Call 1300 172 2470

Heffron Blog

Heffron's Blog is a collection of comments related to the latest superannuation comings and goings.

What is cheap and what is good value?

by Meg Heffron

Accountants daily published an interesting article earlier this week about the ATO targeting low cost SMSF auditors (

(And then with irony that must have been deliberate, there was an ad about an offshoring conference right in the middle of it in the on-line version I read!)

It got me thinking though – if the ATO really is targeting particular suppliers on the basis of cost, it’s presumably because they don’t think it’s possible to do the job they expect to be done at that price.  I wonder how they decide that without knowing how that cost is achieved? And when is a low cost supplier worrying rather than just a sign of great efficiency innovation?

The article makes some good points – including the fact that the “headline rate” isn’t the only cost to weigh up when looking at any supplier.  If the low cost is achieved by skimping on the job, the new ATO penalty regime makes that a dangerous strategy for everyone – the auditor, accountant, adviser and trustee.

However, low apparent costs can come in many other ways – none of which are inherently evil, they just require a clear understanding so that any arrangements are approached with all eyes wide open.

Click Here To Read More

Hanging on to the Commonwealth Seniors Health Card

by Meg Heffron

There are two big dates in 2015 for holders of the CSHC:

  • 1 January 2015 – the date from which all new account-based pensions became subject to the deeming rules when it comes to calculating “income” and assessing eligibility for the card; and
  • 30 June 2015.

Why is today (30 June 2015) so important?

Click Here To Read More

Tax expenditure – what’s in a name?

by Martin Heffron

According to Wikipedia, an oxymoron is a figure of speech that juxtaposes elements that appear to be contradictory. Anyone paying attention to the political debate in Australia will recognise its utility in the hands of a skilled (or not so skilled) politician. Unfortunately, some of these political oxymorons make their way into wider community conversations as an accepted and serious economic truth where they have the potential to cause a lot of damage.

The term “tax expenditure” is one of these. The term has its origins in the US in the 1960s as a means of communicating a political message.  It has become increasingly common in our own political debate where it is unfortunately being misused as a serious economic idea – even by the Commonwealth Treasury.  It’s a term very much in common use when talking about superannuation and the various tax “concessions” applicable to contributions and investment earnings.

Click Here To Read More

The role of professional bodies

by Meg Heffron

Last week saw CPA Australia announce the establishment of CPA Australia Advice Pty Ltd.

This wholly owned subsidiary of CPA Australia will apply for an Australian Financial Services Licence (AFSL) with the intention of effectively providing dealer services to interested members of the association (you have to be a CPA to operate under the new licence).

It’s not entirely clear to me whether the business will also employ financial planners and therefore provide advice itself but given the impact they plan to have on the standards of financial advice in Australia, one would have to assume it’s part of the plan.

Responses to this announcement have predictably fallen into two camps.

Click Here To Read More

Why do old people still have large super balances?

by Meg Heffron

Why do old peopleSocial services minister, Scott Morrison, has called upon pensioners to “use up” their super balances during their lifetimes rather than hanging on to it to provide a tax effective inheritance to the next generation.

At one level, this is not unreasonable.  To the extent that we have a shared understanding of the purpose of super (and I’d argue there’s work to be done on this!), there would probably be broad agreement that it’s NOT supposed to be an estate planning vehicle.

So are people who don’t spend their super during their lifetime being deliberately annoying or breaking the rules in some way?

Why do people end up still having so much in super when they die? Click Here To Read More

Terminal medical condition – budget change but there is a trap

by Meg Heffron

Terminally ill traps

One of the very few direct changes to superannuation announced in the 2015 Federal Budget was an improvement to the rules surrounding access to super for terminally ill client.

Currently, it’s possible for anyone to access their preserved super if they meet two conditions:

  • two registered medical practitioners have certified the individual is likely to die within 12 months from an illness or injury; and
  • at least one of the registered medical practitioners is a specialist practicing in an area related to the individual’s illness or injury.

The Government proposes to extend the period to 24 months.  It’s a sensible tweak and while it won’t necessarily affect many people, it will make a big difference to those it does with – realistically – no revenue impact for Government.

Being aware of this option for very ill clients allows practitioners guiding clients during a challenging time to add significant value but there are some important quirks and traps to watch. Click Here To Read More

Are Australians pension converts or lump sum junkies?

by Meg Heffron

pensioners or lump sum junkiesAccording to a recent article in SuperReview the vast majority of SMSF members take their balances as pensions rather than lump sums.  Who’d have thought?

When I first started in SMSFs, this was absolutely not the case.  A really common question I was asked by accountants and advisers alike in 1998 was “my client has turned 65, now what do I do with their SMSF?  Do we have to wind it up and take the money out?”.  I’ll bet a heck of a lot of unnecessary capital gains tax was paid by people who just didn’t realise they had the option to take one of these newfangled things called “allocated pensions”. Click Here To Read More

Sustainability of the retirement incomes system

by Meg Heffron

Sustainability of the retirement incomes systemRetirement and ageing policy in Australia is in a mess right now.

There seems little or no integration between the policies affecting superannuation, the age pension and aged care (including health). Policy announcements such as the one made by Federal Labor on superannuation tax recently focus on one issue only and ignore other areas of retirement and ageing policy or the impact the proposed changes could have on those policies.

However, some of the points made in Labor’s press conference got me thinking.

Click Here To Read More

Is “saving” worth saving?

by Meg Heffron

Is “saving” worth savingJeremy Cooper and Challenger have done us all a huge favour by doing the calculations many of us should have done a long time ago to work out exactly what the age pension is worth in lump sum terms.  It’s difficult to have a sensible discussion about the costs of our longevity and what we should do about it until we know what is already being funded by the public purse.  Well, it turns out that someone with nothing is actually worth $1m.  Who’d have thought?

Click Here To Read More

Industry funds and DIY investment options – can they compete with SMSFs?

by Meg Heffron

compete with SMSFsIt would seem that industry funds are starting to work out that just adding a wide range of investment options in order to look more like a self managed fund is not the way to minimise leakage to SMSFs (

I’d agree – in fact, I wonder if the industry funds who have done so are facing some probing questions from members along these lines :

Why have you spent all that money (that could have been used to reduce my fees) on doing something that was only ever going to be beneficial for a small group of people?  As it happens it’s been a flop but even if it hadn’t, how is it acting in the best interests of members to focus on features that are just not likely to be used by the majority of members?

Click Here To Read More

Copyright © 2010 Heffron Consulting   All Rights Reserved

SMSF | SMSF Administration | SMSF Audit | Document Services | SMSF Actuarial Services

SMSF Advice | SMSF Technical Support | SMSF Training | Articles | Payment Policy | Privacy Policy |  Terms of Use