Super Snapshot August 2014

Clear Vision • August 3, 2014
This month we will expand on our age-based super strategies series by discussing the ‘withdrawal and re-contribution strategy’. This strategy is available for SMSF members who are over 60 and is a particularly useful tool for estate planning.

Cheers
Justin

 
This strategy is best presented as an example however there are some background facts about income streams (pensions) which are important to remember:
  •  Once an income stream commences,  no further contributions can be made unless that income stream is stopped.
  • Furthermore, on the date that the income stream has been commenced, the proportion of taxable and tax free balances is locked in and will not change for the life of that income stream.
  • When you begin to draw down on your income stream, this money coming out of the fund is made up of taxable and tax free components according to the locked in proportions. (e.g. if the Fund has 70% taxable balance, each payment will be made of 70% taxable money).

Worked example:
Terry is 58 and is currently drawing an income stream from her self managed superannuation fund. Terry’s income stream has a taxable percentage of 40%.  In the 2014 financial year, Terry makes a non concessional contribution of $150,000. This non concessional contribution (i.e. post tax contribution) will increase Terry’s tax free balance in the fund, however, this money is not automatically added to the Terry’s income stream as contributions cannot be added once the income stream has commenced.
There are several options available to Terry:

Keep the $150,000 in accumulation mode : this would mean that some of the income of Terry’s Fund will be taxable as it is no longer a 100% pension fund. The Fund would also need to apply for an actuarial certificate to determine the percentage of the fund’s income which is taxable. This strategy may be of advantage depending on Terry’s situation however assuming there is no other benefit for Terry to keep an amount in accumulation mode this is tax the Fund will be paying unnecessarily.

Stop the existing income stream, add the $150,000 contribution and commence a new income stream with the new balance : Terry’s current income stream has a taxable percentage of 40% whereas the $150,000 is 100% tax free money. If the income stream is stopped and the new money added, the new pension which is commenced will have a lower the taxable percentage. This essentially ‘muddies the water;’ as the taxable and tax free components of the pension are diluted. When this new pension commences, the taxable and tax free percentages are re-calculated at date of commencement. All withdrawals from the new pension will be made up of the new taxable to tax free ratio.

Keep the existing income stream and commence a second income stream with the $150,000 : Terry’s current income stream remains as is. The second income stream commenced with the $150,000 will have a 0% taxable percentage. This situation can now be used to Terry’s advantage. Each year Terry must withdraw the minimum pension amount from each of her pensions. Let’s say Terry’s minimum for the 2014 financial year is $10,000 however Terry withdraws $30,000. Terry must meet the minimum withdrawal requirement on both of her pension accounts however Terry has withdrawn $20,000 in excess of the minimum. Terry can now cherry pick which account the excess pension is allocated against:

  1. Because Terry is under 60 years old, her pension withdrawals are taxable in her own name. Terry could choose to allocate the extra $20,000 against her second income stream as this stream has a NIL taxable percentage. Under this scenario, Terry would only pay tax on the taxable portion withdrawn from her first income stream.
  2. Alternatively, if Terry has  minimal taxable income in her own name, she could choose to allocate the extra $20,000 against the her first income stream in order to lower the balance and therefore reduce the tax payable by any adult beneficiaries when she passes away.

Our strategy to run multiple pension streams allows for the most flexibility in terms of pension withdrawal and estate planning. In addition, with the proposed changes to the Centrelink deeming rules in January 2015, pensions commenced prior to 31 December 2014 will be grandfathered under the old deeming rules. If an existing income stream were to be stopped, new money added and then re-commenced this would count as a new pension and therefore be subject to the new deeming rules.

If you have any questions in regards to our pension strategies or would like further to discuss your superannuation options further, please do not hesitate to contact our office on 07 4688 2500.

 

Vanity Metrics vs Real KPIs: Which One Are You Tracking?

By Caroline Gillies • March 26, 2026
More data doesn’t mean better decisions. Many business owners are drowning in numbers but starving for direction, tracking everything and understanding nothing. The result? Decisions based on gut feel, cash flow surprises, and growth that looks good on paper but doesn’t actually strengthen the business. Vanity metrics can be misleading. Total revenue, website traffic, or social media likes might feel positive, but they don’t always reflect real performance or profitability.  Real KPIs tell a different story. They give you clarity, control, and confidence in your decisions. While every business is different and the right KPIs will vary, here are some examples of powerful KPIs businesses often track: • Profit Margin – Are you actually making money? • Cash Flow – Do you have enough cash to operate and grow? • Customer Acquisition Cost (CAC) – What does it cost to win a new customer? • Debtor Days – How quickly are you getting paid? • Customer Lifetime Value (CLV) – How much is each customer worth over time? If you’re not tracking the right numbers for your business, you’re essentially flying blind. Because success isn’t about more data—it’s about the right data.

Payday Super is Coming - 1 July 2026

By Caroline Gillies • March 1, 2026
From 1 July 2026, the Federal Government will introduce one of the most significant changes to superannuation administration in recent years: “Payday Super.” These reforms fundamentally shift how and when employers meet their Superannuation Guarantee (SG) obligations. What’s Changing? Under the new rules, SG contributions must be paid at the same time as salary and wages and received by the employee’s super fund within seven business days of payday. This replaces the current quarterly payment system. The changes apply to all eligible employees, including those captured under the expanded definition of “employee,” and extend to salary sacrifice amounts and other qualifying earnings (QE). Employers will calculate SG at the legislated 12% rate on QE, which includes ordinary time earnings and relevant additional payments. Contributions remain subject to the Maximum Contribution Base, limiting employer liability to approximately $30,000 per employee per financial year. Employers will also be required to report QE and SG liabilities through Single Touch Payroll (STP), enabling the ATO to monitor compliance more closely and identify underpayments earlier. Operational Impact for Employers The shift to payday reporting and payment means payroll systems must be updated to calculate, process, and remit super contributions each pay cycle. Businesses will need to ensure their software can manage QE calculations and facilitate timely electronic payments to super funds. Cash flow management will also require attention, particularly for small businesses accustomed to quarterly payments. Super will become a real-time obligation rather than a periodic liability. Importantly, failure to meet the new deadlines will trigger the revised Superannuation Guarantee Charge (SGC), including penalties and interest. While late contributions and SGC amounts remain tax deductible, interest and penalties do not. Employers currently using the Small Business Superannuation Clearing House must transition to alternative payment solutions before its closure on 30 June 2026. Preparing Now Although implementation begins in 2026, early preparation is essential. Reviewing payroll systems, assessing cash flow impact, and updating internal processes will help ensure a smooth transition and minimise compliance risk. Payday Super represents a move toward greater transparency and timeliness, but it also demands proactive planning from employers. If you would like assistance preparing your business for Payday Super, our team at Clear Vision Accountancy Group is here to help. Please contact us on 4688 2500 to discuss how we can support your transition and ensure you remain compliant. We drew inspiration for this article from the ATO

Don’t be on the ATO’s naughty list in 2026

By Caroline Gillies • December 11, 2025
The ATO is cracking down on people who claim too many tax deductions for properties that they use both personally and as rentals — especially holiday homes. A new draft ruling says that if you use a property for both personal use and renting it out, you must split (apportion) the expenses in a fair and reasonable way. You can only claim deductions for the portion of time or space used to earn rental income. If the ATO thinks your property is really a holiday home — for example, you block out peak times for your own use and only rent it occasionally — they can classify it as a “leisure facility.” If that happens, you cannot claim big expenses like mortgage interest, council rates, land tax or maintenance. You’ll only be allowed to claim small costs like cleaning, advertising and platform/agent fees. The ATO says many owners of holiday homes have been claiming too much by showing “rental losses” every year. They are now looking more closely at cases where the owner keeps the property unavailable for rent during busy periods.  How do I stay off the ATO naughty list? If you mix personal use with rental use, be careful. Only claim the rental part of your expenses, or the ATO may deny most of your deductions.