Tag: Investment

Superannuation complaints up

Jocelyn Furlan, Acting Chairperson of the Superannuation Complaints Tribunal, has reported a significant increase in the number of complaints received by the Tribunal.

In the June 2008 quarter, complaints were up by 23.6% when compared to the same quarter in 2007.

The number of complaints within jurisdiction relating to fund administration continues to rise as a percentage of total complaints received and now comprises the largest category of complaints. Complaints about delays in rollovers or benefit payments and investment option changes comprised over 27%, and disputes regarding account balances representing a quarter of administration complaints.

Ms Furlan said that whilst this increase may or may not be a direct result of negative investment returns, in a falling market trustees should review any undertakings given in relation to the processing time for benefit payments, rollovers, investment switches and other transactions impacting on the member’s account balance.

Falling markets may have implications for death benefit payments.

The Tribunal encourages trustees to review their policies regarding the investment of pending death benefit payments (and any insurance proceeds) during the period of the claim staking process (and resolution of a dispute by the Tribunal if a complaint is lodged) and ensure that this has been disclosed to members.

An explanation to the potential beneficiaries/legal personal representatives of how the account will be invested during the period between confirmation of death and the payment of the death benefit may help to reduce the number of complaints to the Tribunal about any unexpected change in the value of the benefit. The Tribunal is aware that some funds have adopted the policy that any investment choice in place at the date of death continues until the benefit is paid. The Tribunal has received complaints that the trustee will not accept a request to change the investment option, on the basis that, in the Trustee’s view, no one (including a surviving spouse or a legal personal representative of the deceased member’s estate) is authorised to request such a change.

The tribunal has now merged with the Banking Industry ombudsman to form the Financial Ombudsman Service.

Rental properties claims – common mistakes

The ATO has highlighted common errors it has found in tax returns of property investors, esppecially first time investors.

Incorrectly claiming deductions can be costly.

Common mistakes

  • Claiming deductions for rental properties not genuinely available for rent
  • incorrectly claiming deductions for properties only available for rent part of the year, for example a holiday home
  • incorrectly claiming the cost of structural improvements as repairs when they are capital works deductions, such as remodelling a bathroom or building a pergola, and
  • overstating deduction claims for the interest on loans taken out to purchase, renovate or maintain a rental property. A loan can be taken for both income-producing and private purposes, like to buy a car or go on an overseas holiday. The interest on the private portion of the loan is not tax deductible.

Advice for claiming rental deductions

There are two categories of rental property expenses you can claim:

  • expenses for the year you paid them, like council rates, repairs, insurance and loan interest, and
  • expenses that are deductible over a number of years, like borrowing costs, creating structural improvements and costs of depreciating assets.

You cannot claim costs associated with acquiring or disposing of a property, but they may form part of the cost base of the property for capital gains tax purposes.

Renovation costs and costs to repair damage, defects or deterioration existing on purchase cannot be claimed as an immediate deduction. These costs are capital expenditure, depending upon what is repaired or improved, and must be claimed as either decline in value deductions over the asset’s effective life, or as capital works deductions over 40 years.

More detail can be found in the ATO publication Rental Properties 2007