Oliver's Insights - A new bull market in shares?

This note provides some perspective on the strong share market growth observed since the easing of investor concerns around instability in Europe and the US to assess whether we are now in a long term bull market, based on observations of past share market cycles.

Key points to note are:

• Shares are overbought and vulnerable to a correction. February is often a soft month and current risks regarding Italy, Spain, the US budget and earnings results in Australia may constrain markets in the very short term.
• However, the rising trend in share markets since late 2011, reasonable valuations, improving global economic news and easy monetary conditions suggests shares have likely entered a new cyclical bull market. 

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Shares, property or cash? Oliver's Insights

Key points

• Cash and bonds have been the place to be over the past five years as a whole, providing higher returns than residential property and shares.
• But as well all know, past returns are not a good guide to future returns and this is particularly likely to be the case for cash and bonds, given the fall in interest rates and yields.
• Going forward, shares and to a lesser degree property, are likely to be a better option for investors (depending of course on their individual risk tolerance) as global recovery supports growth assets and low yields hamper the returns from bonds and cash.

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SMSFs not meeting minimum pension rules - new ATO guidance

The Australian TAX Office (ATO) has published guidance on starting and stopping superannuation income streams in Self-managed superannuation funds (SMSF). The guidance is useful for SMSF trustees who are dealing with situations where the minimum pension payment requirements are not met in an income year.

The guidance outlines the circumstances involving breaches of these requirements in which the Commissioner may exercise his power of general administration to treat a pension as having continued. It also includes several useful examples.

Background - income stream ceases if minimum payment requirements are not met

If the minimum pension payment requirements are not met in any given income year, the ATO considers that the income stream ceases from the beginning of the year. The implications can included:

• fund tax: the fund's income on the assets that were supporting the income stream (including capital gains) may not be exempted from tax in that year; and
• benefits tax: any payments made in that year may not be taxed as income stream benefits and will instead be taxed as lump sum benefits

Click here to read Macquarie's article on the new ATO guidance

Corporate or individual trustees for SMSF

Corporate or individual trustees for your SMSF?

Philip LaGreca, the administration head of technical services at AMP SMSF, outlines the pros and cons of each option.


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