thewest#westaustralian#06-02-2017#full run#first#ym 07#1# ... · monica rule is an smsf special-ist...
TRANSCRIPT
Know thechanges tosuper laws
With the changes to our super-annuation laws about to hit on July 1, every self-
managed superannuation fundmember needs to understand what the changes mean for them.
SMSF members, with this knowl-edge in hand, will be able to miti-gate against any negative con-sequences the new laws mightcreate and take action to ensuretheir superannuation will continueto grow in the most tax-effectiveway.
The change most people are fa-miliar with is the $1.6 million trans-fer balance cap. What you may notknow is that the cap will apply intwo instances.
First, it is the limit on the amountof net capital that can be placed onan SMSF member’s pensionaccount where the earnings are taxexempt. Amounts above the capneed to be moved to the accumula-tion phase or taken out as a lumpsum.
The second instance is where thecap will apply to a member’s totalsuperannuation balance.
If a member exceeds $1.6 millionin their superannuation balance,they will be prevented from making further non-concessionalcontributions into their SMSF.
Now I should point out that thereare some contributions which donot count towards the $1.6 million
This is an impor-tant distinction formembers who wantto put more moneyinto their pensionaccount.
Reversionarypensions and deathbenefit pensions arealso treated slightly
differently under the$1.6 million pension
cap. Although both pen-
sions count towards adependant recipient’s pen-
sion cap, reversionary pen-sions are not counted towards the
cap until 12 months after thedeceased member’s death.
Estate planning also needs to beconsidered more carefully wherethe deceased member’s childrenreceive their superannuation entit-lements.
The children may not be able totake a pension of up to $1.6 million,or may be able to take a pension inexcess of $1.6 million, dependingon whether the deceased was inreceipt of a pension at the time oftheir death.
While the changes may causeconcern, knowledge is your bestdefence.
Understanding how the changeswill apply to you, and taking early action will help you to navi-gate these changes with morecertainty.
Monica Rule is an SMSF special-ist and she will be running a webinar on the changes on February23. For more information, go to monicarule.com.au
ofyourunused conces-sional contributionscap, from 1 July 2018, ona rolling basis for up tofive years.
Where an SMSF mem-ber exceeds their $1.6million pension cap by up to$100,000 at June 30, 2017, the newlaw allows the member six monthsto remove the excess from themember’s pension account.
However, the member will still berecorded as having exceeded their$1.6 transfer balance cap and willnot be eligible for any indexedincreases of the cap in the future,even if they reduce their pensionaccount balance below $1.6 million.
Members need to be aware thatwithdrawals from their pensionare recorded differently dependingon the type of withdrawal.
While a partial commutationreduces a member’s $1.6 millionpension cap, an ordinary pensionpayment does not.
pension cap or superannuationbalance cap.
Compensation payments for per-sonal injury, received by SMSFmembers and contributed intotheir SMSFs, are not countedtowards the $1.6 million superan-nuation balance cap or the $1.6 mil-lion pension cap.
This means members can have apension account in excess of $1.6million.
On the other hand, if a smallbusiness taxpayer transfers theproceeds from the sale of activeassets up to the value of $1,415,000,or capital gains from the sale of anactive asset of up to $500,000 intotheir SMSF (under the Small Busi-ness CGT concessions) the contri-bution will count towards theirsuperannuation balance
If the amount exceeds $1.6 mil-lion, then the member will be re-stricted from putting any morenon-concessional contributionsinto their SMSF.
SMSF members turning 65 dur-ing the 2016-17 financial year needto understand the changes to thebring-forward non-concessionalcontributions cap.
There will be a transitional non-concessional bring-forward cap of$460,000 or $380,000 depending onwhen the bring-forward cap wastriggered.
If you want to take advantage ofthe full $540,000 cap you need tomake the whole bring-forward,non-concessional contribution of$540,000 before 30 June 2017.
There will also be a $500,000 limitthat stops you from being eligiblefor the catch-up concessional con-tributions, where you can use any
Getting informed andtaking action are vital
WHILE THECHANGES MAY CAUSECONCERN,KNOWLEDGE IS YOUR BEST DEFENCE. MONICA RULE
Monica Rule
7Monday, February 6, 2017
The adage that jacks-of-all-tradesare masters of none rings painfullytrue for Woolworths.
This family favourite is begin-ning a revival after two years in amarket that proved to be the veryopposite of super — hardware andthe failed Masters project.
We are always happy to shop forbargains in the discount aisle andWoolworths is starting to showfresh signs of a long-term recovery.
It is an opportunity well worthchecking out. After shedding Mas-ters, Woolworths is a food-and-retail giant encompassing generalmerchandise, food, liquor, petrol,gaming, leisure, accommodation,hospitality and entertainment.
It is one of Australia’s biggestcompanies, has international expo-
sure to markets in New Zealandand India, and in many ways is aretail investors one-stop shop.
Ringing up a dividend of almost3.7 per cent has us needing a fur-ther 5.0 per cent required from cap-ital gain. While its target price isslightly undercutting the marketprice, these forecasts have beenchasing them higher over the lastseven months, rising 4.9 per cent inthe past month alone.
You can add to this some goodfundamental growth forecasts onmargins, earnings, income anddividend yield extending into 2018as the streamlined Woolworthsreturns to what it once did best.
From 1993, Woolies suppliedfresh gains and crisp profits withina bountiful uptrend that returnednearly 1500 per cent in capital gainsbefore hitting a wall in 2014.
Since then the stock soured by 40per cent before beginning to rallyout of the lows in mid-2016 andright now it is working throughresistance around $25 .
Somewhat a victim of its ownsuccess, chasing growth at all costsnearly cost Woolies everything butit seems to have returned to its oldstrengths. It could already bethrough the worst of it.
As bitter medicine returns it tohealth, it is encouraging to seesome particularly attractivemomentum signals comingthrough in longer timeframes.
With good fundamentals and astrong technical outlook we expectthe recovery to continue and thinkit has a lot more in store.
Patrick Taylor is a private fundmanager with Taylor Securities
WOW factor after Masters bluePatrick Taylor
WOOLWORTHS LIMITED (WOW)Classifi cation: food retail & distributionCurrent price: $25.09Market capitalisation: $31.69BForecast EBITDA growth: 7.1% Gross yield: 3.69%Consensus price target: $25.02 Covering analysts: 14 Premium at current price: 0.28% Price target trend: increasing fl atSignal time frame: quarterly-monthly-weekly Trend bias: up fl at medium-short
INDICATORSShort-term: positive neutral Medium-term: positiveLong-term: positive Recommendation: buy Focus: dividend income & capital growth
SET UP NOTES � After being cut in half from 2014 to
2016 WOW has been showing the fi rst signs of a long-term recovery and we are looking to follow excellent moment signals here.
� Fundamentals are good and also rising on the back of improved performance and have attractive forecasts unfolding before them.
� The price is currently working through medium-term resistance at $25.00 and could have some further volatility ahead but once through that we start targeting $27.50 dynamic resistance and older structure around $30.00.
� Good support is now layered down from $24.50 to $23.50 (and also has strong support forming a wall at $20.00 but hopefully it won’t be required) as we follow greater recovery signs aligning here.