Sole Purpose Test For Superannuation
There are many kinds of superannuation or retirement savings available today
. Self-managed super funds or SMSF is just one of most regulated kinds of superannuation. Even though it provides the trustee the liberty to make the options which are most suitable to them, it is also highly regulated when it comes to administration, taxation, reporting and auditing.
There are plenty of legal guidelines implemented from the government to make sure that it is properly managed by the trustees involved. The sole purpose test for superannuation is among the ways the government to ensure that money out of your superfund is spent in line with the guidelines specified by the government regulator.
So that a self-managed super fund can become a complying superannuation fund, it must first be regulated. Therefore, it must pass and follow the operational standard of SIS (Superannuation Industry Supervision) Act of 1993. A complying SMSF pays a tax with a concessional rate of fifteen percent, while the non-complying fund pays a tax of 46.5 percent from its income.
For an SMSF trustee to pass the sole purpose test, they have to maintain one (1) core purpose and one (1) or more ancillary purpose.
The core purpose may be one of the following:
To pay the benefits of the members after fulfilling the working contract.
To pay the members their benefits once they have reached 65 years old (the prescribed age)
To pay the benefits to the immediate family of the member in the case they pass away unexpectedly.
The ancillary purpose might be one or more of the following: (This is for the members to have access to the benefits if one or more of these situations)
When a member is terminated from his/her employment provided that the employer has contributed to the superannuation of the member.
When a member stops working as a result of physical, psychological, or mental illness.
When a member dies after retirement, the benefits are given to the dependents and/or immediate family.
During a member's bankruptcy or when experiencing a terminal illness (as long as the reason meets the approval of the Australian Prudential Regulation Authority)
In the event the trustee doesn't follow these regulations, they are going to suffer consequence such as:
Making the fund into a non-complying fund, losing its tax concessions
Disqualification as a trustee
Prosecution in the court
Penalty fines
Since you are managing your self-managed super funds personally, this means that you are responsible for any mistakes or non-compliance. Government regulators cannot provide you with specific advice on what actions to take, , so it is prudent to call an expert to raise your concern.
Please note that all numbers in this article were accurate at the time of writing but could possibly have changed in the meantime and needs to be verified independently.
by: David Saul
Things You Need To Consider When Getting Wine Baskets Glutation Y Su Importancia Durante El Embarazo Begin A Webstore Without Difficulty With The Use Of An Affiliate Feed Eight Sure Fire Tips To Create Your Ideal Bridal Speech Establishing A Good Night Time Routine Knowing All About Supplemental Security Income Or Ssi Collect Native American Gourd Rattles Classified Ads Bihar The Dentist: Always Ready To Address Your Oral Needs Waste Management Winnipeg Painless Dentistry: Overcoming The Age-old Fear Of The Dentist Sedation Dentistry: Helping People Cope With Fear How Sedation Dentistry Helps Relieve The Fear In Hesitant Patients