunities.

That demand aligns with Parramatta's continued evolution as an economic powerhouse. Equitifund Research and Market Insights specialist John Bekiaris says sustained population growth, infrastructure investment and expanding employment opportunities continue to support long-term housing demand across the city.

"Parramatta has evolved from a satellite city into one of Australia's most important economic centres. Population growth, infrastructure investment and employment are all supporting sustained long-term housing demand."

[smartcode_project_cta:default project_id=5743]

The apartment price gap drawing Sydney buyers west

A luxury beachfront apartment at Rainbow Bay has more than doubled in value since it sold off the plan six years ago, setting a new local apartment record in the process.

The three-bedroom apartment in the Flow development on Petrie Street, the first of four new projects locally by Paul Gedoun's S&amp;S Projects, has sold for $7.4 million, after originally selling for $3.27 million when the project launched in 2020.

The seventh-floor apartment, comprising 187 sqm of internal living space and a 54 sqm balcony overlooking Froggies Beach and Snapper Rocks, was purchased by a local family.

The transaction was negotiated by Pezet Matheson director Kerry Pezet and equates to more than $30,000 per sqm.

Pezet said the sale reflected the limited opportunities to buy into the boutique beachfront development.

"The sale highlights the rarity of opportunities within the boutique beachfront development, where residences seldom become available," Pezet said.

"Flow is one of the Gold Coast's most tightly held buildings. Buyers from our database move quickly when residences become available, and achieving an off-market sale at $7.4 million demonstrates the depth of demand for property of this calibre."

<img alt="Flow" data-entity-type="file" data-entity-uuid="c585b206-2130-4eee-a50c-3f27c51a7c70" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-06%20at%208.33.25%E2%80%AFPM.png?VersionId=m3pHRDV62Y3fvN.XQuQHq.52ilTWpRLf" />

Flow was the first of four luxury apartment developments delivered by Paul Gedoun's S&amp;S Projects at Rainbow Bay and was completed in 2023.

Positioned on the beachfront overlooking Snapper Rocks, the residence includes three bedrooms, three bathrooms, a powder room and views stretching north along the coastline towards Surfers Paradise.

Pezet Matheson Residential principal Mitchell Lambert said buyers continued to prioritise quality beachfront apartments in tightly held locations.

"Flow Residences offers a rare combination of elevated beachfront positioning, architectural excellence, comprehensive resident amenity and premium finishes, which is exactly what discerning purchasers are seeking," Lambert said.

"The transaction further reinforces Rainbow Bay's reputation as one of Australia's premier coastal lifestyle destinations, where limited supply and growing demand continue to support strong market performance."

Pezet Matheson originally marketed and sold out Flow off the plan, making the latest transaction a return to one of the project's original buyers.

Paul Gedoun is selling his third project, <a href="https://www.apartments.com.au/new-apartments/radia-rainbow-bay-271-boundary-street-coolangatta-qld-4225">Radia Rainbow Bay</a>, after recently completing, and selling out, <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a>. He has plans for a <a href="https://www.apartments.com.au/news/qld/first-look-s-s-projects-proposes-88-apartment-wellness-tower-at-coolangattas-boundary-street">fourth building</a>, 88 apartments on <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">Boundary Street</a>.

Rainbow Bay apartment doubles in price since off the plan sale during pandemic

Smsfs

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GUEST OBSERVER
The SMSF Association has produced compelling evidence that the Federal Government should increase the concessional contribution cap for people aged 50 and over and extend the carry forward of concessional contributions.
Research undertaken for the organisation by the actuarial consultancy firm Rice Warner “conclusively shows” that people only begin making significant voluntary contributions to superannuation from their mid-50s onwards.
The research confirms what the Association has long been telling policy makers: that there is a sharp difference between compulsory and voluntary contributions to superannuation – the former increase gradually over time while the latter jump dramatically in the years leading to retirement.
The Rice Warner research used a sample of 14,351 SMSF members provided to the Association by BGL, a leading SMSF software provider.
This research graphically shows why people aged 50 and over need to have a more generous contribution cap than the $25,000 that will apply from 1 July 2017.
The Association has argued for the Government to retain the current $35,000 cap for older workers and notes that even a compromise of a $30,000 cap for those over 50 years will still benefit fund members trying to save their superannuation savings to achieve a dignified retirement.
The research highlights the significant impact that voluntary contributions can have on a fund member’s superannuation balance.
The research also highlights that if the carry forward concessional contribution limit was increased from a balance of $500,000 to $750,000 it would benefit 13% of the members in the sample, of which half would be female. This measure alone would go a long way towards building adequacy for women.
The Association believes that this change would increase the effectiveness of the Government’s carry forward policy and deliver better results for people who have had volatile incomes throughout their careers and are trying to build adequate retirement savings.
These important policy changes will allow a greater opportunity for people to achieve a secure and dignified retirement by building their retirement savings.
It’s also significant that women’s contribution patterns show that when they are in the workforce they are engaged with their superannuation in an SMSF, and this particularly applies when they are in the 60-plus age group.
Rice Warner CEO Michael Rice said the underlying focus of the research was to measure the impact of recently proposed legislative changes to tax treatment in superannuation on SMSF members and potential refinements.
The three most significant of those proposed legislative changes were: the introduction of a $1.6 million cap on the amount that can be transferred from accumulation accounts to pension accounts, the reduction of the concessional contribution cap to $25,000 from $35,000 and the introduction of a $100,000 yearly non-concessional contributions cap (restricted to those with balances under $500,000).
The research shows that the proposed changes will have a material impact on the SMSF population and will restrict members’ ability to save in superannuation.” 
Andrea Slattery is managing director and chief executive officer of the SMSF Association and can be contacted <a href="https://www.smsfassociation.com" target="_blank">here</a>.
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jchancellor-FAypfDUnLy

Research shows ‘strong argument’ to lift concessional cap

<html><body>
<h2>An SMSF can lease an asset of the fund – such as business equipment or machinery – to a related party of the fund. This is known as an in-house asset.</h2>
An in-house asset is a loan to – or an investment in – a related party of your fund or an asset subject to a lease to a related party.
A related party of your fund can include fund members, trustees, their relatives and any companies and trusts these related parties control or influence. Employers who contribute member benefits for you or another member of your super fund are also related parties.
It’s important to remember that in-house assets can’t be more than 5 percent of the total market value of fund assets.
If your SMSF holds an in-house asset, the value of all of your funds’ assets needs to be determined at the end of the income year. The valuation enables you to test whether the market value of the in-house assets exceed 5% of the funds’ total assets at the end of a year of income.
<h2>Certain events will affect the percentage of in-house assets and there are also some exceptions to the in-house asset rules.</h2>
Your SMSF must also ensure that the lease of business equipment or machinery complies with the sole purpose test and is made on a commercial ‘arm’s length’ basis.
Can an SMSF sell a collectable or personal-use asset to a related party?
Yes – collectables and personal-use assets held in an SMSF can be sold to a related party. For items acquired:
<ul>
<li>after 1 July 2011, the sale must be made at market price as determined by a qualified, independent valuer</li>
<li>before 1 July 2011 and sold before 1 July 2016, an independent valuation is not required, however, the sale must be made on an arm's length basis.</li>
</ul>
All sales to related parties that occur on or after 1 July 2016 must be supported by an independent valuation.
What is the time limit for providing requested documents to my SMSF auditor?
You must provide requested relevant documents to your SMSF auditor within 14 days of the request being made.
If you fail to do so, you will be in breach of a statutory time period in section 35C (2) of the Superannuation Industry (Supervision) Act 1993.
Where a statutory time period is exceeded by more than 14 days, your SMSF auditor is required to report the contravention to the ATO via an Auditor Contravention Report.
What is my preservation age for accessing super benefits?
Your preservation age is the minimum age at which you can access your preserved super benefits without meeting another condition of release. It is based on your year of birth.
Your preservation age will be 55 if you were born before 1 July 1960.
If you were born after 30 June 1960, you will have a higher preservation age of:
<ul>
<li>56 – if you were born between 1 July 1960 and 30 June 1961</li>
<li>57 – if you were born between 1 July 1961 and 30 June 1962</li>
<li>58 – if you were born between 1 July 1962 and 30 June 1963</li>
<li>59 – if you were born between 1 July 1963 and 30 June 1964</li>
<li>60 – if you were born after 30 June 1964 
</li>
</ul>
To access your preserved super in the 2015-16 income year, you must have turned 55 before 1 July 2015.
Your preservation age is relevant to the following conditions of release:
<ul>
<li>reaching preservation age and retired with no intention to work again in the future</li>
<li>reaching preservation age and starting a transition-to-retirement income stream.</li>
</ul>
What happens if TRIS payments exceed the maximum annual payment limit?
A transition-to-retirement income stream (TRIS) can be paid to a member who has reached their preservation age even if they have not retired. However, strict annual payment conditions apply. The minimum annual payment amount depends on the member’s age and the maximum annual payment amount is 10 percent of the member’s account balance. 
If payments are outside the allowable limits, the TRIS is automatically taken to have ceased for income tax purposes from the start of the financial year in question. This means your fund cannot claim a tax exemption on the income from the account supporting all the payments. It also means all payments made during the financial year will be treated as a lump sum and taxed at the individual’s marginal tax rate, unless the payments are unrestricted non-preserved benefits.
Can an SMSF purchase shares in a private company?
An SMSF is prohibited from acquiring assets from a related party. There are limited exceptions, including market listed shares, business real property or in-house assets (where the value of all in-house assets does not exceed 5% of total fund assets).
In recent communications, we have described situations where an SMSF purchases the shares of a private company for the purpose of channelling franked dividends to the SMSF instead of the company’s original shareholders.
If the private company is a related party of the SMSF, the purchase would be a prohibited acquisition and a breach of section 66 of the Superannuation Industry (Supervision) Act 1993 (SISA) would occur.
How are unrestricted non-preserved benefits related to a condition of release?
The most common conditions of release for paying benefits to a member are when the member has:
<ul>
<li>reached their preservation age and retires</li>
<li>reached their preservation age and begins a transition-to-retirement income stream</li>
<li>turned 65 (even if they haven't retired)</li>
<li>died</li>
</ul>
When you meet a condition of release with no cashing restrictions, your preserved benefits become unrestricted non-preserved benefits (UNPB).
Under the rules for voluntarily cashing benefits, UNPBs may be cashed at any time. 
Can you set up an SMSF with a corporate trustee? 
Under paragraph 19(3)(a) of the SISA, the trustee of the fund must be a constitutional corporation pursuant to a requirement contained in the governing rules.
This means you need to set up a company incorporated under law and obtain a certificate of registration in order to have the company act as trustee of a fund. Registering a company incurs immediate costs and there is also an annual fee depending on the purpose of the fund.
The company must be registered before the SMSF is established.
How do I amend my SMSF annual return?
To amend your SMSF annual return you need to resubmit the whole return and answer ‘yes’ in Section A question 5.
You cannot request amendments by:
<ul>
<li>writing to us with the correct details</li>
<li>submitting a partially completed SMSF annual return</li>
<li>submitting a Request for an amendment of an income tax return form.</li>
</ul>
Can I make salary-sacrificed contributions to my SMSF and at the same time access retirement money to make mortgage payments?
There are very limited circumstances when you can access your retirement savings early. Strict criteria must be met to do so.
A release on compassionate grounds must be applied for through the Department of Human Services. In these circumstances, superannuation savings will only be released to make mortgage payments if you do not have the financial capacity to pay and your mortgagee is threatening to repossess or sell your home.
If you are voluntarily salary sacrificing into your super fund, instead of paying your mortgage, you will not qualify for compassionate grounds because you have the financial capacity to make your mortgage repayments by accessing your employment income.
You are only able to withdraw super under severe financial hardship if you have received Australian Government income support payments continuously for 26 weeks and are unable to meet reasonable and immediate living expenses. Payments from your super fund are limited to a maximum of $10,000 every 12 months.
Improper early access to your super is illegal – there are severe consequences for you and your fund if you access your super before you are legally entitled to do so. These include disqualification of trustees, the fund being made non-complying, imposition of administrative penalties, and prosecution.
Any money accessed illegally will also be assessed as income for the individual and taxed at the applicable marginal tax rate.
Can an SMSF take out insurance on a cross-insurance basis?
Regulations that came into operation on 1 July 2014 do not allow SMSFs to provide insurance for a member unless the insured event is consistent with one of the following conditions of release:
<ul>
<li>death</li>
<li>terminal medical condition</li>
<li>permanent incapacity</li>
<li>temporary incapacity.</li>
</ul>
<h2>The Explanatory Memorandum associated with the amended regulations makes it clear that the proceeds of an insurance policy must be released to the member who is the insured under the policy. This means that cross-insurance arrangements where the proceeds of an insurance policy are paid to someone other than the insured under the policy are not permitted.</h2>
Does the temporary budget repair levy apply to SMSFs?
The Temporary Budget Repair Levy started on 1 July 2014. It is a 2 percent levy that applies if your income is taxed at the highest marginal tax rate. Super fund tax rates that match the top marginal tax rate for individuals have been increased by 2 percent. These tax rates are:
<h2><a href="/images/2016/10/12/Screen%20Shot%202016-10-12%20at%209.25.33%20AM.png" target="_blank">Click to enlarge</a></h2>
<img src="/images/2016/10/12/Screen%20Shot%202016-10-12%20at%209.25.33%20AM.png" alt="">
For more information from the ATO, <a href="https://www.ato.gov.au" target="_blank">click here</a>.
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Property 101: Can equipment owned by the SMSF be leased to other members of the same SMSF?

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GUEST OBSERVER 
The Productivity Commission’s draft report on our super system may make self-managed super funds (SMSF) more popular.
The draft report, designed to stimulate discussion about competition in the superannuation sector, examines whether the system is working in favour of fund members.
It questions whether larger institutional funds and service provider groups are passing on benefits to fund members in the form of lower fees, better services or improved investment returns.
The report refers to SMSFs as a core segment of the superannuation industry, and a benchmark to which APRA-regulated funds can be compared.
The Productivity Commission’s findings so far will come as no surprise to many Australians, especially those who already have their retirement savings in a self-managed fund.
Granted, technology is improving and fees are coming down, but the Productivity Commission believes there is still a long way to go. Ultimately criticism of the way APRA-regulated funds operate could motivate many more Australians to take control of their retirement future and set up their own self-managed fund.
The SMSF sector is competition operating in its purist form - its members are individuals who have exercised their choice as free consumers to establish their own funds but they are not without vulnerabilities.
The government’s view that SMSFs swim ‘outside the flags’ means they are on their own when victim to financial misconduct. The Trio Capital fraud saw 400 SMSFs, who lost a total of $60 million, refused any form of government compensation or support. It’s vital trustees have access to the independent advice and guidance they need to avoid the traps.
The Productivity Commission is not just reviewing competition and efficiency in the superannuation sector, but whether trustees of APRA-regulated funds are acting in the best interests of members. 
Any doubts about trustees acting in members’ best interests will ring alarm bells. People all over the world are already becoming more cynical of institutions, from the ‘Brexit Effect’ to the ‘Trump Effect’, but here we might just see the ‘Super Effect’
Christopher Page is managing director of market intelligence company Rainmaker and can be contacted <a href="https://www.rainmaker.com.au" target="_blank">here.</a>
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Review of super system will push more Australians into SMSF

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<img src="https://counter.theconversation.edu.au/content/63395/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The Productivity Commission has released its draft report setting out criteria for assessing the competitiveness and efficiency of the superannuation system. The final report will be delivered in November this year.
The study, the first stage of a three-stage exercise, is part of the Government’s response to the 2014 Murray Financial System Inquiry. Murray recommended that the Government “introduce a formal competitive process to allocate new default fund members to MySuper products, unless a review by 2020 concludes that the Stronger Super reforms have been effective in significantly improving competition and efficiency in the superannuation system.”
This first stage does not assess the superannuation system; it merely sets out criteria for evaluating it. The second stage, to be delivered by mid-2017, will develop alternative models for the competitive process. The third and final stage will review the system. Only then, and only if the government finds there is still significant inefficiency, will it consider introducing one or more of the “models” developed in the second stage.
<h2>What’s at stake?</h2>
The efficiency of the superannuation system makes a big difference to incomes in retirement. Today, the system charges fees totalling about $16 billion, or 1% of GDP. There are too many unwanted accounts, too many funds, and many funds charge fees that are too high. Costs that are too high by even half a percent a year can reduce balances at retirement by over 10%, and many Australians are paying more than that in excess fees. The recent Stronger Super reforms and the Future of Financial Advice reforms have reduced fees somewhat, but billions of dollars in excess cost remain.
<h2>What the Commission proposes</h2>
The challenge in evaluating superannuation is to make sense of the system’s jargon and its maze of products, sales channels, governance structures, and performance metrics. Even people with real financial expertise struggle to assess funds' performance, and many members are inexpert and disengaged. What’s more, some providers and advisers have interests that are not aligned to those of members.
The Commission proposes a rich set of performance measures for this complex system. It begins from the Government’s announced objective for superannuation: “to provide income in retirement to substitute or supplement the Age Pension”, and proposes five supporting goals, including maximising net returns, meeting member needs, providing appropriate insurance at least cost, complementing a stable financial system, and competition that drives efficient outcomes.
It then sets out separate criteria for the competitiveness and efficiency of the superannuation system. Sensibly, it notes that “competition in the superannuation system is not an end in itself, but provides benefits to the community as a whole and members in particular when it promotes efficient outcomes.”
It proposes that the system’s competitiveness be assessed by reviewing such measures as whether members are engaged and informed, whether advisers and sellers are acting in members' interests, whether funds compete on costs and pass on cost savings to members, and whether member outcomes are affected by vertical or horizontal integration.
The criteria it proposes for the system’s efficiency include net returns after fees and tax, the costs of the system, the extent to which the system’s services align to members' needs and preferences (such as risk management), and the extent of unpaid contributions and lost accounts.
These criteria are all sensible, though many will prove much easier to specify than to measure against an ideal or acceptable outcome. As the draft notes, work must begin now to ensure the data is in place when it is needed.
<h2>Three critical additions to ensure the process works</h2>
The Commission needs to build on its draft report in three directions.
First, it should be more explicit about the weighting given to different performance measures. Not all measures are equally important.
Second, it should be clear about what matters to different fund members. The draft notes that default and choice superannuation members have different needs; those needs should be clearly set out in the final report. Many of the 9.5 million Australians with default products are disengaged. Few will engage much until they near retirement, if they ever do. Many do not have financial expertise. That means that risk-adjusted net returns should be given strong weight in evaluating default products.
Lost accounts and unpaid contributions will also be particularly important for this part of the market. For the choice part of the market – currently about 5 million people – returns should remain paramount, but member engagement and advice quality may play a larger role.
Third and most critically, the Commission must strengthen the links between the three stages of its work. The government’s response to the Murray Inquiry and the Commission’s Terms of Reference for the first two stages make it obvious that the three are intended to work closely together. Stage 1 must define criteria that inform the development of competition models in Stage 2, as well as the assessment of those models against today’s model in light of the findings of Stage 3.
But the draft hardly discusses these links. For example, there is no discussion of how the proposed measures will inform Stage 2. And there is no discussion of which measures will help government decide whether to deploy the models designed in Stage 2. Without much tighter links between stages, the whole purpose of the process will be defeated.
At a minimum, the set of measures in Stage 1 must include the performance of funds by governance type (industry, public sector, and for-profit) in different competitive contexts (tender, awards, direct, and advised) and across product types (default and choice, accumulation and post-retirement).
It must also include the performance of tenders for investment management and administration separately. And it must include the implications of those segment outcomes for the whole system. That type of detailed assessment will be vital if the Commission is to assess competitiveness and efficiency and so inform the government’s decision about whether and how to change the competition model for default super.
<h2>Broader lessons?</h2>
The Commission’s process might seem cumbersome, but it could prove a model for a better way of developing policy. Superannuation is not the only sector in which competition seems to be leaving many consumers little better off.
There are at least two opportunities to roll out the multi-stage market assessment model. First, in its response to the Murray Inquiry, the Government has already committed to implement periodic reviews of competition in the broader financial sector.
More generally, last year’s Harper Review recommended that government set up a new body that would have the power to initiate what it called “market studies”. That was one of the few Harper recommendations the Government left hanging, perhaps because it wasn’t convinced a new body was needed.
But if the Commission’s three-stage process can credibly assess both superannuation system outcomes and the policy options to improve them, it could prove a model for further market studies, whether undertaken by the Commission, the ACCC, or some new body.
Jim Minifie is productivity Growth Program Director, Grattan Institute and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/jim-minifie-10230" target="_blank">here</a>.
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PC sets groundwork for long-awaited look at super competition and efficiency

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<img src="https://counter.theconversation.edu.au/content/63393/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Will competition in the superannuation system improve efficiency, or is this an ideological argument extended beyond its usefulness?
If more competition would promote efficiency, what design and policy issues need to be addressed to accommodate the changes?
The Productivity Commission’s draft report on superannuation’s efficiency and competitiveness seeks to address whether increased competition will, in fact, drive efficiency, or whether this proposal is ideologically driven by either a belief in the free market or a desire to weaken the role of the unions in industry superannuation funds.
The Commission confronts this, saying that the role of competition is to drive efficiency, and is not an end in itself. Competition is justified only if it drives funds to become more innovative and efficient. An increase in the number of funds could lead to inefficiencies as smaller, potentially more innovative, funds would not have the economies of scale of bigger funds.
A number of participants in the consultation process made the case that competition may not lead to greater efficiency: the ACTU raised the concern that competition could weaken the superannuation system, noting failures when other services, specifically technical education, were opened to the market.
Other submissions discussed whether consolidation of the existing range of providers would improve efficiency; Fiduciary’s Friend thought this would detract from innovation, while the Financial Planning Associationand Financial Services Council thought that competition could incentivise underperforming funds to consolidate with more efficient funds.
Another perverse effect of competition could be to change the investment policies of superannuation trustees. If members were encouraged to switch funds, this could place stress on the liquidity of the fund. If funds retained more investment in liquid assets this would not only flow through to capital markets but would affect the returns of the fund.
The draft report does make the point that superannuation is a unique environment, so the usual frameworks for assessing efficiency need to take that into account. Specifically, superannuation is an instrument for government policy, and is compulsory. Member disengagement continues to be relatively high, as shown by the number of members who accept the default options both of their fund and of investments within their fund.
Although the introduction of MySuper with the Stronger Super Reformswas intended to increase efficiency and reduce costs, the behavioural effect could well be to further reduce member engagement with the superannuation system.
Since 2005 most employees have been able to choose their fund, but according to the PC report, about two thirds of employees remain in their default fund and less than one third switch their investment options within their fund. There are also about 20% of employees who are not able to choose a fund other than the default fund nominated in their award or enterprise bargaining agreement (EBA).
This contributes to a large number of agency relationships in the system: the employer acts as an agent for the members when nominating a default fund; there is a fiduciary relationship between the trustees of the fund and the members in respect of managing the fund; and many trustees outsource functions to external service providers.
Given the combination of member disengagement and the agency relationships, competition needs to be considered more broadly than facilitating member choice.
The report also discusses the relationships that arise at the wholesale level, including a range of services provided to the superannuation sector. Insurance is particularly in the spotlight here as many members are entitled to insurance benefits through their superannuation fund.
Superannuation trustees are able to obtain policies at far better rates than most individuals – although this has been under the spotlight recently as members find exclusions in their policies. The effect of competition in this area could be less efficient than the current system.
The Productivity Commission sets out a series of objectives for the superannuation system, that sit below the policy objective that the superannuation system is “to provide income in retirement to substitute or supplement the Age Pension”. These objectives include:
<ul>
<li>Competition that drives efficient outcomes through facilitating rivalry and contestability in supply and demand conditions and allowing suppliers to compete on adding value to members</li>
<li>Maximising net returns over the long term</li>
<li>Meeting member preferences and needs over the member’s lifetime</li>
<li>Providing insurance that meets members needs at the lowest cost</li>
<li>The Superannuation system complements a stable financial system</li>
</ul>
The development of these objectives is the first stage: the report goes on to refine the objectives into assessment criteria and indicators.
It is important that the superannuation sector operates efficiently as it is becoming an increasingly important retirement policy instrument and a major component of household wealth. This report has articulated a set of objectives that would strengthen the superannuation system and the faith that members have in their superannuation fund.
Helen Hodgson is associate professor, Curtin Law School and Curtin Business School, Curtin University and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/helen-hodgson-94553" target="_blank">here</a>.
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A competitive superannuation system: will efficiency gains follow?

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According to SMSF Association CEO and managing director Andrea Slattery, the cut in the official interest rate to a new low of 1.5 percent will hurt SMSF trustees who have large cash balances in retirement phase.
“Although this low interest rate environment is cause for concern for some trustees, the Association is, however, greatly heartened by the fact that a current research report shows that those SMSFs in the transition to retirement or pension phases are typically coping “very well”, she said.
“Research by the SMSF Association and the retirement experts Accurium shows that the medium average return of funds in these two phases of transition to retirement and full retirement is 4.2% – a real return of more than 3% after inflation, an excellent result in this volatile investment environment. 
“Quite clearly such a real return shows SMSF trustees are getting good advice and are making informed decisions to ensure they are both safeguarding their capital and generating an income.” 
Slattery says the research should help dispel the myth that trustees – especially in the retirement phase – are a one-trick pony with their money only in cash or fixed deposits and blue-chip Australian equities.
“The reality is trustees have been able to find ways of diversifying their investment portfolios to generate healthy returns after inflation, especially considering low interest rates and difficult investment markets, highlighting, yet again, the value of sound strategic advice," she said.
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j.ballantyne1990-6AQqhLzZaK

SMSF trustees in retirement phase set to be hurt after official RBA rate cut

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The government is still consulting on superannuation after concerns raised by backbenchers over changes made in the budget. However these changes are more important than ever, as evidenced by the 2016 HILDA statistics on wealth and superannuation.
The statistics highlighted changes in the distribution of wealth of Australians since the survey commenced in 2001. The most significant assets held by most Australians continue to be their family residence and superannuation, but policy changes over the time of decade the survey have changed the balance of those investments.
More concerning is the finding that wealth inequality has increased. The data adds strength to the argument that superannuation reforms are overdue, with a small number of wealthy people able to accumulate wealth in superannuation and investment property.
In Chapter 5 of the report, which discusses household wealth, the authors note that superannuation will soon overtake the family home as the major asset owned by Australians. This is the result of two separate trends: increases in superannuation balances and lower net wealth in housing.
Looking at the HILDA data, it’s not unexpected to see that younger age cohorts have experienced the strongest growth in superannuation assets.
Prior to 1993 superannuation was very different to the current system. According to Treasury data in 1986 53.5 percent of Australian full time employees did not have superannuation coverage, and over 80% of those who did, were members of a defined benefit scheme, which would not generally be reported as an asset. By 2000, 96.9% of full time employees had superannuation coverage, with 86% of those employees in accumulation type funds.
The superannuation guarantee has been a significant contributing factor in the importance of superannuation as a household asset. Notably, the phasing in of the rate of the superannuation guarantee shows in account balances. As can be seen from the HILDA report the increased rate of superannuation guarantee after 2002 has resulted in higher superannuation balances for people at the same age in successive surveys.
The increase in housing values is the second trend which has altered the mix of assets. Over this time residential house prices rose significantly, with ABS data showing an increase in the Residential Property Price Index across eight capital cities from 69.0 in September 2003 to 120.2 in Dec 2014.
Given that in the 2002 data the major asset of Australians was the family home, homeowners benefited disproportionately from the increased value of housing. Even with the significant increases in superannuation, for older Australians the proportion of wealth held in housing has been maintained as their total wealth has increased.
However for younger age groups the story is not as positive. The rate of home ownership is declining as it is becoming more difficult to enter the housing market and home equity is declining among younger age groups as the value of loans has increased.
The HILDA data shows that most age cohorts, including all except the oldest retirees, have seen increases in their superannuation accounts over time. Policy changes effective from 2007 have supported superannuants through tax exemptions and high contribution levels.
Another trend contibuting to this is that people are retiring later. The change in the pension age to 67 has been accompanied by a trend for people to work longer. Not only are they deferring withdrawals from their superannuation fund, but they are also continuing to contribute during this time.
As noted in the Productivity Commission report last year there is some evidence of withdrawals at the time of retirement, but these are generally used to pay outstanding debts, including mortgages against the family home.
Others convert their superannuation at retirement into other financial investments. This cements the family home as the most significant asset held by retirees.
The more concerning finding for policy makers is that wealth inequality has increased, and that superannuation holdings and investment properties are factors in this inequality. HILDA data shows that in 2014 the mean superannuation balance of the top 10% of people aged 50 to 69 was $991,268, up from $650,619 in 2002, compared to $210,798 in 2014 for the sixth to ninth decile and $13,719 for the bottom 50% (although a significant number of retirees in this age group do not have any superannuation balance).
There is a strong correlation between high superannuation balances, income and non-superannuation wealth. People in the top decile have access to higher levels of income to make higher levels of concessional contributions, and the ability to find the funds to make non-concessional contributions into a tax preferred investment environment.
As has been noted previously, the current superannuation system allows high income and high wealth individuals to over-accumulate in tax preferred superannuation, which increases wealth inequality as well as intergenerational inequality.
The Government proposals to restrict the level of contributions and to reduce the amount that can be retained in a tax free environment are important tools to address increasing levels of wealth inequality in our community.
Helen Hodgson is associate professor, Curtin Law School and Curtin Business School, Curtin University and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/helen-hodgson-94553" target="_blank">here</a>.
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Wealth inequality shows superannuation changes are overdue

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GUEST OBSERVER
It is imperative that the new government moves quickly to set the long-term goals for superannuation.
It has been the Association’s long-term policy that the objective and underlying principles of superannuation should be enshrined in legislation, and what has happened over the course of this election campaign has simply reinforced our position. 
It is quite clear that the election highlighted the fact that many in the electorate were unnerved by the changes to superannuation proposed by both major parties and are seeking certainty for their retirement planning.
Both major political parties were seen as moving the goal posts for ordinary Australians to build their savings to ensure a dignified retirement. This is despite the repeated calls from the public and superannuation industry for the ongoing tinkering with superannuation to stop. This is why it is critical to have a politically bipartisan framework for superannuation that is removed from both the budgetary and political cycles for the long term.
We need to have a sustainable and measured policy approach to people’s second largest asset, superannuation. which assists Australians to accumulate adequate retirement income savings for a secure retirement.
It is especially important at times of political uncertainty, such as what has happened with the federal election and Brexit, that people know that their retirement savings are secure.
The Association is ready to work “constructively” with the new Government, Opposition, and cross-benchers in the House of Representatives and the Senate to address the various superannuation policy issues that arose out of the last federal Budget.
It is also important to remember that our superannuation system is one of the world’s best retirement income systems and we need to understand the benefit it provides to our economy and national prosperity.
We are on the record in saying we believed the reduction in the concessional contribution caps were detrimental to the goal of encouraging people to be self-sufficient in retirement and that other budget changes were complex and disrupted many people’s long-term plans. We look forward to working with all parliamentarians to either change or ameliorate the impact of these changes.
It’s also important to note that there were some positive measures in the Budget that were overlooked to some degree, and we will be urging that they get enacted by the new Parliament as quickly as possible.
Among the positives, which the Association has long advocated, were the carry forward of unused concessional contribution caps, allowing people aged between 65 and 74 to contribute to their super without meeting the ‘work test’, and removing the ‘10 percent’ rule that allows all fund members to make deductible contributions to their super.
 
Andrea Slattery is chief executive officer, SMSF Association and can be <a href="https://www.smsfassociation.com" target="_blank">contacted here</a>.
 
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Election highlights need to set long-term super goals: Andrea Slattery 

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GUEST OBSERVER
We are about to enter a period of substantial reform.
We have therefore prepared a brief ‘stock take’ of what the reform proposals look like as at the start of July 2016. In particular, we consider the proposals announced in the 3 May 2016 Federal Budget by the Liberal Government.
We also briefly compare these with the Labor Government’s proposals. Remember that these proposals are not yet law and the final form they take if they are introduced as law depends on a number of variables.
<h2>
LIBERAL PARTY PROPOSALS - CHANGES THAT APPLY FROM 3 MAY 2016
</h2>
The following change, if enacted, will apply from the date of the Budget announcement, being 7.30pm on 3 May 2016:
<h2>Lifetime non-concessional contributions cap</h2>
A lifetime non-concessional contributions (‘NCC’) cap of $500,000 will apply. This lifetime cap will take into account all NCCs made on or after 1 July 2007. Contributions made before the Budget announcement, however, will not result in excess NCCs.
The most difficult aspect of the Liberal Party’s superannuation reform proposals is the practical retroactive application the lifetime cap by including almost 9 years (ie, 1 July 2007 to 3 May 2016 is around 3,230 days or just over 8.8 years).
Thus, people who have previously relied on the law during this 9 year period in making contributions to their superannuation funds may now have no or little lifetime NCC cap remaining. Despite this practical impact, the Liberal Party is firm (and correct) in its view that this proposal is not retrospective (from a strict legal perspective).
The Liberal Party takes the view that the lifetime cap is prospective as it only affects excess NCCs made after the Budget announcement. That is, if more than $500,000 was contributed prior to 3 May 2016, that amount is not required to be withdrawn from superannuation.
However, if someone who has contributed more than $500,000 after 3 May 2016 (including contributions made prior to that date), the excess must be removed from superannuation or will be subject to penalty tax. A special ATO release authority will issue allowing the removal of the excess.
The Liberal Party has stated that there may be transitional provisions implemented for superannuation trustees who entered into contractual arrangements prior to the Budget announcement and who intended to make additional NCCs to settle the contract.
The proposed lifetime NCC cap will replace the existing NCC caps of $180,000 each financial year (or $540,000 averaged over three years under the bring-forward provisions). The $500,000 NCC cap will be indexed to average weekly ordinary time earnings (‘AWOTE’). Further, this proposal does not alter contributions made to superannuation under the CGT cap.
For more information on the $500,000 lifetime NCC cap, <a href="https://www.dbalawyers.com.au/announcements/new-500000-lifetime-contribution-cap-retrospective-bad-law/" target="_blank">click here</a>.
<h2>CHANGES THAT APPLY FROM 1 JULY 2017</h2>
<h2>Retirement transfer balance cap </h2>
A balance cap of $1.6 million on the total amount of accumulated superannuation a member can transfer into the tax-free retirement phase will be introduced. 
Currently, the earnings on assets supporting the trustee’s liability to pay a pension to a member are tax free without any maximum limit; this is known as the exempt current pension income (‘ECPI’) exemption. This proposed measure caps the ECPI of each member at $1.6 million of capital that can be used to commence a pension.
There will, however, be no restrictions placed on the subsequent earnings on the balance cap of $1.6 million. Therefore, the tax free status of the earnings derived from assets supporting a pension will not be limited.
Amounts in excess of the balance cap can be maintained in accumulation phase. Generally, earnings during the accumulation phase are taxed at 15%, with a 10% applying to net capital gains on assets held for more than 12 months after allowing for the 1/3rd CGT discount. 
Members already in the retirement phase with balances above $1.6 million will be required to reduce their pension account balance to $1.6 million by 1 July 2017.
A tax on amounts that are transferred in excess of the $1.6 million cap (including earnings on these excess transferred amounts) will be applied, similar to the tax treatment that applies to excess NCCs. 
Excess amounts will need to be transferred to accumulation phase or withdrawn, and tax paid on the associated earnings after allowing a 15 percent tax offset. 
The balance cap remaining for a member seeking to commence more than one pension will be determined by apportionment. Broadly, this means that if a member only uses part of their balance cap, they can utilise the remaining balance cap and if the cap has been indexed, they obtain a proportionate increase to their remaining cap.
The $1.6 million balance cap will be indexed in $100,000 increments in line with CPI.
For more information on the $1.6 million balance cap, <a href="https://www.dbalawyers.com.au/announcements/1-6m-balance-cap-examined-tax-death-benefits/" target="_blank">click here</a>.
<h2>Division 293 threshold</h2>
The threshold at which high income earners pay additional contributions tax will be lowered from $300,000 to $250,000 from 1 July 2017.
Annual concessional contributions cap will be reduced to $25,000
The annual concessional contributions (‘CC’) cap will be reduced to $25,000 each financial year (indexed in line with AWOTE).
<h2>Rolling 5 year concessional contribution cap</h2>
Members with a superannuation balance of less than $500,000 will be permitted to make additional CCs where they have not reached their CCs cap in the prior five FYs. This will effectively equate to a rolling five year average CC cap of up to $125,000. 
For example, if a member contributes $10,000 in FY2018, the member will effectively have a CC cap of $40,000 in FY 2019 (ie, $25,000 plus $15,000). 
<h2>Tax deduction for personal superannuation contributions</h2>
All members up to age 75 will be allowed to claim an income tax deduction for personal superannuation contributions up to their CC cap. This effectively allows all individuals, regardless of their employment circumstances, to make CCs up to the CC cap.
For example, if an employer makes superannuation contributions of $10,000 on behalf of an employee, the employee may make an additional $15,000 of personal CCs to superannuation, and claim a deduction for this amount (subject to having sufficient taxable income to offset the deduction).
For more information on personal deductions, <a href="https://www.dbalawyers.com.au/ato/budget-means-right-now-personal-deductible-contributions/" target="_blank">click here</a> 
<h2>Abolishing the work test for members under age 75</h2>
The current restrictions on people aged 65 to 74 from making superannuation contributions will be removed. In essence, this means that the work test requirements (ie, gainful employment for 40 hours in 30 consecutive days before a contribution can be made) will cease to apply for members under age 75.
For more information on the CC proposals, <a href="https://www.dbalawyers.com.au/announcements/spotlight-concessional-contributions/" target="_blank">click here</a>.
<h2>Low income superannuation tax offset</h2>
A low income superannuation tax offset (LISTO) will be introduced to reduce tax on superannuation contributions for low income earners. Note that this announcement ensures that the Low Income Superannuation Contribution, which has been legislated to cease on 30 June 2017, will effectively continue to operate.
<h2>Spouse tax offset</h2>
The income threshold for the recipient spouse (whether married or de facto) of the low income spouse tax offset will be increased from $10,800 to $37,000. The contributing spouse may be entitled to a maximum tax offset up to $540 for contributions each financial year made on behalf of the recipient spouse.
<h2>Transition to retirement income streams</h2>
The tax exemption on earnings derived from assets supporting transition to retirement income streams (‘TRIS’) will be removed from 1 July 2017. Therefore, members who have reached preservation age, but not yet retired will be able to commence a TRIS (or continue to receive a TRIS), but the earnings will be taxed at the concessional rates that apply to amounts in the accumulation phase.  
<h2>Lump sum election</h2>
It is proposed to remove the provision that allows individuals to treat certain superannuation income stream payments as lump sums for tax purposes under regulation 995-1.03 of the Income Tax Assessment Regulations 1997 (Cth). This measure will primarily affect members under age 60 in receipt of a TRIS. 
<h2>Anti-detriment provisions</h2>
The anti-detriment provision in respect of death benefits from superannuation will be removed from 1 July 2017.
<h2>LABOR PARTY PROPOSED SUPERANNUATION CHANGES</h2>
At this stage, the Labor Party has proposed the following two changes to superannuation if it wins the July 2016 election:
<h2>Pension exemption limit of $75,000 p.a.</h2>
If elected, the Labor Party intends to reform the tax exemption for earnings on superannuation balances in pension phase that exceed $1.5 million. From 1 July 2017, future earnings on assets supporting income streams will be tax‑free up to $75,000 a year for each member, while earnings above the $75,000 threshold will be taxed at 15% that applies to earnings in the accumulation phase.
It is proposed, however, that assets acquired prior to 1 July 2017 will be grandfathered for capital gains tax purposes. In respect of future discounted gains (ie, capital gains entitled to the 1/3rd discount), the gain will be added to income earnt in any year and included in the $75,000. 
<h2>Division 293 threshold</h2>
The Labor Party also proposes to reduce the Division 293 threshold from $300,000 to $250,000.
<h2>Labor Party’s position</h2>
While the Labor Party has stated that it opposes the retrospective effect of certain Liberal Party proposals, Labor has not as yet formally adopted a position with regard to the Liberal Party proposals. 
For more information on the Liberal Party v Labor Party pension proposals, <a href="https://www.dbalawyers.com.au/announcements/liberals-v-labor-different-election-outcomes-mean-smsf-pensions/" target="_blank">click here</a>. 
<h2>CONCLUSIONS</h2>
The superannuation reforms will have wide ranging impact and are likely to take several years to finalise. Most people will have to adjust their superannuation planning, especially their SMSF succession planning, and are best positioned to do so if they monitor and keep on top of the changes. There are strategies that can be implemented ahead of these proposals becoming law and expert advice should be obtained as needed.
DBA Lawyers will be continually refining its SMSF and related documents to keep at the forefront of this change. We also offer an extensive range of education options to keep you updated on an ongoing basis.
Daniel Butler is director, DBA Lawyers and Rebecca James is special counsel. They can be contacted <a href="https://www.dbalawyers.com.au" target="_blank">here</a>. 
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Property 101: Proposed super reform

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Commercial properties in NSW’s Port Macquarie are attracting self-managed super funds (SMSF) because of the Mid North Coast’s affordability and healthy yields.
“It’s a bit like Sydney in towns such as Port Macquarie, with SMSFs driving the sales of quality investment assets,” said Graeme Garrett, co-principal of Raine &amp; Horne Commercial Port Macquarie. 
SMSFs leasing a commercial property back to a related business is becoming a common trend in the sub-$500,000 market in Port Macquarie, added Garrett.
Several small business owners too are buying properties through SMSFs and then leasing them back to the business, which the current superannuation laws allow, he said.
In many cases, professionals such as accountants, lawyers, engineers, architects and real estate agents are buying commercial properties through a related DIY fund. Properties around the range $400,000-$500,000 are in particularly in demand.
“The trouble is that there’s a shortage of industrial stock in this price range to meet demand,” said Garrett.
Investors operating outside a super fund are also active in the Port Macquarie market because of the low interest rates and the fact that commercial properties are viewed as an investment safe haven, he added.
“Sydney investors seeking solid yields are also starting to make their presence felt in Port Macquarie.”
Yields for industrial stock priced below $500,000 range from 8%, while it’s 6.75-7% for retail and 8% for office space, according to Raine &amp; Horne Commercial Port Macquarie. 
“We auctioned a retail property to a Sydney investor, who purchased it through a self-managed super fund, and who intends on retiring to Port Macquarie down the track,” said Garrett. The property located at 5/56 Clarence Street, Port Macquarie sold under the hammer for $622,500.
Garrett said members of SMSFs would be best served considering a commercial asset that will appeal to future tenants.
“If you occupy it yourself now and then retire, you need to consider what appeal that property will have to future tenants and whether it will be easily let out if it’s part of your future retirement plans.
“Our proximity to Sydney and Newcastle is attracting investors from those cities through a combination of our healthy yields and commercial real estate affordability. 
“When you can buy two or three assets in Port Macquarie for the equivalent of a single-tenant property in Sydney, investors see this as value.”
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