SMSF strategies under review in volatile market

While there is nothing trustees and advisers of self-managed superannuation funds (SMSFs) can do to change the reality of the current global financial crisis, there are opportunities to implement strategies to take advantage of some of the current negative returns.

Meg Heffron, SMSF expert and principal of Heffron Consulting, used her presentation at the SPAA national conference in Adelaide to examine a number of strategies that focused on the management of negative returns to create future benefits for clients.

This included the reallocation of contributions to the tax-free component that might have been reduced in light of recent negative returns, including a number of pension refresh strategies. In certain circumstances, clients may be better of ceasing pensions and recommencing them to take advantage of lower minimum payments, for example.

Heffron also stressed the importance of understanding the full value of assets that may be transferred in specie into a SMSF. Heffron said that in specie transfers, particularly of listed securities, can appear to be a worthwhile strategy in light of falling asset values by assisting with the management of contribution caps and capital gains tax minimisation. But Heffron stressed that, in some cases, the lack of capital gains on the transfer of the listed securities may inadvertently result in the member losing the ability to claim a tax deduction on personal concessional contributions.

Heffron examined four areas of strategic advice that are relevant to members and trustees of SMSFs in the current investment environment: tax and preservation, strategic timing of pensions, re-contributions and the transfer of assets.