Author Archives: Rebecca Edwards

About Rebecca Edwards

With a background in aged care management, Rebecca brings hands on experience and insight into our elder law and aged services areas as well as a thorough understanding of complex estate planning issues and disputes.

ELECTION UPDATE – SMSFs and the Major Parties’ Superannuation Policies

The federal election will be held on May 18 and both major parties have now outlined their superannuation and tax policies. With the federal election only days away many of our clients have been asking what the major political parties’ policies are that might impact their SMSF as well as their individual taxation circumstances.

If you would like more information on a particular policy announcement, please do not hesitate to contact our office to set up a time to discuss any requirements you may have.

Liberal-National Coalition

Superannuation

  • Australians aged 65 and 66 will be able to make voluntary superannuation contributions without needing to work a minimum amount. Previously, this was only available to individuals below 65.
  • Extending access to the bring-forward arrangements (the ability to make three years of post-tax contributions in a single year) to individuals aged 65 and 66.
  • Increasing the age limit for individuals to receive spouse contributions from 69 to 74.
  • Reducing red-tape for how SMSFs claim tax deductions for earnings on assets supporting superannuation pensions.
  • Delaying the implementation of SuperStream (electronic rollovers for SMSFs and superannuation funds) until March 2021 to allow for greater usability.

Taxation

  • From 2018-19 taxpayers earning between $48,000 and $90,000 will receive $1,080 as a low and middle income tax offset. Individuals earning below $37,000 will receive a base amount of $255 with the offset increasing at a rate of 7.5 cents per dollar for those earning $37,000-$48,000 to a maximum offset of $1,080.
  • Stage 1 tax cuts: From July 1 2018, increasing the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000.
  • Stage 2 tax cuts: From 1 July 2022, increasing the top threshold of the 19 per cent personal income tax bracket from $41,000, to $45,000.
  • Stage 3 tax cuts: From 1 July 2024, reducing the 32.5 per cent marginal tax rate to 30 per cent which applies from $120,000 to $200,000. The 37 per cent tax bracket will be abolished.

Australian Labor Party

Superannuation

  • Disallowing refunds of excess franking credits from 1 July 2019 – this would mean SMSF members in pension phase no longer receive refunds for the franking credits they receive for their Australian share investments.
  • Banning new limited recourse borrowing arrangements.
  • Reducing the post-tax contributions cap to $75,000 per year down from $100,000.
  • Ending the ability to make catch-up concessional contributions for unused cap amounts in the previous five years.
  • Ending the ability for individuals to make personal superannuation tax deductible contributions unless less than 10 per cent of their income is from salaries.
  • Lowering the higher income 30per cent super contribution tax threshold from $250,000 to $200,000.

Taxation

  • Labor supports the stage 1 tax cuts and will match the $1,080 low and middle income tax offset. From 1 July 2018, individuals earning below $37,000, will get a $350 a year tax offset, with this amount increasing for those earning between $37,000- $48,000 to the maximum $1,080 offset.
  • Introduce a 30 per cent tax rate for discretionary trust distributions to people over the age of 18.
  • Will limit negative gearing to newly built housing from January 1 2020. (Existing investments are grandfathered under the current law)
  • Reduce the capital gains tax discount for assets that are held longer than 12 months from the current 50 per cent to 25 per cent. (Existing investments are grandfathered under the current law)
  • Limit the deductions for the cost of managing tax affairs to $3,000.

 How can we help?

If you have any questions or would like further clarification about how these policies might affect you and your fund, please feel free to give our dedicated team a call to discuss your particular requirements in more detail.

Everything worth knowing about SMSFs in under 5 minutes

What is an SMSF?

A Self-Managed Super Fund (“SMSF”) is a way to save for your retirement.

SMSFs differ from other super funds because the trustees of the fund are in most cases also, the members.  This means that the members of the fund are able to operate the SMSF for their benefit.  However, they are also required to comply with the complex legislation which governs SMSFs.

What’s the point of using an SMSF?

SMSF’s can provide the following benefits for members:

  • More control for members over their superannuation;
  • Tax savings;
  • Administration fee savings; and
  • Asset protection.

What does the trustee of an SMSF do?

The trustee’s role includes being responsible for:

  • holding assets for the sole purpose of providing benefits for your members (or their beneficiaries) upon their retirement;
  • developing, putting in place and reviewing the SMSF’s investment strategy;
  • keeping SMSF assets separate from your personal or business assets;
  • preparing and keeping proper records, including financial statements, tax returns and audits among other things;
  • not lending money from the SMSF to its members;
  • not borrowing money except in limited circumstances in accordance with the legislation;
  • ensuring assets known as in-house assets do not exceed 5% of the total SMSF assets, and
  • only releasing money when the proper conditions of release are met.

Which assets can an SMSF invest in?

An SMSF can invest in a broad range of assets which are allowed under the SMSF’s investment strategy and which are in accordance with the legislation governing SMSFs.  For example, assets invested in might include shares, term deposits, managed funds and property.  As well as this, SMSFs can also hold alternative assets, such as antiques and artwork.

What can’t an SMSF do?

There are restrictions on the way that SMSFs operate. There are some assets that they cannot invest in or which are limited on how much of the fund is allowed to be invested in certain assets.  For example, loans to members of the SMSF or their relatives are prohibited.

It is essential that an SMSF is operated for the sole purpose of providing retirement benefits to its members.

There can be very serious consequences where an SMSF fails to comply with its obligations under the legislation governing it.  These include being taxed at 47% due to a loss of the concessional rate afforded to SMSFs, significant fines and in extreme circumstances prison for SMSF trustees who do the wrong thing.

Can anyone be in your SMSF?

Members of an SMSF can include family including your spouse, your children, even your parents.  The maximum number of members for an SMSF is four.

While there is the potential to save money by sharing an SMSF, there is also the potential for more problems the more people are involved.  We recommend that you carefully consider who to bring in as members of an SMSF.

What are the costs of running an SMSF?

SMSFs generally have a variety of expenses and fees to pay including the cost of investing such as broker fees, any trustee service fees, accounting costs as well as the costs associated with ongoing administration and annual auditing.

In general terms, it seems to be accepted that you need at least $200,000 to make the set up worthwhile.

Is an SMSF right for you?

Deciding on whether an SMSF is right for you depends on a number of factors.  We recommend seeking professional advice from legal and financial specialists able to guide you through the decision making process.

Here at CRH Law, our team of experienced lawyers are well placed to help you to achieve the best possible outcomes for you and your family regarding your superannuation, giving you peace of mind for the future.  If you are considering establishing an SMSF, contact us today for help in getting it right at the outset.

So you’ve decided to set up a Self-Managed Superannuation Fund?

Setting up a SMSF can be daunting, you only have to look at the legislation to see that – over 700 pages (yes, you read that right – 724 pages to be precise) of rules about SMSFs and that doesn’t even include the regulations or other associated legislation.

But don’t be put off.  Although, the law governing SMSFs is complex, with some careful planning and support from knowledgeable advisors, you could have a successful SMSF in no time.  So what is the key to the success of an SMSF?  Well, there is no magic involved; you just need to make sure you get the SMSF set up right from the outset and then reviewing things regularly afterwards.  Sadly, you’d be surprised at how many people don’t do this and pay dearly later on.  The right set up will help you to avoid the costly and stressful pitfalls of getting it wrong and take you a step ever closer to living your dream retirement.

Important things to consider before setting up an SMSF.

There are many things to consider when setting up a SMSF but here are some of the key issues:

1. Professional help to get it right from the start.

Setting up your SMSF properly in the beginning will reduce the risk of significant cost to you later.  For example, having to change a trustee or being penalised for non-compliance.

2. Appointing the right trustees

Appointing the right trustees initially is crucial to the smooth, cost effective running of the SMSF.  Whether to appoint an individual trustee or corporate trustee will depend on many factors.

3. Having the best Trust Deed

The SMSF is only as good as its Deed.  Having a high quality Deed in place is paramount to the successful running of the SMSF.  While the law may make provisions about what trustees can and can’t do, the Deed prescribes what can happen for a particular SMSF.  For example, the law may allow non-lapsing death benefit nominations but if the Deed does not, then the Members will not be able to make them.

4. Making sure the SMSF is an Australian Fund

If the SMSF does not meet the residency requirements then it may be found to be non-compliant and will be in danger of significant negative tax consequences.

5. Having an exit plan

Having an exit plan in place which contemplates how you will end your Fund in various situations including simply because you want to, due to death or following a relationship breakdown.

At CRH Law, we are here to help you every step of the way when it comes to your superannuation.  From getting things right from the inception of an SMSF to helping you to keep your SMSF running at an optimum, our team is ready to help you to become the master of your own superannuation and retirement.

Myth busting – What happens to your super when you die?

Not sure?   Well, you are not alone.  Despite being one of our biggest assets, many Australians have no idea what happens to their superannuation when they die.

Changes to the law over the last few years have made it even more mind-boggling to try to work out and plan for what might happen after death.  Not to mention, the ever growing myriad of myths that float around just too really make things tricky.

As lawyers dealing with super every day, we frequently meet clients who have been falsely comforted by myths they have heard regarding the way that their super will be dealt with after they die.  Here are a few of the common myths …

Myth 1 – I’m OK, I did my Will

Firstly, if you have a Will, congratulations, research estimates that you are in a minority, with less than ½ of Australians having a valid Will. But that is a whole different article.

Super is not an estate asset.  This means that it does not automatically get dealt with via your Will, unless you actually direct it to be left to your legal personal representative (LPR) such as the executor of your estate.

If you want a say about who gets your super after you die and how they receive it – that is, as a lump sum or income stream (if possible) for example, then you need to make sure that you complete a death benefit nomination form with your super fund.

Easy, right?  Unfortunately not.  Super law is complex and it just keeps on getting more and more complex.  What type of nomination – a preferred nomination, a binding death benefit nomination or a reversionary pension? Who is eligible as a beneficiary? How can you minimise tax?  How can you stop or reduce the risk of challenges?  These are all live issues and if you have a blended family or if superannuation is your main asset, then how to deal with you super after death is an even more complex minefield from an estate planning perspective.

Myth 2 – You can give your superannuation to anyone using a death benefit nomination

I’m afraid not.  The law dictates who is an eligible beneficiary of your superannuation.

Many clients say that they have completed super death benefit forms have been accepted by their super fund.  This acceptance by super funds of the nominations leads to belief that the nomination must have been valid. In truth, most super funds do not consider the validity of the nominations made, they simple file them.  Often times, the nominations do not comply with the legislation and in many cases nominate an ineligible beneficiary.  If the nomination is ineligible, the super fund can’t comply with it after you die.

This is not to say that you can’t channel your super to ineligible beneficiaries but getting it to them means being much more sophisticated than simply naming them on a death benefit nomination and posting it off to the super fund.

Myth 3 – Children are always eligible beneficiaries

Working out whether someone is an eligible beneficiary can be complicated, especially for blended families.  Biological children will always be eligible beneficiaries of their biological parents super (unless they are adopted out) but what about step-children?  Well the answer is, it depends.

There are some circumstances, for example, where the first spouse dies and the marriage was intact at the date of death, then yes, generally this would mean the step-children of that deceased spouse would be eligible.  But in other circumstances, for example, when the second spouse dies, the children of the first spouse to die are no longer considered children under superannuation legislation.  If they are nominated on the death benefit form, it will be held to be invalid (unless they are eligible under another category of beneficiary).

Myth 4 – Beneficiaries are all born equal

So you want to give your super to your kids?  Sounds pretty logical but be aware that not all beneficiaries are considered equal in the eyes of super legislation.  Some beneficiaries such as adult children may be exposed to significant amounts of tax on super death benefits whereas other beneficiaries such as spouses, children under eighteen and adult children with disabilities may not be taxed.

For lump sum death benefits, the taxable component is paid tax-free to a tax dependant, such as your spouse. It is taxed at 15 per cent (or 30 per cent from an untaxed fund such as an old government scheme) plus 2 per cent Medicare levy if it is paid to a non-tax dependant, like an adult child.

Understanding these issues and considering who to give your superannuation to and the best way to give it to them may save your beneficiaries thousands and really make them equals regardless of circumstance.

Myth 5 – Transfer balance caps only apply to rich people

The transfer balance cap is a limit set on the amount of money that can be transferred from an accumulation account to a tax-free retirement account. The cap sits at $1.6million so most people are not affected.

However, when your spouse dies, if they give their super to you then the combined balance could reach or exceed the cap. Taking this potential issue into account during your estate planning is important, otherwise, your spouse could be negatively impacted after your death.

Myth 6 – My affairs are simple – I don’t need advice

Well given the myths busted in this article, if you have super, it’s clear that you may benefit from some legal and financial advice to ensure that your wishes are carried out after you die.

Here at CRH Law, our team of experienced lawyers which includes our Accredited Specialist in Succession Law Margaret Arthur and SMSF Special AdvisorTM Rebecca Edwards, we are well placed to help you to achieve the best possible estate planning outcomes for you and your family giving you peace of mind for the future.

Major changes to the Retirement Villages Act 1999 (Qld) Passed in Parliament

The Housing Legislation (Building Better Futures) Amendment Act 2017 (“Act”) was passed by Parliament on 25 October 2017.  It will have a major impact on Retirement Village documents and processes.

General Comments

The Act is the result of a long and winding path of review of the law spurred recently by the infamous Four Corners Program on retirement villages.

It is fair to say that one of the major themes of the legislation is to standardise the contractual arrangements and to do that by reducing much of the paperwork in the RV sector to the ubiquitous government form. It introduces, for example, the following forms:

  • Residence Contract;
  • Prospective Costs document;
  • Village Comparison document;
  • General services budget;
  • Transition Plan; and
  • Condition Report.

The more specific issues of note are set out below.

Reinstatement of units

When ending residency, the unit must be left in the same condition it was in when the former resident started occupation of the unit, apart from fair wear and tear and any renovations carried out with the agreement of the resident and the operator.

The Act amends the definition of ‘reinstatement work’ removing references to restoring units to a ‘marketable condition’, and the general condition of other comparable units in a village.

These changes will only apply to new residents.

Renovation work

The Act addresses the issue of renovation work being undertaken to the former resident’s unit which is proposed by the operator. ‘Renovation work’ is defined to mean ‘replacements or repairs other than reinstatement work‘.

Before starting the renovation work, the operator and former resident must agree on a date by which the renovation work will be finished, and the work must be completed by the agreed date.

The cost of such renovation work must be paid by either:

  • The operator and the resident, in the same proportion as the capital gain is to be shared (if the scheme operator and the resident are to share in any capital gain on the sale of the unit under the residence contract); or
  • If the operator and the resident do not share any capital gain on the sale of the unit, then the scheme operator.

The Act does not set out to prescribe or limit the scope of renovation work determined by the operator.  The Act appears not to contemplate disputes arising between operators and residents in relation to the scope of the work to be untaken.  Instead the provision refers only to disputes regarding timeframes for the completion of renovation work.  We hope for further clarity around this issue in due course.

These changes will only apply to new residents.

Compulsory buy back of units

  • Unless the unit is resold beforehand, scheme operators must pay residents their exit entitlement 18 months after the resident leaves, unless doing so would cause the operator undue hardship.
  • This amendment will apply to existing residence contracts including where a resident has already left a village. In the latter case, the 18 month period for payment of the exit entitlement will commence from the date of assent of the amendment, not the date of the resident’s departure.

Website

Scheme operators are also required to maintain a village website.

The village comparison document (or a link to it) must be clearly displayed on any pages of the website which contain marketing material.

PIDs will be scrapped and the Act introduces the following:

Operators will be required to give prospective residents:

  • A residence contract in the approved form within 7 days of a request from a prospective resident;
  • The village comparison document in the approved form within 7 days of a request from a prospective resident;
  • A prospective costs document in the approved form of a request from a prospective resident which summarises the cost of moving in, living in and leaving the village;
  • A copy of any village by-laws for the village; and
  • Any other document prescribed by regulation.

Existing residents PIDs will continue to be effective to the extent that legislation permits.

Condition reports

Condition report on entry

A resident must not be allowed to start occupying a unit until a condition report is completed:

  • In the presence of the prospective resident (or without them present if they consent to be absent in writing) describing the condition of the unit;
  • Signed by the operator and a signed copy given to the resident;
  • The way that the condition report must be completed will be prescribed by regulation;
  • Penalties apply for non-compliance;
  • The condition report must be signed by the resident within 7 days of entry and if the resident disagrees with the report they should mark the report and indicate what they do not agree with;
  • Reports must be kept for at least 2 years after the termination of the resident’s place at the village.

Condition report on exit

Within 14 days of termination:

  • The Bill requires the scheme operator to complete and provide a former resident with a condition report at the end of residency;
  • A penalty applies for non-compliance; and
  • Reports must be kept for at least 2 years after the termination of the resident’s place at the village

Regulation of redevelopment of a Village while continuing to operate

The relevant sections of the Bill will not apply if all residents were given notice before entry in the documents provided to prospective residents of the running redevelopment.

Otherwise:

  • All residents must be given a proposed redevelopment plan; and
  • Notice of at least 21 days must be given to all residents of the residents meeting regarding the redevelopment plan. At the meeting, residents should be asked to pass the redevelopment plan by special resolution.
  • Failing approval by the residents, the scheme operator may apply to the Chief Executive seeking approval of the proposed redevelopment.
  • The Chief Executive can decide to approve the plan or give written direction to the scheme operator to take certain action or revise the plan. If approved, the Chief Executive must give all residents written notice of the decision to approve as well as a QCAT information notice.

References to regulations and approved forms

There are various references to ‘approved forms’ and ‘regulations‘ throughout the Act.  These have not yet been released.  However, we will be providing regular updates as new information is released.

Clients need to be gearing up for the changes and obtaining advice on how they impact on your current documents and processes.

For further information about how these changes might affect you, please contact our Aged Care and Retirement Villages team at CRH Law on 07 3236 2900.

Changes to Retirement Villages Law (& other things) in Qld

Following the ABC Four Corners program earlier this year, the Queensland Government embarked on a plan to amend various pieces of housing legislation in response to the issues raised in the program. On 25 October 2017 that resulted in the passage through the Queensland Parliament of legislation to address the concerns raised.

Much focus has been on the changes to the Retirement Villages Act 1999.  However, changes are also set for a number of other housing laws including the Manufactured Homes (Residential Parks) Act 2003 and the Residential Tenancies and Rooming Accommodation Act 2008.

In respect to Retirement Villages, amongst other things, the new law will provide for:

  • Simplified contracts;
  • More transparent fees and charges;
  • A minimum 21 days to evaluate the contract before signing; and
  • A compulsory ‘buy back’ period for payment of a resident’s exit entitlement to 18 months.

It is worth noting however, that there are various references throughout the legislation to ‘approved forms’ and ‘regulations‘.  These have not yet been released and, at this stage, no timeframes have been issued.  However, we will be providing regular updates as new information is released.

As is so often the case, the devil will be in the detail once these further measures surface.

For further information about how these changes might affect you, please contact our Aged Care and Retirement Villages team at CRH Law on 07 3236 2900.

Top 5 things SMSF trustees and members should know about their Deeds

Your superannuation deed along with the superannuation laws form the governing rules that self managed super funds (SMSFs) need to operate by. The introduction of the $1.6 million transfer balance cap (TBC) and new transition to retirement income stream (TRIS) rules are a ‘game changer’ for SMSFs when discussing benefit payments and estate planning.

With the new super rules in effect as of 1 July 2017, now is the right time to review if your deed needs to be updated to deal with the new laws and strategies that you may need to implement.

Read the deed

The first step in reviewing your superannuation deed will be to read it. Deeds are legal documents which can be complex to read, so you may want help from an advisor with this.

It is likely that most deeds will not result in a breach of superannuation laws and would provide the trustee with powers to comply with changes to relevant tax and superannuation laws.

The next step would be to review the deed in consideration with your own circumstances. For example, a common scenario may be a restrictive deed that only provides the trustee with discretion to pay death benefits. This means that if a member of that SMSF wanted to create a binding death benefit nomination, it would be irrelevant due to the deed’s governing rules.

In any event, deeds which are clearly out of date will need to be amended as soon as possible.

Deeds post 1 July 2017

Post 1 July 2017, there are many approaches and strategies that will differ from the past and it is essential that your SMSF deed does not restrict you in anyway. You should consider the following five points:

1.  Paying death benefits

The $1.6 million TBC now restricts how much can be kept in super on the death of a member. This is crucially important as when a member dies, their TBC dies with them. SMSF members should review their estate planning and further review their deed for the following:

  • Does it allow for binding death benefit nominations (BDBN)?
  • Does the deed prescribe for BDBNs to lapse every 3 years when the law does not?
  • Does it consider the appropriate solution when there is a conflict between a reversionary pension and a BDBN and which will take precedence?

2.  Reversionary pensions

Reversionary pensions are pensions which continue being paid to a dependant after your death.  Under the TBC, reversionary pensions will not count towards a member’s TBC until 12 months after the date of the original recipient’s death. Importantly, the transfer of the pension from the deceased to the new recipient will count towards the TBC. The value of the credit to the TBC will be the value of the pension at the date of death, not the value after 12 months.

The complexity of reversionary pensions is increased and deeds should be reviewed to consider:

  • Does it allow for a reversionary pension to be added to an existing pension or are there restrictions?
  • Should it automatically ensure that a pension is reversionary so that it is paid to a surviving spouse?

3.  Pensions

The TBC also has implications for strategies in commencing pensions and making benefit payments. Trust deeds may need to be reviewed for:

  • Ensuring that commutations are able to be moved into accumulation phase rather than being forced as lump sums out of superannuation.
  • Are there any specific provisions relating to the TBC? There may be value in ensuring a deed restricts pensions from being commenced with a value greater than the TBC.
  • Are there provisions which detail where commutations must be sourced from first?
  • Are there restrictive pension provisions that the trustees must comply with?

4.  Transition to retirement income streams

Tax concessions for TRISs where the recipient does not have unrestricted access to their superannuation savings (known as meeting a condition of release with a nil chasing restriction) have also been removed. Trust deeds may need to be reviewed for:

  • Does the deed allow for the 10% max benefit payment to fall away once a nil condition of release is met?
  • Does the deed deal with a TRISs character when a nil condition of release? (Does it convert into an account based pension?)

5.  How can CRH Law help?

CRH Law can help you understand how the new laws may impact you and your family by reviewing and amending your deed as required. Please feel free to call us to discuss your requirements, especially regarding issues arising out of the latest changes to the super laws.

Major changes to the Retirement Villages Act 1999 (Qld) proposed in Parliament

The Housing Legislation (Building Better Futures) Amendment Bill 2017 (“Bill”) was introduced to the Queensland Parliament late yesterday. If passed, the Bill will make the following key changes to the Retirement Villages Act 1999 (Qld):

General Comments

The Bill is the result of a long and winding path of review of the law spurred recently by the infamous Four Corners Program on retirement villages.

It is fair to say that one of the major themes of the legislation is to standardise the contractual arrangements and to do that by reducing much of the paperwork in the RV sector to the ubiquitous government form. It proposes, for example, to introduce the following forms:

  • Residence Contract;
  • Prospective costs document;
  • Village Comparison document;
  • General services budget;
  • Transition Plan; and
  • Condition Report.

The more specific issues of note are set out below.

Reinstatement of units

When ending residency, the unit must be left in the same condition it was in when the former resident started occupation of the unit, apart from fair wear and tear and any renovations carried out with the agreement of the resident and the operator.

The Bill amends the definition of ‘reinstatement work’ removing references to restoring units to a ‘marketable condition’, and the general condition of other comparable units in a village.

These changes will only apply to new residents.

Renovation work

The Bill addresses the issue of renovation work being undertaken to the former resident’s unit which is proposed by the operator. ‘Renovation work’ is defined to mean ‘replacements or repairs other than reinstatement work’.

Before starting the renovation work, the operator and former resident must agree on a date by which the renovation work will be finished, and the work must be completed by the agreed date.

The cost of such renovation work must be paid by either:

  • The operator and the resident, in the same proportion as the capital gain is to be shared (if the scheme operator and the resident are to share in any capital gain on the sale of the unit under the residence contract); or
  • If the operator and the resident do not share any capital gain on the sale of the unit, then the scheme operator.

The Bill does not set out to prescribe or limit the scope of renovation work determined by the operator. The Bill appears not to contemplate disputes arising between operators and residents in relation to the scope of the work to be untaken. Instead the provision refers only to disputes regarding timeframes for the completion of renovation work. We hope for further clarity around this issue in due course.

These changes will only apply to new residents.

Compulsory buy back of units

  • Unless the unit is resold beforehand, scheme operators must pay residents their exit entitlement 18 months after the resident leaves, unless doing so would cause the operator undue hardship.
  • This amendment will apply to existing residence contracts including where a resident has already left a village. In the latter case, the 18 month period for payment of the exit entitlement will commence from the date of assent of the amendment, not the date of the resident’s departure.

Website

Scheme operators are also required to maintain a village website.

The village comparison document (or a link to it) must be clearly displayed on any pages of the website which contain marketing material.

PIDs will be scrapped and the Bill introduces the following:

Operators will be required to give prospective residents:

  • A residence contract in the approved form within 7 days of a request from a prospective resident;
  • The village comparison document in the approved form within 7 days of a request from a prospective resident;
  • A prospective costs document in the approved form of a request from a prospective resident which summarises the cost of moving in, living in and leaving the village;
  • A copy of any village by-laws for the village; and
  • Any other document prescribed by regulation.

Existing residents PIDs will continue to be effective to the extent that legislation permits.

Condition reports

Condition report on entry

A resident must not be allowed to start occupying a unit until a condition report is completed:

  • In the presence of the prospective resident (or without them present if they consent to be absent in writing) describing the condition of the unit;
  • Signed by the operator and a signed copy given to the resident;
  • The way that the condition report must be completed will be prescribed by regulation;
  • Penalties apply for non-compliance;
  • The condition report must be signed by the resident within 7 days of entry and if the resident disagrees with the report they should mark the report and indicate what they do not agree with;
  • Reports must be kept for at least 2 years after the termination of the resident’s place at the village.

Condition report on exit

Within 14 days of termination:

  • The Bill requires the scheme operator to complete and provide a former resident with a condition report at the end of residency;
  • A penalty applies for non-compliance; and
  • Reports must be kept for at least 2 years after the termination of the resident’s place at the village

Regulation of redevelopment of a Village while continuing to operate

The relevant sections of the Bill will not apply if all residents were given notice before entry in the documents provided to prospective residents of the running redevelopment.

Otherwise:

  • All residents must be given a proposed redevelopment plan; and
  • Notice of at least 21 days must be given to all residents of the residents meeting regarding the redevelopment plan. At the meeting, residents should be asked to pass the redevelopment plan by special resolution.
  • Failing approval by the residents, the scheme operator may apply to the Chief Executive seeking approval of the proposed redevelopment.
  • The Chief Executive can decide to approve the plan or give written direction to the scheme operator to take certain action or revise the plan. If approved, the Chief Executive must give all residents written notice of the decision to approve as well as a QCAT information notice.

References to regulations and approved forms

There are various references to ‘approved forms’ and ‘regulations’ throughout the Bill. These have not yet been released. However, we will be providing regular updates as new information is released.

The Bill has now been referred for examination and report to a Parliamentary Committee although there is no indication of how long that will take. Given the extensive changes proposed to the Retirement Villages Act 1999 (Qld) and other legislation, further alerts will follow.

For further information about how these changes might affect you, please contact our Aged Care and Retirement Villages team at CRH Law on 07 3236 2900.

Does your SMSF Deed need a post 1 July check up?

On 1 July 2017, significant changes came into force and many more are proposed as a result of the recent federal budget.  So if you haven’t already reviewed your SMSF Deed, do you really need to?

The answer is YES – all SMSF Deeds should be reviewed to ensure that they are up to date and reflective of the changes that have occurred.  SMSF Trustees should really aim to review their SMSF Deeds at least annually as well as when there are significant changes in:

  • Their financial or personal circumstances; and
  • The law governing SMSFs.

Seeking advice from a SMSF specialist lawyer and accountant will certainly offer peace of mind to SMSF Trustees and ensure that the SMSF continues to be compliant and effective.  It is the responsibility of the SMSF’s Trustee to review the Deed before making any decisions or taking any actions so ensuring the Deed is valid and current is an integral part of being an SMSF Trustee.

There are a broad variety of issues that need to be reviewed in an SMSF Deed including:

  • Whether an SMSF member can roll back funds in their retirement pension account to their accumulation phase;
  • The ability to create various death benefit instructions. This is so death benefit recipients do not exceed their transfer balance cap when receiving a death benefit;
  • The ability to roll over a death benefit without losing its death benefit status.
  • Trustees must not accept contributions in certain circumstances and refund contributions that should not have been accepted;
  • Altering the terms and conditions of an income stream. This will allow reversionary beneficiary nominations or will allow changes to the nomination of a reversionary pensioner without stopping the pension; and
  • Determining whether to retain or cease transition to retirement income streams.

Importantly, this list is not exhaustive and there are many other issues that should be examined when reviewing the SMSF Deed including for example, for older Deeds (or poorly drafted Deeds) there may be other issues that need attention or consideration.

A review of the Deed by a qualified SMSF specialist lawyer would bring any such issues to light.  Failure of SMSF Trustees to ensure adequate review of the Deed may mean that the Deed does not permit certain actions and in a worst case scenario, negative financial consequences from issues of non-compliance may occur, for example.

To book your post 1 July 2017 SMSF check-up, contact us today.