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Devising an SMSF investment strategy

Posted on May 24, 2016 by admin

An investment strategy is fundamental when it comes to self-managed super funds. Not only is having one a statutory requirement, but it also helps SMSF trustees know what to invest in to meet the fund’s investment goal.

Above all, an SMSF investment strategy must be designed to help trustees reach their retirement goal.

To do this, the strategy must outline the fund’s objectives. Every fund’s objective will be different and should reflect the circumstances of each fund member. For example, it must take into account the age and when each member plans to retire, existing assets inside and outside of super, each member’s current and future salary and ability to contribute to the fund. Importantly, it must also factor the ability of the fund’s assets to be sold within a specific time frame.

Taking into account the risk profile of each fund member will help the strategy determine what the fund invests in. In cases where the risk profile of each member differs, individual asset pools should be created to reflect individual members’ risk preferences.

SMSF strategies need to be reviewed regularly, especially during important life events, like when a member enters retirement, suffers from an illness, goes through a divorce or passes away. These events can have a substantial effect on how a fund operates e.g. if a member dies, a fund’s asset allocation may need to change so that the fund holds fewer high-risk assets.

While there is no such thing as a ‘one size fits all approach’ when it comes to an SMSF’s investment strategy, it is essential for a strategy to consider the elements such as the ones discussed to ensure the fund complies with regulations and meets member needs in retirement.

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Government increases cash flow support for businesses

Posted on March 27, 2020 by admin

The Australian Government has increased support for businesses to manage cash flow challenges under the ongoing COVID-19 circumstances.

The Boosting Cash Flow for Employers measure announced on 12 March 2020 will be increased to provide up to $100,000 for eligible small and medium-sized businesses. To be eligible employers must have been established prior to 12 March 2020 and have an aggregated annual turnover of less than $50 million and employ workers.

The measure will provide employers with a payment equal to 100% of the tax withheld from wages and salaries. This is a rise from the original 50%, with maximum payments being increased from $25,000 to $50,000 and minimum payments being increased from $2,000 to $10,000.

Employers will receive payments from 28 April 2020 from the ATO as automatic credit in the activity statement system upon lodging eligible upcoming activity statements.

Eligible businesses will be provided with an additional payment during July – October 2020. The payment will be equal to the total amount received under the Boosting Cash Flow for Businesses scheme. For monthly and quarterly activity statement lodgers, these payments will be provided as automatic credit in the activity statement system for each lodgement up until October 2020.

The Government has also introduced the Coronavirus SME Guarantee Scheme to support the flow of credit for small and medium enterprises (SME) by providing a guarantee of 50% to participating SME lenders for new unsecured loans that will be used for working capital. To be eligible, SMEs will have a turnover of up to $50 million and the loans must comply with the following terms:

The SME Guarantee Scheme will still require businesses to repay these loans and approval is subject to regular lending requirements. The Scheme will commence by early April 2020 and be available until 30 September 2020.

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