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Re: hostplus indexed balanced option self managed

Enthusiast

Views 63

Replies 6

Hi,

 

My husband and I have a self managed superannuation fund however we are considering a rollover of our super into the Australian Hostplus indexed balanced option which is a   self managed product. It was recommended by Scott Pape, the barefoot investor but regardless of that fact, it appears to be a low cost indexed fund with consistent positive returns.

 

I spoke to a HP representative who informed me that the indexed balanced fund was a self managed investment account with some features which were different to my understanding of "usual" superannuation funds, hence my post.

 

Specifically, I was advised that -

 

1.  There was no limit to the amounts a member can contribute

2.  There was no $1.7 million dollar cap on non-concessional contributions

3.  There was no requirement to take 2.5% of the super fund total, when in a "pension" mode

4.  Up to the age of 70, a member could make contributions to super, without having to satisfy the "work test"

5.  Apparently it is the nature of the investment account which renders it exempt from compliance with the "usual" super rules.

 

It was a lot to digest and I will have further conversations with a HP rep, but I'm interested in learning the ATO response/attitude to the above concepts.

 

Thank you in anticipation

 

 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Taxicorn Registered Tax Practitioner

Replies 1

My understanding, based on the information provided by HostPlus and the clarification provided by your good self is as follows -

 

1. The details provided by HP ie that $1.7 million cap doesn't apply etc are general guidelines so that the individual circumstances of members aren't taken into account as that would be providing personal advice i.e. an institutional investor could, say, contribute/invest millions of dollars and still comply with their ATO requirements but an individual investor must still comply with ATO requirements ie $1.7 million caps. 2.5% pensions etc if that is pertinent to their individual circumstances

 

The only 'institutions' that can invest in a PST are complying super funds  -  not individuals.

https://www.smsfadviser.com/strategy/18004-smsfs-investing-in-a-pooled-superannuation-trust

 

 

2.  So, there are no "exceptions" to the usual ATO requirements, the indvidual super fund member must continue to apply/adhere to ATO requirements specific to their circumstances

 

Yes.

 

6 REPLIES 6

Taxicorn Registered Tax Practitioner

Replies 5

I spoke to a HP representative who informed me that the indexed balanced fund was a self managed investment account with some features which were different to my understanding of "usual" superannuation funds, hence my post.

 

Specifically, I was advised that -

 

1.  There was no limit to the amounts a member can contribute

2.  There was no $1.7 million dollar cap on non-concessional contributions

3.  There was no requirement to take 2.5% of the super fund total, when in a "pension" mode

4.  Up to the age of 70, a member could make contributions to super, without having to satisfy the "work test"

5.  Apparently it is the nature of the investment account which renders it exempt from compliance with the "usual" super rules.

 

This is all true  -  but it is not magic.  It is simply because the investment is a Pooled Super Trust (PST).

A PST is issued by a super fund, but a PST is not a super fund itself.

 

A PST can only be owned by an existing super fund, so all the issues above still apply to the fund that owns the PST.

 

Enthusiast

Replies 4

Hi Bruce and thank you for your prompt reply.

 

Could you clarify the last sentence - "A PST can only be owned by an existing super fund, so all the issues above still apply to the fund that owns the PST."

 

Does this mean that I don't have to worry about those issues, that my membership isn't subject to the super fund rules, rather the fund is subject to them ?

 

Does the ATO view Hostplus favourably and as a viable enterprise?

 

Thanks again

 

 

Taxicorn Registered Tax Practitioner

Replies 3

 

Could you clarify the last sentence - "A PST can only be owned by an existing super fund, so all the issues above still apply to the fund that owns the PST."

 

1.  You have a SMSF

2.  The SMSF buys an investment  =  PST.

3.  Your SMSF still has to comply with the all the SMSF rules  -  some of which were listed in your post.

4.  SMSF does not receive taxable income from PST  -  PST income is reinvested and therefore factors into the PST redemtion value.

5.  SMSF does not treat redemption of PST as a capital gain  -  all tax is treated internally in the PST.

 

Does this mean that I don't have to worry about those issues, that my membership isn't subject to the super fund rules, rather the fund is subject to them ?

 

If you join HostPlus a member, all the rules will apply as normal.

 

My understanding is that you were not investing as a HostPlus member  -  your SMSF was planning to buy an investment product offered by HostPlus.

 

So yes - your SMSF is subject to all the normal rules.

 

Does the ATO view Hostplus favourably and as a viable enterprise?

 

I cannot speak for ATO, but I believe they view HostPlus an industry super fund that also issues investments to SMSFs.

 

 

Enthusiast

Replies 2

Hi again Bruce and thanks again for your prompt response

 

My understanding, based on the information provided by HostPlus and the clarification provided by your good self is as follows -

 

1. The details provided by HP ie that $1.7 million cap doesn't apply etc are general guidelines so that the individual circumstances of members aren't taken into account as that would be providing personal advice i.e. an institutional investor could, say, contribute/invest millions of dollars and still comply with their ATO requirements but an individual investor must still comply with ATO requirements ie $1.7 million caps. 2.5% pensions etc if that is pertinent to their individual circumstances

2.  So, there are no "exceptions" to the usual ATO requirements, the indvidual super fund member must continue to apply/adhere to ATO requirements specific to their circumstances

 

Thanks

Most helpful response

Taxicorn Registered Tax Practitioner

Replies 1

My understanding, based on the information provided by HostPlus and the clarification provided by your good self is as follows -

 

1. The details provided by HP ie that $1.7 million cap doesn't apply etc are general guidelines so that the individual circumstances of members aren't taken into account as that would be providing personal advice i.e. an institutional investor could, say, contribute/invest millions of dollars and still comply with their ATO requirements but an individual investor must still comply with ATO requirements ie $1.7 million caps. 2.5% pensions etc if that is pertinent to their individual circumstances

 

The only 'institutions' that can invest in a PST are complying super funds  -  not individuals.

https://www.smsfadviser.com/strategy/18004-smsfs-investing-in-a-pooled-superannuation-trust

 

 

2.  So, there are no "exceptions" to the usual ATO requirements, the indvidual super fund member must continue to apply/adhere to ATO requirements specific to their circumstances

 

Yes.

 

Enthusiast

Replies 0

Thank you again Bruce, I am most grateful for  your expert assistance