National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Joel Robinson

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 52-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 52-storey tower, which has just shy of 250 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

A decade in the making: Residents to move into Chevron One as construction wraps up

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

[smartcode_project:default project_id=150017 project_image_fid=374054]

Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

[smartcode_project:default project_id=426 project_image_fid=359199]

The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

[smartcode_project:default project_id=426 project_image_fid=360299]

The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Elevated amenity anchors daily life at Aeris, Melrose Park

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]

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

Superannuation

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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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jchancellor-FAypfDUnLy

A competitive superannuation system: will efficiency gains follow?

<html><body>
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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<div class="layoutArea">
<div class="column">
GUEST OBSERVER
The election result has sent a clear message to all political parties – keep changing superannuation policy at your electoral peril.
Although it was the Coalition Government that felt a backlash from voters in the wake of the Budget measures around superannuation that caused so much public angst, the reality is both the major parties were culpable as Labor included these savings in its fiscal estimates. 
What the electorate has rightly discerned is that superannuation is increasingly being seen by all the political parties as a cash cow that can be milked for fiscal reasons. 
However, what we have seen in the election is that many of the people have said ‘enough is enough’, and that there will be an electoral cost if you continue to change the policy settings by which people plan their retirement income strategies. 
It has to be remembered why compulsory superannuation was introduced in the first place – to give people the opportunity to be self-sufficient after leaving the workforce. 
In the SMSF space, in particular, trustees assume the responsibility to be financially independent in retirement, and all they ask of their elected representatives is to determine the policy settings and then leave the system alone. 
Right now it is a difficult time for trustees with volatile investment markets around the globe the order of the day and interest rates at historical lows. 
To compound these market-related issues they have to continually second guess what the government of the day will do with superannuation policy, especially as it relates to its tax treatment. But after last Saturday, it seems doing so might come at a high political cost.
Olivia Long is chief executive officer of SMSF administrators Xpress Super and SuperGuardian and can be contacted <a href="https://www.xpresssuper.com.au" target="_blank">here</a>.
</div>
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Election result sends message to politicians – keep your hands off super

<html><body>
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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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
It is received wisdom in the Australian superannuation industry that bigger is better. The theory goes that funds with more assets under management will benefit from economies of scale, because the costs of running a superannuation fund are largely fixed and do not change much, whether you are managing assets of A$500 million or $50 billion.
This means that funds which have more assets under management will spend proportionally less on administration and overheads. This will allow them to make more competitive returns and supposedly give them an edge in the marketplace. The endpoint of this reasoning is that a market’s conditions will be a “critical threshold” when it comes to size.
Any funds smaller than that threshold would be too inefficient and would eventually succumb to the larger and more efficient competition, being either absorbed into a larger fund (to restore economies of scale) or losing members attracted to greener pastures, as the bigger funds could charge lower fees per member.
<h2>But is this true for industry superannuation funds?</h2>
We decided to look into whether it was indeed the case that larger funds have an advantage in economies of scale over smaller funds. In particular, we were hoping to find signs of healthy competition in the superannuation marketplace, as competition helps assure us that the industry is appropriately serving the needs and demands of consumers. Such competition might take the form of strategic mergers between smaller funds, or attempts by larger funds to advertise their relative efficiency and lure away the members of the smaller funds.
Signs of healthy competition are especially important for the superannuation industry, as one of the largest sectors in the economy and a crucial part of our collective ability to finance our retirement. The review used data from industry funds, which disclose this information in annual reports. Retail (for profit) funds do not always disclose this information.
<h2>Comparing administrative efficiency</h2>
In order to work out whether super funds really do benefit from economies of scale, we looked at the largest and the smallest industry superannuation funds. In particular, we compared them based on the proportion of assets under management spent on administration costs each year. If the theory that “bigger is better” is correct, one would expect to find that larger funds spend a far lower proportion of their total assets on administration costs.
One would expect this difference to be especially prominent given the massive size discrepancy between industry superannuation funds: the largest, Australian Super, held over $90 billion in assets in 2015 compared to the smallest fund, Transport Super, with a relatively miniscule $114 million.
When comparing some of the top dogs to a handful of middle-sized industry funds, there seems to be no marked correlation between size and efficiency:
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124413/width754/image-20160530-879-1jmptgw.png" target="_blank">Click to enlarge</a>
<h4>
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124413/width754/image-20160530-879-1jmptgw.png" alt="">Source: Fund annual reports
</h4>
This is very surprising, as these funds do vary by quite a large margin of assets; the two mid-sized funds shown hold about $7 billion each, whereas the two large funds hold over $37 billion and $90 billion.
To further check these results we decided to compare a handful of the largest funds to the five smallest. At first glance, this comparison seems to confirm the “bigger is better” theory:
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124414/width754/image-20160530-10041-3xm71g.png" target="_blank">Click to enlarge</a>
<h4>
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124414/width754/image-20160530-10041-3xm71g.png" alt="">Source: Authors
</h4>
However, when we look past these averages at some of the individual funds (both the largest and the smallest), a much more interesting picture emerges: some of the tiniest funds (in solid lines) seem to be just as cost-effective as the very largest (the dashed lines).
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124415/width754/image-20160530-864-pk9vqg.png" target="_blank">Click to enlarge</a>
<h4><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124415/width754/image-20160530-864-pk9vqg.png" alt=""></h4>
<h4>Source: Fund annual reports</h4>
<h2>A potentially embarrassing situation</h2>
These findings run in stark contrast to prevailing wisdom about the superannuation sector and indeed the classic economic theory of economies of scale. Not only do the biggest funds have no discernible efficiency advantage over the much smaller mid-sized funds, but there are some positively tiny funds which are just as efficient as some of the very largest.
What is going on here – is this merely some market aberration, or are some smaller funds putting up a heroic David-and-Goliath struggle against their competitors? The question for the big funds is why they have no efficiency advantage over their smallest competitors, and what steps they ought to be taking to rectify a potentially embarrassing situation which has been in place for many years.
<h2>Data</h2>
The data-set used for this article consisted of the financial information of the 14 largest and 5 smallest industry superannuation funds, as ranked by APRA’s statistical publications. The data as to the level of administrative expense came from the annual reports of the superannuation funds. An overview of the funds and the size of their assets is shown below.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124416/width754/image-20160530-903-21i56.png" target="_blank">Click to enlarge</a>
<h4><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124416/width754/image-20160530-903-21i56.png" alt=""></h4>
<h4>Source: Fund annual reports</h4>
Rob Nicholls is lecturer, UNSW Australia, and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/rob-nicholls-91073" target="_blank">here</a>.
This piece has been co-authored with Veevek Doolabh, a final year undergraduate law student at UNSW.
 
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The myth of economies of scale: bigger is not necessarily better for super funds

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The Australian dream of home ownership is still relevant to millennials, but rapidly slipping out of their reach, research by leading Australian superannuation fund REST Industry Super reveals. 
The study, conducted earlier this year, of more than 1,000 Australians aged 18-34 revealed that a majority (87%) believe the Australian dream of home-ownership is just as important to them as it was for their parents. However, four in five (80%) are concerned they’re not on track to achieving the Australian dream.
More than half, 52%, say it is out of reach by the increasing cost of living and rising house prices.
But despite the affordability concerns, the desire to own property is still very apparent within this age group, with 55% saying they’d sooner save for a property than retirement.
REST Industry Super CEO Damian Hill said that while it was a good thing that young Australians were keeping an eye on their financial situation, it was just as important they plan for 50 years’ time, not just the next five.
“For people in their twenties, retirement can seem a long way off, but the reality is that this is the perfect time to start putting aside a nest egg for your retirement,” said Hill. “Even if you’re only able to put aside an extra 10 dollars a week through a voluntary contribution, this could provide an additional $48,000 extra in retirement income.”
The survey also probed the concerns of millennials whose parents’ retirement is approaching. It found that almost one in three (30%) of millennials are concerned they will have to give up work to look after their parents, or that their parents will come to them for money in retirement.
“It’s concerning to see so many millennials worried about the impact their parents’ retirement will have on their own financial wellbeing. I’d encourage millennials who are concerned about this to start putting a little extra into their own super, to make sure they don’t become a burden on their own relatives in retirement,” said Hill.
In addition, millennials surveyed said they were concerned about the long-term impact of rising living costs with over half (53%) believing that the increased cost of living meant they wouldn’t be able to save enough for a comfortable retirement. Further, 39% admitted they had absolutely no idea how they’d fund their retirement, while less than half (46%) were actually saving for their retirement, whether through compulsory superannuation or personal investments.
“If you’re one of the three in five young Australians who are concerned about how they’ll fund their retirement, the good news is that there are three simple steps every individual can take to get the most out of their super. Firstly, take your superannuation fund with you when you change job – this will ensure you don’t wind up paying two sets of fees which can eat away at your retirement savings,” said Hill.
“Secondly, if you do have multiple superannuation funds, or have lost track of a superannuation account from an earlier job, look into consolidating your superannuation with a single fund, which again can stop fees eating into your retirement.
“Thirdly, it’s worth checking in with your super fund to make sure you have appropriate insurance cover, as the total permanent disability and income protection cover offered by some funds could make a huge difference if you find yourself suddenly unable to work,” said Hill.
 
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jonathanchancellor-7SQnKwU6yx

Australian Dream of property ownership fading fast, REST survey reveals

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GUEST OBSERVER
Australia votes on 2 July 2016 and never before has so much superannuation policy turned on one election. A Liberal victory could mean very different things than a Labor victory.
In this article, I explore some of the ins and outs of each party’s announced policies.
Labor
The policy
Labor has been consistent with their policies for superannuation (including SMSF) pensions. Its position is <a href="https://www.alp.org.au/fairer_super_plan" target="_blank">available here</a>.
… reduce the tax-free concession available to people with annual superannuation incomes from earnings of more than $75,000. From 1 July 2017, future earnings on assets supporting income streams will be tax‑free up to $75,000 a year for each individual. Earnings above the $75,000 threshold will attract the same concessional rate of 15 per cent that applies to earnings in the accumulation phase
… capital gains will be grandfathered …
The drawbacks
The key drawback I feel is that the above could be very difficult to implement for those with pensions from multiple funds. For example, consider an individual who receives pensions from two superannuation funds. The earnings from the assets supporting the first pension in the first fund might total $60,000. The earnings from the assets supporting the second pension in the second fund might also total $60,000. Accordingly, total earnings (ie, $60,000 + $60,000 = $120,000) exceed the $75,000 threshold by $45,000. This raises a tricky question: in which fund is the $45,000 excess subject to tax?
I suspect that the most practical way of dealing with this problem is as follows. I stress that this is only what I suspect what would happen. Again, I have no special inside information.
At the end of each financial year, each fund tells their pensioners what the associated pension assets earnings of the fund are by way of a document that is similar to a PAYG payment summary.
Each pensioner has to lodge an income tax return with the total of all associated pension assets earnings from all funds. These figures would not constitute assessable income of the pensioner.
If total associated pension assets earnings is greater than $75,000, the ATO sends the pensioner a tax bill calculated as the excess (eg, $45,000 in the above example) multiplied by 15 percent.
The pensioner must give this bill to one or more for their superannuation funds to pay. The superannuation funds can adjust the tax bill by any deductions/losses they have in the relevant year.
The pensioner can only pay the tax bill him or herself if there is insufficient money in any of their superannuation accounts in any superannuation funds to pay the bill.
Naturally, the above would be very paperwork heavy. Further, it would be mean that pensioners who might not otherwise have to lodge income tax returns would need to start lodging tax returns. However, I suspect the above — or some version of it — is what would be needed to make the Labor policy work.
Another drawback is the question of what happens in respect of the sale of ‘lumpy’ assets such as real estate. Real estate can be quite low yielding in rent meaning that in most years the $75,000 threshold might not be used up. However, when sold, there could be a large capital gain. If this capital gain is greater than $112,500 (ie, $75,000 grossed up for the one-third CGT discount that superannuation funds currently get if the asset is held for more than 12 months), then the SMSF would pay tax at usual superannuation fund rates on the excess of the net capital gain over $75,000. However, some of the harshness of this would be mitigated by the fact that ‘capital gains will be grandfathered’. Also, there is no suggestion that the $75,000 threshold will be indexed.
The pros
Firstly, ‘capital gains will be grandfathered’. On one construction, this could mean that pension assets already owned in superannuation funds will remain CGT free upon sale. Alternatively, on a more charitable/optimistic reading of the sentence, this could even mean that the second drawback doesn’t even occur (ie, that there’s no limit on the pension exemption that applies to capital gains). Alternatively, it also mean even other things.
Liberals
The liberals made three noteworthy policy announcements in the Budget.
The first policy
The first policy is to:
… [f]rom 1 July 2017 … introduce a $1.6 million transfer balance cap on the total amount of accumulated superannuation an individual can transfer into the retirement phase. Subsequent earnings on these balances will not be restricted.
This $1.6 million cap will be indexed in increments of $100,000 in line with the consumer price index. A fact sheet released on Budget night explains:
A proportionate method which measures the percentage of the cap previously utilised will determine how much cap space an individual has available at any single point in time. ― For example, if an individual has previously used up 75 per cent of their cap they will have access to 25 per cent of the current (indexed) cap
The drawbacks of the first policy
On its face, the Liberals’ policy is similar to Labor’s policy. Afterall, assuming that assets yield income of 4–5% pa, $1.6 million of assets will generate approximately $75,000 of income. However, I suspect the reality could be quite different. My reasoning is as follows. Firstly, remember that under Liberals’ policy ‘[s]ubsequent earnings on these balances will not be restricted.’ Accordingly, a taxpayer with greater than $1.6 million of assets will have a tremendous incentive to try to do a bit of ‘crystal ball gazing’ in order to determine which assets will experience significant capital appreciation and use those assets to fund their pension. This can work out in two ways:
If the crystal ball gazing is right and assets that will experience significant capital grow are allocated to the pension, then — contrary to the Liberals’ motivation — high wealth individuals could still experience significant tax free income, including net capital gains.
However, the opposite could occur (ie, the crystal ball gazing is wrong), and indeed I suspect the opposite will occur more regularly. That is, assets are allocated to commence pensions and those assets end up collapsing in value, for example, where the next GFC comes along. Because it very much sounds like the Liberals want to implement a lifetime cap of $1.6 million, if you pick the wrong assets (eg, if you started your pension with $1.6 million of shares in the next Enron), then it appears to be a case of too bad: even though the original assets might collapse in value down to effectively nothing, you can never use your pension exemption again.
This means that the income tax system would not be taxing income. Rather, it would be giving a tremendous free kick to those who are good at picking investments and it would be giving a tremendous kick in the guts to those who mis-predict future investment performance.
Other draw backs of this policy include:
It sounds like there will be a harsh penalty for exceeding one’s cap. This could occur if a fund miscalculates market values and starts a pension not with $1.6 million of assets but with what ends up being valued at, for example, $1.7 million of assets. The penalty would a tax on not just the earnings of the excess but also on the capital of the excess. Hopefully lessons from the poorly drafted excess contributions tax regime would be learnt and a sensible discretion will be given to the ATO (or even to taxpayers themselves) in order to avoid unfair and harsh outcomes.
It would require tracking of how much of each individual’s lifetime cap — as proportionally indexed — has been used.
The pros of the first policy
This policy would be conceptually easier to administer I think than the Labor equivalent.
The second policy
The Liberals have said that they will remove ‘the tax exemption on earnings of assets supporting Transition to Retirement Income Streams from 1 July 2017’.
The key point here is that to date, for those wishing to take no greater than 10% of their assets per annum, it has not made a huge difference whether they receive transition to retirement income streams or full account-based pensions. However, under this policy it would make a big difference. Accordingly, if this policy ultimately becomes law, those wishing to commence transition to retirement income streams will have an incentive to see if they can first ‘trigger’ a retirement event so that they can take a full account-based pension rather than a transition to retirement income stream and thus pension assets can access the pension exemption. It has been noted by many that — particular once someone reaches age 60 — ‘retirement’ as defined in superannuation law can occur in ways that are very unintuitive. For example, according to paragraph 22 of APRA’s Prudential Practice Guide SPG 280 Payment Standard, if a 60 year old works two jobs and quits one job (eg, to work even more in the other job) this constitutes retirement under the superannuation law.
The third policy
The Liberals propose to remove the ability to make a reg 995‑1.03 election that ‘allows individuals to treat certain superannuation income stream payments as lump sums for tax purposes.’
Succession planning
Both the Liberals and Labor’s proposals could have a massive impact on succession planning.
Currently, the legislature has been quite explicit that if a fund member dies in pension mode, so long as their benefits are cashed as soon as practical after death, the pension exemption at the fund level will continue and there will be no ‘back door’ death tax by way of CGT at the fund level.
This could change a lot regardless of who wins. I won’t give this full consideration in this article, however, I will note the following consideration in respect of the Liberals’ policy. Namely, unlike Labor where an infinite amount can support a pension, it appears that under the Liberals’ policy, someone can never receive pensions with assets that were worth more than $1.6 million upon their commencement.
This might mean in a mum and dad fund with real estate worth say $3.2 million, if dad dies and mum already has a pension, all of dad’s benefits (ie, a 50% interest in the real estate) might need to be cashed out of the fund by way of a lump sum with no scope of a death benefit pension to mum.
Therefore substantially more CGT may be collected in superannuation funds in respect of death benefits especially given the Liberals’ proposed removal of the anti-detriment deduction.
Disclaimer: The following is based on my view of materials publicly available as at the date of writing (16 May 2016). I suspect that when more details become known about both parties’ policies, some comments could become redundant.
This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional. 
Bryce Figot is director, DBA Lawyers and <a href="https://www.dbalawyers.com.au/">can be contacted here</a>.
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Liberal v Labor: what different election outcomes could mean for smsf pensions

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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

Governance and culture in superannuation: APRA's Helen Rowell

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GUEST OBSERVER
All newly acquired investments by SMSF trustees in collectables and personal use assets since 1 July 2011 have been subject to strict rules under reg 13.18AA of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (‘SISR’).
However, SMSF trustees should be aware that the grandfathering relief in relation to such investments that were held prior to 1 July 2011 will come to an end on 1 July 2016. Therefore, to avoid potential penalties, SMSF trustees with grandfathered investments in collectables and personal use assets will need to consider the current rules carefully and take appropriate action before 1 July 2016 to ensure their investments are compliant. 
This article provides an overview of the rules concerning collectables and personal use assets. 
The origin of the rules
The current rules in relation to collectables and personal use assets arose in response to the 2010 Super System Review (also known as the Cooper Review). The Cooper Review expressed concern that there was an unacceptable risk that investments by SMSF trustees in collectables and personal use assets may be made for present day benefits rather than for the purposes of retirement. Accordingly, the final report recommended a total prohibition on SMSF trustees making such investments. 
However, the federal government rejected the recommended blanket ban and instead sought to allay these concerns by legislating certain restrictions which are contained inreg 13.18AA of the SISR which commenced 1 July 2011. 
Collectables and personal use assets
Regulation 13.18AA covers artwork, jewellery, antiques, artefacts, coins, medallions or bank notes, postage stamps or first day covers, rare folios, manuscripts or books, memorabilia, wine or spirits, motor vehicles, recreational boats, and memberships of sporting or social clubs.
As matter of passing curiosity, we note that collectables and personal use assets include antique firearms but not modern firearms. Moreover, we note that it applies to spirits and wine, but not to beer or pre-mixed drinks. 
No leases to related parties
Sub-regulations (2) and (3) of reg 13.18AA require that SMSF trustees must not lease collectables and personal use assets to a related party of the SMSF, or enter into lease arrangements in respect of these assets with related parties. A lease arrangement is a broad concept covering any agreement, arrangement or understanding in the nature of a lease.
No use by related parties
SMSF trustees must not allow collectables and personal use assets to be used by a related party of the SMSF.
Storage in private residence of related parties
Sub-regulation (3) of reg 13.18AA prohibits SMSF trustees from storing collectables and personal use assets in the private residence of related parties.
The drafting of this provision raises the question of whether it may be possible to store collectables or personal use assets in the offices of related parties where those offices are not a private residence. For example, might an SMSF trustee be allowed to store artwork in the business premises of a related party? 
The ATO has published material on their website which clarifies the position:
You can store (but not display) collectables and personal use assets in premises owned by a related party provided it is not their private residence. They can't be displayed because this means they are being used by the related party. For example, if your SMSF invests in artwork it can't be hung in the business premises of a related party where it is visible to clients and employees.
Remember to keep a record of the reasons for deciding on where to store the assets.
Though this is not binding on the ATO, as the regulator of SMSFs, it is consistent with the legal construction of the regulations and the ATO seems relatively likely to follow the views expressed in such public materials.
SMSF trustees must also make and keep written records of the reasoning behind any storage decisions. There is no specific timeframe as to when the written records must be made, however, the record must be kept for at least 10 years after the decision.
Insurance
The rules stipulate that SMSF trustees must insure collectables and personal use assets in the name of the SMSF within seven days of acquiring such items, excluding memberships of sporting or social clubs.
More specifically, reg 13.18AA(5) provides:
Each trustee of a regulated superannuation fund that is a self managed superannuation fund commits an offence if:
(a)  the fund owns a section 62A item, other than a membership of a sporting or social club; and
(b)  it is more than 7 days since the fund acquired the item; and
(c)  the item is not insured in the name of the fund.
The reference to ‘owns’ is an interesting aspect of the drafting of sub-reg (5). It must be noted that most of the compliance requirements in reg 13.18AA are drafted using the language ‘holds an investment involving’ rather than ‘owns’ [emphasis added]. 
This difference in language raises the question of whether the requirement for taking out insurance in the fund's name would still apply in relation to investments in collectables and personal use assets which are held through an interposed entity. For example, could an SMSF trustee invest in artwork as a unitholder in a div 13.3A non-geared unit trust without the insurance requirement applying? If so, this would allow for more flexible insurance arrangements, such as having artwork insured as part of an overall gallery policy. 
Realisation of assets and related party transfers
Collectables and personal use assets must be realised for a market price determined by a qualified independent valuer if a related party receives an interest in the asset because of the realisation.
More specifically, reg 13.18AA(7) provides:
A trustee of a regulated superannuation fund that is a self managed superannuation fund commits an offence if: 
(a)  the trustee realises an investment held by the fund involving a section 62A item; and 
(b)  a related party of the fund receives an interest in the item because of the realisation; and 
(c)  the realisation was not at a market price determined by a qualified independent valuer. 
Though the ATO has long maintained that qualified independent valuers are desirable, it is notable that this is the first time that there has been an actual legislative requirement to utilise a qualified independent valuer.
Moreover, given the legislation is framed in terms of the SMSF trustee being the entity which ‘realises’ the collectable or a personal use asset, this raises the question of exactly what kind of dealings are covered.  
Neither ‘realises’ or ‘realisation’ are defined in the SISR. Therefore, in the absence of an express definition, we note that words should take their ordinary meaning. Relevantly, Macquarie Dictionary defines realise as follows:
4. to covert into cash or money: to realise securities.
5. to obtain as a profit or income for oneself by trade, labour or investment
6. to bring as proceeds, as from a sale: the goods realised $1000
7. to convert property or goods into cash or money.
Furthermore, the explanatory statement which introduced the provisions in reg 13.18AA uses the language ‘disposes of’. This would tend to suggest that disposal of the asset is required for the purposes of the regulations.
Though the above points are not entirely dispositive, it is arguable that a transfer of an asset directly to a member by way of in specie lump sum would not be caught by reg 13.18AA(7) and thus independent valuation would not be required. Naturally, however, this is a novel and untested construction and therefore the most prudent course of action may be to obtain a qualified independent valuation in any event. 
The end of grandfathering
As noted above, the rules in reg 13.18AA did not immediately apply to existing investments in collectables and personal use assets when the requirements commenced on 1 July 2011. This is because reg 13.18AA(9) provides that sub-regs (2)­–(7) do not apply to investments in collectables and personal use assets that were held by the fund on 30 June 2011. However, the rules will apply to such ‘older’ assets from 1 July 2016 because reg 13.18AA(9) ceases to be enforced as of 1 July 2016 (refer to reg 13.18AA(10)). 
Thus, SMSFs with grandfathered collectables and personal use assets must conform with reg 13.18AA by July 2016. For example, if artwork was stored at a member’s private residence, was not insured, or was leased to a member, the artwork must be leased to a third party at arm’s length terms and insured, or otherwise disposed of by 1 July 2016.
Penalties for contraventions
The prescribed penalty for contravention of any of the above rules is 10 penalty units (ie, $1,800 currently) for each SMSF trustee. This is another timely reminder of the advantages of using a corporate trustee over individual trustees. 
Where contraventions involve a collection of items, the potential for a penalty multiplier to apply to the facts should also be considered. Case law, such as Olesen v Eddy [2011] FCA 13 [32], Vivian v Fitzgeralds [2007] FCA 1602 [33] and Australian Prudential Regulation Authority v Derstepanian (2005) 60 ATR 518 [31] suggests that a multiplier approach is unlikely, however, no guarantee can be given about this and SMSF trustees should be very careful to ensure they comply with the rules.
Conclusion
SMSF trustees who have previously enjoyed grandfathered protection in relation to their investments in collectables and personal use assets held prior to 1 July 2011 will need to take appropriate action to ensure they meet the strict requirements of the SISR prior to 1 July 2016. 
This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.
 
William Fettes and Bryce Figot are lawyers at DBA Lawyers and <a href="https://www.dbalawyers.com.au/" target="_blank">can be contacted here</a>.
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