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

Superannuation

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Where problems are perceived to exist with the SMSF sector, its important policy decisions are based on reality and hard facts, not ideology and hearsay.
The seemingly inexorable rise of self-managed funds is the most striking dynamic of Australia's superannuation system. More so because the rise of self-managed superannuation has been driven by the choice and determination of individuals rather than by government policy direction.
Self-managed funds are the only funds realising the vision set for Australia's superannuation system – to enable people to make themselves financially independent in retirement and avoid reliance on the age pension.
Generally SMSF members are achieving this goal while the members of the large industry and retail funds are not. The average balance in a self-managed fund account is over $500,000 compared with average account balances in industry and retail funds of less than $30,000.
The higher balances in SMSFs result from people maximising their concessional and non-concessional contributions and from the returns generated by their assets. Yet self-managed superannuation is not just for those paid higher. ATO statistics show that 66 per cent of SMSF members are on incomes of less than $80,000.
One important outcome of self-managed superannuation is enabling a generation of Australians to fund their retirement and old age within their own lifetime, instead of leaving a pension tab on the table for the next generation to pick up.
The fact that a million Australians, with more joining every day, are willing and capable of taking charge of their retirement savings, and doing a good job of it, is to be applauded.
However, it seems success breeds envy and draws criticism.
You'll hear it said that self-managed funds are driving up property values, distorting capital allocation, investing too conservatively, investing recklessly, straining the Budget, getting an unfair tax advantage and are costly to run.
We challenge each of these claims as they are often driven by ideology, or self-interest or are just plain wrong.
Take the claim that SMSFs are used to gain an unfair tax advantage.
Members of self-managed funds are subject to exactly the same tax rules as members of pooled super funds.
Critics are quick to point out the top 20% of income earners get the lion's share of super tax concessions but they don't always acknowledge that the top 20% also pay the lion's share of income tax. They get 57% of the tax concession but pay 64% of income tax. So, as you would expect, the value of their super tax break is proportionate to the amount of tax they pay, and actually a bit lower.
Or take the claim that super tax concessions are an unsustainable drain on the Budget.
Tax incentives to save for retirement are sensible policy because in the long run it's cheaper than paying out the age pension. If super tax incentives are reduced, less will be saved, fewer people will be financially independent and more will have to rely on a full or part taxpayer-funded pension.
Are SMSFs too costly to run? It's true that a relatively low account balance in a self-managed fund will cost more to administer than one held in a pooled super fund. But above around $100,000, costs are comparable or much lower. Two-thirds of self-managed funds have an operating expense ratio to assets of less than 1% and 40% have an expense ratio of less than 0.25%.
It’s not just about cost. The main reason people set up self-managed funds is to take control of their savings and more are doing so relatively early in their working lives. They make a commitment to save and as they build their assets, the relative cost of running their fund comes down. They are being helped by the emergence of a range of low-cost, online fund management service providers.
The real cost issue in superannuation is the fees charged by the large industry and retail pooled super funds, which are estimated to have consumed a quarter of these funds' returns in the past decade, a cost borne by their members.
Another common criticism of SMSFs is that they drive up property prices through highly leveraged investment. But no hard evidence is presented to back up this claim. Very low interest rates and an inadequate supply of new housing is likely fuelling property prices more. SMSFs actually put quite a small proportion of their assets into residential property – around 3.5% and this has been steady for five years. They put three times as much into commercial property, often linked to the owners' business.
Some people, on dubious advice, may be starting an SMSF to borrow to buy a residential property. Having one highly leveraged asset is clearly not a sensible strategy. To the extent that it is occurring it should be managed through better advice, credit restraint by lenders and regulation of property promoters.
In pondering the report of <a href="/guides/smsfs-to-rush-further-into-property-after-borrowing-ban-looms-following-murray-financial-system-inquiry">David Murray's Financial System Inquiry</a> and, in due course, the forthcoming tax white paper, the government should reflect on the singular success of self-managed funds in achieving the objectives of the superannuation system, appreciate the motivation of people who set them up and recognise the social and economic benefits they deliver.
Duncan Fairweather is executive director of the SMSF Owners' Alliance. Contact him <a href="https://www.smsfoa.org.au/contact" target="_blank">here</a>.
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Are SMSF’s causing property values to increase and receiving an unfair tax advantage? Duncan Fairweather

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Guest Observer
 
One of the most disturbing aspects of the $500,000 lifetime non-concessional contribution (NCC) cap announcement in the 3 May 2016 Federal Budget is that the new lifetime NCC cap catches prior NCC’s made since 1 July 2007.
We consider the implementation of this announcement would effectively give rise to retrospective legislation for almost 9 years (ie, 1 July 2007 to 7.30pm (AEST) on 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 super funds may now have no or little lifetime NCC cap left remaining.
We acknowledge that if your NCCs made during the prior 9 year period did not exceed $500,000, then there may be some remaining cap. For example, if someone had only made $10,000 of NCCs, they will have a $490,000 remaining cap.
However, if someone makes an NCC after the Budget announcement at 7.30pm on 3 May 2016, including any NCCs made in the prior 9 year period that exceeds $500,000, then their super fund must either reject any excess amount or the excess will be taxed at 49% if the member leaves the excess in their super account if possible. (There is doubt as to whether the announcement will allow the excess to remain in the superannuation fund given the little detail on this announced change).
If we trace back recent history, recent limits on making NCCs can be summarised as follows:
•        NCCs prior to 7.30 pm 9 May 2006 — unlimited;
•        NCCs from 9 May 2006 to 30 June 2007 — $1 million;
•        NCC from 1 July 2007 to 7.30 pm 3 May 2016 — $180,000 (indexed figure) per financial year or $540,000 averaged over three consecutive financial years where the member was under age 65 and was eligible to apply the bring forward rule in s 295-85(3) of the Income Tax Assessment Act 1997 (Cth) (‘ITAA 1997’); and
·                NCCs from 1 July 2007 to 7.30pm 3 May 2016 — $500,000 as reduced by any NCCs made from 1 July 2007.
As you can see, given the far more generous contribution caps applying before 4 May 2016, the $500,000 lifetime cap is a retrospective and an unfair change of law made by way of Budget announcement especially as it may not survive the political and legal process that lies ahead.
Before anyone who has made NCCs in the past 9 years makes any further contributions to superannuation, they would be well advised to request ATO confirmation of their NCCs to check whether they will exceed the new cap. The Budget Paper confirms that:
To ensure maximum effectiveness the lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007, from which time the Australian Taxation Office has reliable contributions records …
<h2>Other points on retrospective law</h2>
The Treasurer, Mr Scott Morrison, may argue that the new cap is not retrospective as it does not require NCCs that already exceed $500,000 on 3 May 2016 to be rejected and therefore prior contributions are not adversely impacted.
However, this is an argument equivalent to an argument about ‘splitting hairs’. The prior law permitted NCCs of $180,000 per financial year or $540,000 over three consecutive financial years (if the bring forward rule applied). Moreover, let’s assume that someone had contributed $540,000 of NCCs during the prior 9 years and now wishes to contribute more, they now have a nil lifetime cap. When did the current Government warn the public that the ‘rug may be pulled from underneath them?’
Indeed, the Government has repeatedly promised (particularly leading up to the 2013 election) that there would be no adverse changes in its next term of office without appropriate consultation. In particular, in January 2013, the Coalition released its pre-election policy document Real Solutions, which pledged to "deliver greater stability and certainty" around superannuation laws. "We won't move the goalposts... We will ensure that no more negative unexpected changes occur to the superannuation system," the document said.
However, following Mr Malcolm Turnbull’s appointment as Prime Minister in September 2015, he confirmed that under a Turnbull Government prior policies could be changed. “We've got to be agile all the time" Mr Turnbull told AM's Michael Brissenden on 21 September 2015.
This is despite the repeated requests for stability in respect of our superannuation law due to the ‘long-term’ nature of being locked into a regulatory environment where someone cannot withdraw their money if there is an adverse change in law.
The usual process of retrospective legislation
The Australian Law Reform Commission (‘ALRC’) report on retrospective law recognises that retrospective tax laws may be introduced, typically for tax avoidance or integrity type measures. Moreover, when retrospective tax laws are introduced, they usually only apply for a relatively short-time frame.
Also, these type of retroactive tax changes to address tax avoidance and integrity announcements should be contrasted with superannuation measures where people are ‘locked into’ a regulatory system without being able to easily withdraw their savings. Indeed, most people cannot access their superannuation until they attain age 65 (subject to strict exceptions under strict preservation rules).
The Senate has processes intended to minimise periods of retrospectivity. Standing Order 44 provides that where tax legislation has been announced by press release more than six months before the introduction of the relevant legislation into Parliament (or publication of a draft bill), that legislation will be amended to provide for a commencement date after the date of introduction (or publication).
Further, Ms Michelle Gordon, a High Court judge, commented that retrospective tax law is not only hurting taxpayers but may be making foreign investment less attractive. This comment was made during her presentation to tax experts at the University of Melbourne law school in late August 2012 when she was then a Federal Court judge.
Given that all Federal legislative processes are now in ‘care taker’ mode until after the election on 2 July 2016, there is going to be considerable uncertainty as to whether this lifetime cap announcement will become law and if it does, in what form. The Labor Government has ruled out any retrospectivity to this reform should it win the election.
More detail on the $500,000 lifetime cap
This article has put forward numerous reasons why retrospective law stretching back nearly 9 years should not be tolerated by the Australian community.
Assuming, despite these reasons, that the Government persists to introduce a $500,000 lifetime NCC cap, we note that such a cap is surprisingly low given the summary provided above where some 10 years ago, the amount of personal NCCs (then known as ‘undeducted contributions’) were unlimited in amount.
The NCC cap was then, following a brief transitional period, reduced to $150,000 (as indexed on 1 July 2014 to $180,000) per FY subject to then a $450,000 (as indexed on 1 July 2014 to $540,000) three year bring forward rule until 3 May 2016. This 10 year slide has been a major restriction on what people could previously have contributed to their super savings.
Certainly, there were numerous submissions to Government by different industry bodies and members of the community to restrict the tax concessions in relation to superannuation for those people who had attained a certain monetary threshold within the super system. However, the Government’s response overlooks the fact that these people had contributed on the basis of the law as then applying (which was unlimited prior to the budget announcement in May 2006) and as a result, the Government should not overly restrict the ability for everyone else to accumulate a reasonable amount in superannuation to provide a satisfactory lifestyle in their retirement.
Assuming the Government sees the light of day and drops the retrospective nature of the $500,000 lifetime cap, we also consider the Government has overreacted with a $500,000 lifetime cap. Such a cap does not allow any flexibility for the numerous investment timing and life cycle risks that may arise which we examine in further detail below.
What if a member suffers an investment loss?
Many who have previously contributed more than $500,000 have lost considerable value — many losing far more than 50% on their investments — as a result of the global financial crisis (‘GFC’).
A $500,000 lifetime cap provides no scope or flexibility for these people who may suffer another GFC or another market correction (as in the October 1987 share market crash), where a substantial value of their lifetime savings may be lost in volatile trading over a short-time frame.
Indeed, there are many who were hoping to retire but got GFC’d and are still in the workforce at age 65 and 70, who expected to retire much earlier.
Moreover there have been many thousands of people who have suffered from one of the many fraudulent investment schemes and who will have no chance to accumulate any further super savings as they will generally have burnt up their lifetime NCC cap but unfortunately, and through no fault of their own, have zero or next to no dollars remaining in superannuation.
SMSFs that have entered into contracts pre-budget
SMSFs that have entered into contracts and transactions to buy investments, incurring limited recourse borrowing arrangements to gear up an investment property and other investment contacts that span 7.30pm 3 May 2016, may now be in default of such contracts and stand to lose deposits and suffer considerable loss and damages as a result of the threatened retrospective impact of the new lifetime NCC cap.
So with a mere Budget announcement without any forewarning or transitioning rule, many peoples’ superannuation planning may now be in ruins by the announced change in law.
In contrast, when changes were made to restrict SMSFs investing related unit trusts on 11 August 1999, a special 10 year transitional rule was introduced to allow an SMSF that invested in a related unit trust with borrowings to invest in further units up to 30 June 2009 to enable the unit trust to reduce its debt. Without the introduction of s 71E of the Superannuation Industry (Supervision) Act 1993 (Cth) (‘SISA’), SMSFs would have similarly been caught by an announced change but were granted a 10 year transitioning period.
The timing of the $500,000 lifetime NCC cap is particularly adverse for many SMSFs with related party LRBAs that need considerable cash flow before 30 June 2016 to place their LRBAs on arm’s length terms to comply with recent ATO guidelines. For these SMSFs to comply with the ATO’s recently released Practice Compliance Guideline PCG 2016/5, relevant SMSFs need to make the entire outstanding 2016 FY payments of principal and interest on non-arm’s length loans before 30 June 2016.
Impact on small business
The new cap is particularly unfortunate for business owners who generally are not in a financial position to contribute super throughout their lives and fall outside the CGT small business concessions in div 152 of the ITAA 1997. Many small business owners treat their business as a ‘de facto’ superannuation savings vehicle as they generally do not have enough cash to contribute to superannuation as they are building their business.
Small business owners will also have limited capacity to utilise their SMSFs from now on to acquire their business premises. The proposed lifetime NCC cap will adversely affect many small businesses, farmers and others that wish to invest in real estate, with many properties now in capital cities (and farm land on the city fringes) valued far in excess of $1 million.
Transfers from overseas to Australian superannuation funds
Those seeking to make transfers funds from foreign superannuation funds will also now be limited on what they can transfer to Australian superannuation funds.
Without the ability to transfer savings from foreign superannuation funds, many will leave their moneys in these overseas funds as the upfront tax cost on repatriation may be unviable compared to drawing a steady pension.
Australia should encourage foreign savings to be invested here, but the new lifetime cap imposes severe limits on these savings being available to produce any benefit to the Australian economy.
Conclusions
If there is to be announced legislation by budget or press release, then it should prospective. Being prospective, if the limit is $500,000 then most people will hopefully adjust and learn to live with this new limit. However, to then seek to impose a retrospective 9 year inclusion period on prior contributions when people have gone about their affairs in an ordinary and lawful manner is unreasonable and should not be tolerated by our community. Indeed, the current Government has misrepresented that there will be no adverse super changes. A change of Prime Minister in September 2015 is no excuse for such poor law making.
 
This was written by DBA Lawyers Director Daniel Butler and Special Counsel Rebecca James, who can be contacted below
Daniel Butler, Director (<a href="mailto:dbutler@dbalawyers.com.au" target="_blank">dbutler@dbalawyers.com.au</a>) 
Rebecca James, Special Counsel (<a href="mailto:rjames@dbalawyers.com.au" target="_blank">rjames@dbalawyers.com.au</a>)
 
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j.ballantyne1990-6AQqhLzZaK

The new $500,000 lifetime contribution cap is retrospective and bad law

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ASIC has intervened in relation to 21 superannuation trustees, representing 15 per cent of the trustee population, to improve 'Transparency Information' (TI) on their super fund websites.
Under s29QB of the Superannuation Industry (Supervision) Act 1993 (SIS Act), each superannuation fund must disclose TI on a website and keep it up to date at all times.
TI comprises remuneration, governance and other information related to the fund; for example trustee directors’ remuneration for the last two financial years, fund trust deeds and product disclosure statements, a summary of significant event notices sent to fund members in the last two years and a summary of how the trustee voted in the last financial year in relation to listed shares held by the fund.
ASIC's action follows an earlier review of transparency disclosure requirements introduced as part of the Stronger Super reforms (refer: 15-245MR), and a broader focus on ensuring superannuation trustees deliver transparent and accessible superannuation fund information.
Twenty-one super fund websites were identified as failing to meet TI requirements. Two of the super funds had assets exceeding $10 billion while the remaining 19 were smaller funds.
ASIC Deputy Chairman Peter Kell said the economic significance of superannuation meant that information about the superannuation industry should be transparent, both for fund members and gatekeepers such as analysts, advisers and journalists.
'ASIC's expectation is that super fund websites should be easily found by searching on the fund's name using an Internet search engine and that the website homepage should prominently point to the Transparency Information', Mr Kell said.
The transparency deficiencies identified in ASIC's review comprised:
<ul>
<li>no super fund website (10 funds);</li>
<li>no TI on the fund website (four funds);</li>
<li>no remuneration information (five funds); and</li>
<li>remuneration disclosed in bands, rather than for each individual executive officer (two funds).</li>
</ul>
ASIC wrote to the trustees of the 21 super funds asking them to address these transparency failures.
As a result, seven trustees disclosed the required information, five made it easier to find the information and trustees of two small funds, who did not have websites, sought relief from TI obligations.
Seven trustees transferred fund members to another fund before winding up the fund. Two trustees also improved their procedures for ensuring that TI is up to date.
Table 1 sets out the results according to TI failure type.
<a href="https://www.propertyobserver.com.au/images/2017/07/05/Screen%20Shot%202017-07-05%20at%209.59.37%20am.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/05/Screen%20Shot%202017-07-05%20at%209.59.37%20am.jpg" alt="">
ASIC has received applications for relief from TI obligations from two trustees that were in breach of the requirement to have a website, but no relief has been granted at this stage.
ASIC cannot give relief for breaches that have already taken place and will consider what further action may be necessary here.
'ASIC's expectations about effective disclosure that complies with the TI requirements are addressed in new MySuper FAQ D7, our earlier media release 15‑245MR ASIC reviews transparency information on super websites and other ASIC MySuper FAQs.
‘We encourage trustees to familiarise themselves with this guidance when designing or updating their super websites', Mr Kell said.
Regulations 2.37 and 2.38 of the Superannuation Industry (Supervision) Regulations 1994 specify what TI must include.
Failure to comply with TI obligations is a strict liability offence.
The 21 super funds where TI deficiencies were identified represented approximately 8 per cent of APRA-regulated funds (that are not small APRA funds).
ASIC has given industry relief and guidance in relation to the timing of the provision of information under s29QB (refer: Regulatory Guide 252 Keeping superannuation websites up to date).
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ASIC acts to improve transparency of super websites

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GUEST OBSERVATION
The Financial Services Royal Commission spent the last couple of weeks uncovering misconduct in the superannuation industry. But as we clean up superannuation we should also fix another deficiency – the need to provide life-long incomes for retirees.
A recent survey found a third of Australians over 80 had run out of money. The rest want reliable life-long incomes. Funnily enough, there are many projects that need funds and can produce cash flows for decades – infrastructure particularly.
Superannuation funds are increasingly making infrastructure investments themselves. What is needed is a way to link the long-term cash flows derived from physical assets straight through to pensioners.
Investment markets are currently too conflicted to do so.
The status quo
Companies, and even governments entering long term projects mainly use short-to-medium-term bank loans to fund their activities. These loans must be refinanced regularly.
For reasons that the Financial Systems Inquiry could not explain, companies often borrow overseas and so are subject not just to the risk of changing interest rates, but also to fluctuating foreign exchange rates.
To reduce these risks they may enter into sophisticated hedging programs, but this only serves to move risk elsewhere in the financial sector.
Banks, which provide short term finance for long term projects, suffer regular liquidity crises when depositors want to withdraw their money. An IMF report records 129 crises in the 40 years before 2010.
<img src="https://images.theconversation.com/files/232240/original/file-20180816-2903-1ufngwx.PNG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
Banking crises.
At the same time, about 70% of superannuation benefits are taken as “account-based pensions” – regular income streams that the pensioners draw down to pay their expenses.
This money has been invested in thousands of investment options, all of which provide liquidity so that pensioners can sell assets at any time.
But if the money is taken as regular monthly income, all of this liquidity is unnecessary – the funds could have been invested in something that produces monthly cash flows.
The alternative
Consider, for instance, a large infrastructure project that will generate revenue over 50 years, increasing over time more or less in line with inflation.
One could design a financial instrument that paid investors a fixed proportion of that revenue. If the investors were superannuation funds, they could issue annuity contracts that paid out these cash flows to pensioners for life.
The borrowers would face lower risks, as their repayments move together with their revenue. Both borrowers and investors would be unaffected by changes to interest rates or the market value of investments.
Why hasn’t this already been done? It is not that the cash flows from long-term investments are insufficient. They currently exceed all private and public pensions.
These kinds of financial instruments are already used on a very small scale in Australia.
The major obstacle to their wider use seems to be that the financial sector feeds off the excess liquidity in the market. Banks make money by rolling over short-term loans. Investment managers, stockbrokers and exchanges make money by trading superannuation assets.
The whole sector operates under a paradigm where liquidity is paramount. So they fail to address the risks this presents to banks, economies and to retirees.
It is not that people do not like these “life annuities” when they are explained appropriately, but that their advisers and other experts active in the financial sector at best ignore them and at worst actively discourage them (by emphasising the “need” for liquidity).
The ongoing problems of the financial sector must surely make us ask whether it is fit for purpose? Or, at least, how well is it fulfilling its functions of allocating capital and managing risks?
We need appropriate pipes to ensure the cash generated by long-term assets flows through to fund pensioners. What we have instead is a flood of liquidity, which regularly buffets not only the financial sector but the entire economy.
The impetus to fund both long-term projects and life-long pensions must ultimately come from superannuation fund trustees. They appoint those who select assets and must set up the systems to ensure the cash flows are paid to pensioners.
To do this, they must first free themselves from the paradigm that liquidity is paramount. They then need to employ people and consultants whose loyalty is to the members and not the investment markets.
They will have to set up structures to be able to evaluate the soundness of new projects, and secondary markets to allow for trading as necessary. Government and regulators will have to permit funds to collaborate in this process.

Trustees will also need to take the lead and give members access to annuity products, and disinterested and expert advice as to when these are suitable.
Anthony Asher, Associate Professor, UNSW
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/superannuation-trustees-should-find-long-term-assets-for-their-pensioners-101370" target="_blank">original article</a>.
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Superannuation trustees should find long-term assets for their pensioners: Anthony Asher

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GUEST OBSERVATION
An individual’s total superannuation balance (‘TSB’) determines many of their superannuation rights and entitlements, such as eligibility to contribute after-tax amounts into superannuation without an excess arising.
Accordingly, there is a strong incentive for individuals to carefully monitor their TSB over time, particularly towards the end of a financial year (‘FY’) when most TSB thresholds are tested. In many cases, actions taken to reduce an individual’s TSB through appropriate planning in a prior FY will provide an individual with greater flexibility in relation to their superannuation.
This article examines the strategy of making pension payments and/or paying lump sums to moderate an individual’s TSB.
Before considering strategies to reduce an individual’s TSB, it is useful to consider the key elements of the TSB definition.
An individual’s TSB at a particular time is comprised of the following components:
1. the accumulation phase values of their superannuation interests that are not in retirement phase;
2. the amount of their transfer balance or modified transfer balance account — this generally captures the net realisable value of most types of pensions in retirement phase;
3. any roll‑over superannuation benefit that has not already been included under steps 1 and 2; and
4. reductions for any structured settlement contributions.
The above is a broad summary only. A detailed examination of the TSB methodology that is set out in s 307‑230 of the Income Tax Assessment Act 1997 (Cth) is beyond the purpose and scope of this article.
<ul>
<li>Strategy #1: Make pension payments and/or lump sum payments to an individual</li>
</ul>
Payments of pensions and lump sum amounts are both outgoings that can reduce an individual’s TSB. Generally, an individual must meet a relevant condition of release before they can receive a payment from their superannuation fund. For example, an individual must attain preservation age (which ranges from 55–60 years old depending on their date of birth) before they are eligible to commence a transition to retirement income stream (‘TRIS’).
Furthermore, once an individual has met a relevant condition of release with a ‘Nil’ cashing restriction, eg, reaching preservation age and retiring or attaining age 65, they can:
· commence an account-based pension (‘ABP’) and start receiving pension payments;
· partially or fully commute any ABP they are receiving and cash the commuted amount outside of the superannuation system; and
· pay a lump sum from their accumulation entitlements to the extent that their benefits comprise unrestricted non-preserved benefits.
Each of the above types of superannuation payments can help to moderate an individual’s TSB, though naturally there are limitations on the potential impact of TRIS payments due to the 10% maximum payment limitation (and commutation restriction) where a full condition of release has not been met. 
Additionally, it should be borne in mind that there may be non-TSB considerations that will factor into choosing one type of payment over another. For example, making pension payments above the required pension minimums is not generally advisable due to there being no debit for pension payments under the transfer balance account.
<ul>
<li>Consider the following example</li>
</ul>
Benjamin is the sole member of a self managed superannuation fund (‘SMSF’) which is 100% in pension phase. Benjamin is not a member of any other superannuation fund.
Benjamin’s TSB is $1,540,000 just before 1 July 2017 and is broadly based on the net market value of the assets that support his ABP. However, the fund’s assets are performing very well during FY2018 in such a way that there will be overall growth in the fund taking into account all applicable outgoings. Indeed, Benjamin estimates on 10 June 2018 that his TSB will be $1,620,000 just before 1 July 2018
Mindful of this anticipated outcome, Benjamin requests for his ABP to be partially commuted on 15 June 2018 and the commuted amount paid outside the superannuation system as a lump sum. Accordingly, the trustee of Benjamin’s SMSF complies with his request and $50,000 is commuted on 16 June 2018. (For completeness, it should be noted that Benjamin has separately ensured that his minimum pension payment requirements were met with cash transfers as he is aware that the partial commuted lump sum will not count towards his minimums.)
On 15 July 2018, Benjamin’s accountant confirms that Benjamin’s TSB just before 1 July 2018 was $1,580,000. If Benjamin had not partially commuted $50,000, his TSB would have been $1,630,000 just before 1 July 2018 because the performance of the assets exceeded Benjamin’s estimate on 10 June 2018. Fortunately, Benjamin took action to moderate his TSB and included a ‘buffer’ amount in his request for his ABP to be partially commuted and paid outside the superannuation system.
The above example demonstrates how the payment of a lump sum amount can reduce an individual’s TSB.
<ul>
<li>Conclusion and Part IVA</li>
</ul>
For individuals who satisfy a relevant condition of release, making pension payments and/or lump sum payments is a readily accessible strategy to reduce their TSB. This strategy can be used in isolation or in various permutations with other strategies (subject to the below commentary about pt IVA of the Income Tax Assessment Act 1936 (Cth) (‘ITAA 1936’)). 
While it is very difficult to rule out the application of the general anti-avoidance provisions in pt IVA of the ITAA 1936 to the strategy of using benefit payments (ie, making pension payments and/or lump sum payments) to moderate an individual’s TSB, we are not aware of the ATO publicly expressing a view that such a strategy constitutes a ‘tax benefit’ and circumvention of the new rules. Additionally, we consider that paying benefits where a relevant condition of release has been met is, by itself, so common that it would be difficult to see the ATO applying enforcement scrutiny to this strategy in relation to pt IVA of the ITAA 1936 apart from blatant or contrived cases.
However, it is worth highlighting the following example from the Superannuation Taxation Integrity Measures consultation paper released by Treasury in relation to proposed laws to capture outstanding loan balances for limited recourse borrowing arrangements (‘LRBAs’) in an individual’s TSB. 
Example 1 [Treasury’s example]
Laura is the sole member of her SMSF, which holds $2 million in accumulation phase.
· Laura takes a lump sum of $500,000 from the SMSF, on 1 June 2019 which reduces her TSB as at 30 June 2019 to $1.5 million;
· On 30 June 2019, Laura lends the $500,000 on commercial terms back to her SMSF under an LRBA;
· The SMSF uses $1 million of its existing assets and the borrowed $500,000 to acquire a $1.5 million investment property.
Current law
Laura’s TSB as at 30 June 2019 is $1.5 million, comprising the net value of the property of $1 million ($1.5 million purchase price less the $500,000 LRBA) as well as the other assets valued at $500,000.
As her TSB is below $1.6 million, Laura can make further non-concessional contributions of up to $100,000 in the year ending 30 June 2020.
As the SMSF repays the LRBA, the net value of the fund will increase and Laura’s TSB will approach the $1.6 million threshold. However just prior to reaching the $1.6 million threshold, she could withdraw another lump sum and enter into a new LRBA to acquire another income-producing asset. This would reduce her TSB again, allowing more contributions to be made to the SMSF.
The above example illustrates that Treasury regards using benefit payments together with related party loans to moderate an individual’s TSB (and as a result of that enable additional non-concessional contributions) is a potential threat to the integrity of the new superannuation reforms. 
Naturally, it should be borne in mind that Treasury does not necessarily represent the ATO’s view as the regulator of SMSFs, and not everything that is (arguably) a threat to the integrity of the new laws will strictly fall foul of the general anti-avoidance provisions in pt IVA of the ITAA 1936. 
However, conservatively, taxpayers should be mindful that where they are contemplating using a benefit payment strategy to moderate their TSB, the risk of pt IVA being enlivened might conceivably be magnified if this strategy is used together with other actions, such a entering into an LRBA with a related party loan, or paying a small benefit and making a large contribution in a tight timeframe.
The law in relation to TSB is a complex area of law and where in doubt, expert advice should be obtained. Naturally, for advisers, the Australian Financial Services Licence under the Corporations Act 2001 (Cth) and tax advice obligations under the Tax Agent Services Act 2009 (Cth) need to be appropriately managed to ensure advice is legally provided.
Joseph Cheung, Lawyer and William Fettes, Senior Associate, DBA Lawyers 
DBA Lawyers offers a range of consulting services in relation to TSB issues. DBA Lawyers also offers a wide range of document services.
For more information you can visit <a href="http://www.dbalawyers.com.au" target="_blank">their website</a>. 
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jrobinson-rf4aSBido9

Strategies to reduce your total superannuation balance: Joseph Cheung

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The Australian Prudential Regulation Authority (APRA) has today released a speech, ‘Enhancing Australia’s superannuation system: a vision of a sustainable future’, delivered by deputy chairman Helen Rowell to the 2017 ASFA Conference in Sydney this morning. In her speech, Rowell presented a vision for a stronger superannuation system that meets the ongoing needs of its members, and explained how changes to the prudential framework will help to deliver this. Mrs Rowell’s comments included:  
<ul>
<li>‘APRA is also taking steps to make sure that the prudential framework supports trustees delivering quality outcomes for superannuation fund members, complementing the Government’s proposed reforms. We will shortly release a consultation package outlining proposed revisions to the prudential framework, including changes to promote greater transparency, especially around expenditure, and implement member outcomes assessments for all funds.’</li>
<li>‘…the changes proposed in our upcoming consultation package are designed to put pressure on poor performers – irrespective of industry segment – to lift their game or, if the needed improvement is not possible within a reasonable timeframe, to gracefully exit the industry.’ 
</li>
<li>‘…at what point does the level of choice become more a headache than a help? It seems legitimate to ask why the industry offers members an average of nearly 200 investment options when many funds have a significant proportion of members in their default MySuper products and hence relatively few members in each o&gt;f the many choice investment options on offer.’</li>
<li>‘Our preliminary analysis of outcomes across the industry using a wide range of metrics suggests, however, that there may be some correlation between enhanced member outcomes and board composition. The trustees with outcomes at the better end of the industry, on average, appear to be those that have appointed independent or non-affiliated directors.’</li>
</ul>
The full speech is available on the website at:  <a id="LPlnk11598" href="http://www.apra.gov.au/Speeches/Pages/Enhancing-Australias-superannuation-system.aspx" target="_blank">http://www.apra.gov.au/Speeches/Pages/Enhancing-Australias-superannuation-system.aspx</a>
 
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jonathanchancellor-7SQnKwU6yx

Enhancing Australia’s superannuation system, a vision of a sustainable future: APRA's Helen Rowell

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Australians have greater trust and confidence in the superannuation system than they did a year ago but less than half expect to rely solely on superannuation savings in retirement, turning to cash and property to make up the anticipated shortfall, research has found.
The Financial Services Council/ING Direct Superannuation Sentiment Index, released last week, showed that attitudes had improved over the past year towards the performance of superannuation, as well as the stability and certainty that the compulsory savings system provided.
FSC chief executive John Brodgen said superannuation funds had achieved double digit returns for the second year in a row, which had helped to boost confidence. The index measure of sentiment towards fund performance improved by seven points to 121 in 2014.
However, 52% of those surveyed said superannuation savings alone would be insufficient to provide for their retirement and 55% had investments outside of superannuation.
One in five people with assets outside of superannuation had investment property, the research showed. One third had cash savings.
“What’s important is to understand that if you have got money in superannuation it’s not liquid. You do need some liquid savings,” Brodgen said.
Actuarial firm Rice Warner recently reported that Australians held more than $1.6 trillion in superannuation at June 2013. The actuaries projected that figure would increase in real terms to more than $5 trillion in 30 years.
In comparison, Australians hold around $2.3 trillion in assets outside of superannuation and that is predicted to grow to $4.6 trillion by mid-2028, according to Rice Warner’s report, Ageing and Capital Flows prepared for the Financial System Inquiry.
In dollar terms, investment property accounted for almost half of personal investments held now, at $1.1 trillion, Rice Warner’s report found. Cash and term deposits accounted for 33.8% of the value of personal investments, while directly held shares accounted for 11.1%.
Self-managed super funds have been boosting their allocations to direct property and Rice Warner predicts they will continue to be interested in the asset class.
However, the Rice Warner report suggests the proportion of overall personal investments held in direct property will fall by 4% by 2028.
“Growth will occur due to superannuation becoming relatively less attractive for high income earners and lower interest rates in the short to medium term. However, this will be somewhat offset by investors gearing property less and yields being under pressure due to property prices and costs rising faster than rents,” the report says.
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zfielding-GvX3Uq9KTa

Majority believe super not enough to fund retirement: FSG/ING survey

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Speculation that the federal government might lift the age at which people can access their superannuation savings to 70 years should not concern people who have invested in property through a self-managed superannuation fund, a technical expert has said.
Federal Treasurer Joe Hockey last week gave strong indications that the age of eligibility for the government pension is likely to be lifted to 70 years over time while access to other government benefits for older people will also be restricted.
The statements have fuelled fears that the so-called preservation age at which people can access superannuation savings will also be raised.
But SMSF Professionals Association of Australia director technical and professional standards Graeme Colley told Property Observer that an increase to the preservation age for superannuation might advantage people who hold property in their fund.
“It might be an advantage because the longer they hold a property, the greater the likelihood of capital gains,” Colley said.
Many people who own investment property through an SMSF are forced to sell when one of the members retires if the property does not generate sufficient cash flow to pay a pension from the fund.
Colley said an increase to the preservation age for superannuation would probably be accompanied by an increase to the age at which people can make personal and voluntary contributions to their funds.
As the rules stand now, all working people can receive superannuation guarantee payments from employers into their funds, regardless of age. However, while people aged under 65 can also make voluntary or personal contributions to their funds, those aged between 65 and 75 years must meet a work test to be able to do so.
People aged over 75 are unable to make any personal or voluntary payments into their funds.
SMSFs that have borrowed to invest, particularly those that have negatively geared property, often need to sell if members can no longer contribute to the fund to make up the shortfall in cash flow.
Giving older people who were no longer working the ability to make personal contributions to superannuation would allow them to hold their property in the fund for longer, providing the advantage of holding the asset in the low-tax superannuation environment.
“The longer it is, the better it is,” Colley said.
He added there was a risk for government that lifting the superannuation preservation age beyond the planned graduated increase to age 60 by 2024 and aligning it with the age pension age could backfire and put unintended pressure on other parts of the social security system. 
Amounts accumulating in superannuation are excluded from the assets tests that determine whether people qualify for social security payments.
Older people currently moving from the workforce to the age pension, topped up with superannuation benefits, could be forced to rely on other social security payments such as the Newstart Allowance if they were unable to find work but were too young to access their superannuation or the age pension, Colley said. 
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Rise in pension age should not worry SMSF investors

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GUEST OBSERVER
The latest Productivity Commission report, <a href="https://www.pc.gov.au/research/completed/superannuation-post-retirement" target="_blank">Superannuation for Post-Retirement</a>, highlights two aspects of post-retirement income policy that have recently attracted considerable attention: the age at which people should be able to access their superannuation, and whether lump sum withdrawals should be restricted.
Preserving superannuation
The preservation age, which is the age at which a person who retires can access their superannuation, is set by superannuation regulations, and is currently between age 55 for a person born before 1 July 1960, and age 60 for a person born after 1 July 1964. Anyone who reaches the age of 65 can access their super without retiring.
The preservation age has always been lower than the age at which a person becomes eligible for the age pension. In 1997, when the current preservation age was set, a person became eligible for the pension at age 60 (for women) or age 65. Therefore there was a five year gap during which a retiree could draw on their superannuation to support themselves before becoming eligible for the pension. However, superannuation balances were much lower at that time: <a href="https://www.ausstats.abs.gov.au/Ausstats/subscriber.nsf/0/C0A01711EAD911BFCA256BCD007D7F10/%24File/41020_2002.pdf" target="_blank">in 2000 </a> the mean superannuation balance for a male over the preservation age was A$44,700, and for a female was A$19,800. With lower balances, there was less incentive to retire early.
The gap of five years between preservation and pension age has now extended to seven years. From 2017 the pension age will be 67 for both men and women, and as superannuation balances have increased, in recent years there has been concern that retirees will retire earlier, living off accumulated superannuation until they reach age pension age. This could reduce workforce participation among people in this age group, which would impact on productivity in the National Accounts; and would also increase the cost of the age pension as superannuation savings are exhausted before pension age.
The Productivity Commission found that there could be a fiscal saving of about A$7 billion by 2055 if the preservation age and the pension age were to be synchronised. Most of this would be from additional tax paid by higher income households. 
<h2>The losers</h2>
However, there are other factors in the report that could equally be used to argue against the proposition.
Firstly, the increase in workforce participation would be relatively small, about 2%, and most of this would be from workers who are already more likely to continue to work beyond the age pension age: those with higher wealth who are more likely to be in managerial or professional positions.
Secondly, the impact of deferring the preservation age is likely be felt most severely by workers who take involuntary retirement, about half of all Australians between the age of 45 and 70. If these retirees are unable to access the superannuation they have accumulated, they will be forced onto other forms of government benefits that are generally lower and more restrictive than the age pension.
Overall, a change to the preservation age is likely to have a regressive effect on retirement incomes. High-income earners would work longer, save more and access higher incomes when they do retire. Lower-skilled workers, who are more likely to face involuntary retirement, would have lower superannuation balances and would be unable to use those balances to supplement income from other benefits while waiting for the age pension.
<h2>Transition to retirement</h2>
There is, however, a case to change the current transition to retirement pension arrangements.
Under the current rules a person who has reached preservation age can access some of their superannuation without formally retiring if they enter into a transition to retirement scheme. Although this was conceived as a good way to allow people to reduce their working hours in the lead up to formal retirement, in practice it has become a way for high-income earners to maximise superannuation concessions without reducing their working hours. The Productivity Commission has joined other <a href="https://www.acoss.org.au/wp-content/uploads/2015/06/Reform_of_taxation_of_super_contributions_ACOSS.pdf">critics</a> of this arrangement that seems to be used primarily as a tax-saving measure.
<h2>The lump sum myth</h2>
The second issue addressed in the report is the myth of the lump sum. It is frequently <a href="https://www.smh.com.au/it-pro/pensioners-angered-by-claims-of-cruises-and-luxuries-splurge-20140515-zrd5w">said</a> that Australians take a lump sums from their superannuation to fritter away on lifestyle assets such as holidays. However, this is not supported by the evidence of how people access and use their super.
There is a clear preference for people with lower superannuation balances to withdraw significant lump sums when they retire (see chart below).
<a href="/images/2015/07/09/image-20150708-31601-1erjjg2.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/07/09/image-20150708-31601-1erjjg2.png" alt="">
Because lump sums are generally less than A$20,000, taking the lump sum does not have any impact on eligibility for the age pension. Members with higher balances are increasingly likely to convert their balance to an income stream, which is now tax free.
Where a lump sum is taken it is generally used to pay down debt, including mortgages, or to purchase durable goods like cars at the start of retirement. About half of the lump sums taken from superannuation are used in this way. About another third are converted to a different form of financial asset: an annuity is purchased or the money is invested or rolled over to another form of deposit.
All of these uses of the lump sum preserve the wellbeing of a person in retirement. Only 7% of lump sums taken are used for a holiday.
The Productivity Commission has conducted analysis, as opposed to a report with recommendations. It does note that any such decisions are a matter for the government to decide. In this instance, perhaps the current government mantra of no change to superannuation can be justified.
Helen Hodgson is Associate Professor, Curtin Law School. Curtin Business School at Curtin University. She can be contacted <a href="https://oasisapps.curtin.edu.au/staff/profile/view/Helen.Hodgson" target="_blank">here</a>.
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It’s your super, so why shouldn’t you be allowed access?

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GUEST OBSERVATION
The Productivity Commission’s <a href="https://www.pc.gov.au/inquiries/current/superannuation/assessment/draft" target="_blank">latest report on superannuation</a> asks whether the current system is working for members – and answers <a href="https://theconversation.com/young-people-not-employers-should-choose-super-fund-productivity-commission-97329" target="_blank">firmly in the negative</a>.
The report identifies four factors that can chip away at super fund members’ retirement benefits:
<ul>
<li>fees</li>
<li>rate of return</li>
<li>insurance</li>
<li>holding multiple accounts
</li>
</ul>
What is also clear from the evidence laid out in the report that the not-for-profit sector, including industry super funds, generally outperforms the retail sector. Generally they offer lower fees and higher returns, although there are some industry funds that rank among the lowest-performing.
Despite recent reforms such as the 2013 launch of MySuper, the superannuation system is still beset with the same problems of rising fees and patchy performance. And there is still no substitute for just hopping on the internet and proactively checking that your super is in the best possible hands.
The situation is made complex by the highly segmented nature of Australia’s superannuation system. Besides the public sector funds, the most significant sectors are the retail sector and the not-for-profit funds, including industry funds (see figure 1.5 here). These sectors compete for as large a slice as possible of the overall pool.
Self-managed superannuation funds are also a rapidly growing sector of the market, however the regulatory framework applied to these funds has some significant differences to the rest of the market.
Tracking your super
Most employees have the right to choose their superannuation fund (<a href="http://kmo.ministers.treasury.gov.au/speech/008-2018/" target="_blank">although around one million don’t</a>), and if they don’t nominate a fund, employers will pay contributions into a default fund.
As the new report points out (see figure 1.2 here), up to 40% of superannuation members hold multiple super accounts. In some cases this may be a deliberate choice – someone with a self-managed super fund may might, for example, choose to have their employer contributions paid into a conventional fund. But often multiple funds are a consequence of employees being enrolled into a new default fund instead of paying contributions into an existing fund.
A range of <a href="https://www.ato.gov.au/Individuals/Super/Keeping-track-of-your-super/" target="_blank">tools</a> is now available to help people consolidate their super, so as not to <a href="https://www.moneysmart.gov.au/superannuation-and-retirement/keeping-track-and-lost-super/consolidating-super-funds" target="_blank">lose any of their savings</a>. In the 2018 federal budget the government <a href="https://treasury.gov.au/consultation/c2018-t286292/" target="_blank">announced</a> that it would reduce the paperwork involved in this process by allowing the Australian Taxation Office to consolidate inactive super accounts with balances less than A$6,000.
MySuper
The primary aim of <a href="https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/choosing-a-super-fund/mysuper" target="_blank">MySuper</a>, introduced in 2013, was to provide a <a href="https://static.treasury.gov.au/uploads/sites/1/2017/06/R2009-001_Final_Report_Part_2_Chapter_1.pdf" target="_blank">simple default product</a> that meets the needs of members who are not engaged with their superannuation. They have no entry fees, offer simpler insurance and services, and lower administration fees that are charged on a cost-recovery basis.
But although the effects of MySuper are generally positive, the 2013 reforms may also have contributed to the erosion of funds identified by the new review.
This report confirms (see chapter 3, p.127 here) that super fund fees in Australia are among the highest in the OECD, and the upward pressure on fees continues. Just this month, the Commonwealth Bank announced that it would <a href="https://www.smh.com.au/money/super-and-retirement/cba-s-superannuation-sting-is-out-and-out-gouge-says-minister-20180523-p4zh23" target="_blank">pass the costs of regulation onto some superannuation products</a>.
One of the consequences of introducing the fee charging limitations for MySuper accounts was that the previous member protection standards that limited fees on low-balance accounts was <a href="https://www.legislation.gov.au/Details/F2013C00067" target="_blank">repealed</a>. In the 2018 federal budget the government <a href="https://treasury.gov.au/consultation/c2018-t286292/" target="_blank">announced</a> that fees would be capped in respect of certain low balance accounts.
MySuper products must provide also life insurance on an opt-out basis. Insurance in superannuation has also been under scrutiny, with inappropriate or junk policies being included in superannuation. The government has announced proposals to change this to an <a href="https://treasury.gov.au/consultation/c2018-t286292/" target="_blank">opt-in</a> system.
This report adds to the evidence that overall the current structure of not-for-profit funds is serving members well. Although it supports proposals to require the trustees of industry funds to increase the number of independent directors, the Productivity Commission highlights the need for a stronger focus on trustee skills and addressing conflicts of interest.
Take responsibility for your super
It is concerning that many of the problems identified by the new report are the same ones that arose in the 2014 Financial System Inquiry, the 2015 Cooper Review, and in the evidence to the Financial Services Royal Commission.
Most of these issues raised have been part of the discussion for the past decade. The fact that they are still on the table shows a level of inertia in the system, and a reluctance by the industry to address its problems.
So how can we, as individuals, protect our retirement nest egg? The key is to engage with the superannuation system, and not just as we approach retirement.
Compare your super fund’s fees and returns with those of the best performing funds, and then choose accordingly. Reduce your fees and insurance premiums by consolidating your accounts, and make sure that any insurance in the fund meets your needs.
<img src="https://counter.theconversation.com/content/97318/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">The difference at retirement is worth it – up to A$407,000 for a 21-year-old by the time they finish their career.
Helen Hodgson, Associate Professor, Curtin Law School and Curtin Business School, Curtin University
This article was originally published on <a href="http://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/superannuation-is-still-mired-in-the-same-old-issues-and-no-one-is-going-to-fix-your-nest-egg-but-you-97318">original article</a>.
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