Q1/ How does a smsf admin compute the contribution proportions of a smsfs members. Let’s say a smsf has 2 members. Member A contributes $300K in the first year to start the fund. Member B contributes $100K on 1/12/2014. The ratio is computed based on the value of the fund as at 1/7/2014 or on the value as at 1/12/2014? For example, if the fund value is $200K on 1/7/14 and $400K on 30/11/14 (the day before 1/12), then A portion is 66.67% and B is 33.33% if using 1/1/2014 value or 80% to 20% if using 30/11/14 value.
Q2/ When does the future ratio get computed? Is it at the start of a new financial year or at the end of the current year?
Q3/ Is the so called daily operating ratio stays the same for that whole financial year even if both members A and B withdraw different amount of money during different times of the year?
Q4/ If Liberal wins the general election, given the new Budget ruling which requires anyone on TTR to be taxed at 15%of its earnings. If member B age is 57 and member A age is 66, then I think the best strategy is to reduce B portion to zero and then use the cash to let member A contributes the cash subject to his ncc limit back to the fund. To reduce B proportion close to zero, their smsf has to convert all its assets (in shares only) to cash and then member B withdraw her portion of cash?
Q5/ Is this the best strategy for B on TTR without resorting to retirement? Is reverting to accumulation mode a better option than continue on TTR? If so, how does one change from TTR to accumulation mode without cashing out and re-contribute back in?
Q6/ With the new rules of $1.6m cap in pensions and life time ncc cap of $500K, suppose if a retiree has all his pensions in smsf and is at the $1.6m mark and his ncc is close to the limit, I suppose the best strategy for him is to let the fund go up and down. This is because if he cashes out the excess, then the remaining $1.6m suddenly loses value like some shares go into liquidation, then he won’t be able to contribute his ncc to boost up his smsf.
Q7/ If a retires has a few pension funds, then I suppose each fund/smsf administrator will somehow work out all the different day values above the $1,6m mark and ATO will tax 15% for the total excess amount in that year.
Q8/ If a member has 2 industry pension funds and 2 smsf funds shared by other members, then it is a very complicated affairs. It would be even more complicated if a member explicitly wishes to have an accumulation account in each fund to hold his portion over the $1.6m, all his fund admins need to do daily coordination to move whatever excess in each fund to accumulation account and back again to pension account depending on the fluctuation values of the assets. The smsf admin has to maintain segregation of assets between accumulation and pension account as well as between members within the fund.
