Super Snapshot – February 2014

Clear Vision • February 4, 2014

This month’s super snapshot will cover a recent strategy which we implemented to the benefit of a client recently.

This strategy is applicable for SMSF members who are between 55 and 59 years of age and are either permanently retired or drawing a transition to retirement balance which has non concessional component.

If you are unsure if you fall into either of these categories, please contact our office on
07 4632 9077.

Su-Mei
SMSF Specialist

Withdrawing your account based pension tax effectively for under 60 year olds.

Each year, members drawing an income stream (pension) from their superannuation funds are required to meet a minimum withdrawal requirement. For those members under the age of 60, the taxable component of these minimum withdrawals are taxable in the member’s personal name.

Introducing the Lump Sum Payment

There are generally three ways to withdraw money from super.

Type of payment What this means for the SMSF Example – Tax effect on SMSF Example – Tax effect on Terry
Income Stream Payment An income stream payment is a payment made from an account in pension mode. This means the Fund does not pay tax on any income earned by the assets supporting the pension. Terry is a single member of her SMSF. Terry commenced a pension with 100% of her balance on 1 July 2013. During the 2014 financial year the SMSF earns $4,000 in interest on a term deposit. This interest is tax free because the SMSF is fully in pension. As Terry is under 60, she will pay tax on the taxable component of her pension payment at her marginal tax rate and will receive a 15% tax offset against tax paid.
Lump Sum Payment A lump sum payment is a payment made from an account in accumulation mode. This means the Fund will pay tax of 15% on any income earned by the assets supporting the accumulation account. Terry is the single member of her SMSF. The SMSF has a term deposit of $100,000. During the 2014 financial year the term deposit earns $4,000 interest. The SMSF would pay $600 tax on the interest earned. As Terry is under 60, she will pay tax on the taxable component of her lump sum withdrawal at 16.5% however, she may be able to access the low rate cap (see below)

Members who withdraw funds as a lump sum payment may have access to the Low Rate Cap. The low rate cap is a lifetime cap which is available to members between the ages of 55-59. The low rate cap allows you to take some of the your lump sum withdrawal (up to the capped amount) tax free. Amounts withdrawn in excess of the cap amount are taxed at 16.5% on the taxable portion. The low rate cap is $180,000 for the 2014 financial year and is indexed annually.

Partial commutation: withdrawing a lump sum payment from an account based pension account

A recent ATO determination (SMSFD 2013/2) has confirmed that if a member is drawing an account based pension and chooses to withdraw his/her money as a lump sum payment this will satisfy the minimum pension requirement. This means that members can effectively have the best of both worlds. A member can convert his/her account to pension mode and therefore access tax free benefits of being in pension within the SMSF; as well as being able to withdraw the minimum pension as a lump sum, use the low rate cap and pay no tax on the withdrawal in their own name.

How does this work?

One important consideration for this strategy is that the choice to withdraw the funds as lump sum rather than a pension payment is made (and documented by your accountant) prior to the withdrawal. This is because in order to withdraw funds as a lump sum that amount needs to be commuted back to accumulation immediately prior the withdrawal taking place. This is called a ‘partial commutation’. Because only part of the pension is commuted and then immediately withdrawn, the fund retains the tax free environment of pension mode.

Case Study:

Terry is 58 years old and retired. On 1 July 2013 Terry has commenced an account based pension and has been advised that her minimum withdrawal is $18,200. Terry has not previously used her Low Rate Cap at all. Terry’s pension is 100% taxable. Terry also receives income from non superannuation sources and does not rely on regular stream of income from her SMSF for her day to day living. Terry has consulted her accountant and decided that she will withdraw her minimum pension as one withdrawal in June 2014. Terry elects to make a lump sum commutation for her minimum pension amount of $18,200.

Effect on Terry’s personal income tax position
Description Amount Tax if withdrawal taken as Account Based Pension Payment Tax if withdrawal taken as a Lump Sum (using low rate cap)
Terry’s withdrawal from her SMSF $18,200 $6,188* $0
Less Tax Offset ($2,730) $0
Total Tax $3,458 $0

*assuming an effective marginal tax rate of 34% (32.5% plus 1.5% Medicare levy)

How we can help

If you are between 55 and 59 and either withdrawing an account based pension OR withdrawing a transition to retirement pension (TRIS) and have unrestricted non preserved balances, this strategy may assist you. Please contact our office for further information

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.