Superannuation & SMSF

As an SMSF client you can outsource this function for us to release you from your administrative burden. There are significant responsibilities on the trustees of SMSFs as outlined in Superannuation Industry Supervision (SIS) law. Trustees may therefore need to consult with specialists in order to ensure that they comply with all their duties. Failure on behalf of the trustees to manage investments in the fund diligently could result in hefty financial penalties and criminal charges.

How we can help?

• We can assist in arranging for the establishment of your SMSF including the establishment of a Corporate Trustee and Bare Trust and further ensure that the trust deeds meet the strict criteria set out by major lending institutions to ensure you can access limited recourse borrowing. 
• We will arrange an appointment with our Shares specialist team to discuss your options within your SMSF should you have surplus funds and an appetite for equities investing. 
• Establish your new share trading account with us as the intermediary. This will establish a Holder Identification Number (HIN) with the Australia Securities Exchange (ASX) unique to your SMSF.

• You will be provided with pre-filled application forms and save you time.
• We will organise the establishment of a Cash Management Account (CMA) from a leading bank for your SMSF or link it to your trading account.
• Link your existing or new CMA to your share trading account. This link enables seamless communication with the ASX to enable the buying and selling of shares on your share trading account.

• We will organise the partial and full rollovers of your superannuation funds from your current Super to your proposed SMSF.

• Where LRBA is involved, arrange for a legal adviser, SMSF lender and specialist accountant to assist you with the potential loan which may include margin loans.
• We can refer you to external parties for guidance on the property and once you’ve decided on a property, we will assist you with applying for and (at settlement) finalising the specialised limited-recourse loan for the proposed SMSF investment property.
• Working with our qualified advisor will provide you with regular reporting and ease of portfolio management to ensure a simplified investment process. You can alter your investment strategy and allocations as your needs change.

The process of setting up an SMSF can be straightforward, however, the unofficial first step is to seek advice from a qualified SMSF financial adviser. We provide SMSF advisory and investment services and our specialist SMSF advisers can ensure your fund is legally structured following the guidelines established by the ATO:

Step 1: Obtain a Trust Deed: 

A ‘Trust Deed’ is a legal document that will govern every aspect of the setting-up and management of your SMSF. The deed being a legal document means it must be drawn up by a legal professional. 

Step 2: Appoint Trustees: 

After obtaining your trust deed you can formally appoint the trustees of your fund. There are several options available to you, including:

• Appointing yourself as a sole trustee as it is allowed for an individual to operate its SMSF. 
• Appointing up to four individual members as an SMSF can have up to four members. 
• Appointing a corporate trustee. (This is where you set up a company to act as the trustee of the fund. Every member of the fund will also have to be a director of the company)

There are other key issues to be considered which our SMSF advisers can provide you guidance on persons not allowed to serve as trustees and others. 

Step 3: Sign a trustee declaration: 

After appointing the trustees, it is a requirement to sign a trust declaration document by all trustees to confirm that they understand their duties and responsibilities as trustees (or as directors of the corporate trustee).

Step 4: Elect to be regulated by the ATO:

After an SMSF is legally set up you should register it with the ATO and elect for the fund to be regulated by the ATO. This election must be registered within 60 days of establishing the SMSF otherwise the ATO may not accept your registration. Our SMSF advisers can assist with this function and once the fund is officially registered with the ATO, you will be allocated a Tax File Number (TFN)

Yes- it is possible to acquire a business or commercial property or assets through an SMSF. Our SMSF advisers can guide you with the best executable steps possible after we have reviewed your circumstances, objectives, and resources you have available to support your goals.
The first thing to do before you can proceed with acquiring a business or a commercial asset with your super fund is to decide whether you are to borrow or not and amend the trust deed to reflect the outcome. If the answer is to leverage, the next logical step is to amend your SMSF’s internal rules and trust deed (if necessary) to allow for borrowing.

You must ensure such transactions are done on an arm’s length basis. The mechanism used to set up an SMSF property investment including a commercial property or a business can be considered as an ‘Instalment Warrant Structure’. Where an SMSF is involved in borrowing and purchasing an asset that is then held in a trust, this structure is to govern the activities of the super fund.

Where there is borrowing involved, the SMSF will have beneficial ownership of the asset while the trust has legal ownership. Legal ownership can be transferred to the SMSF as soon as the asset is fully paid off.

SMSF trustees must first ensure their superannuation savings are managed to maximise the retirement benefit of its members. It is also the responsibility of the trustee to comply with SISA and all relevant ATO requirements in the process. The ‘Sole Purpose Test’ states that all the investment activity of the fund should be aimed at securing and providing retirement benefits for the members (or for dependants if a member dies before retirement). We provide SMSF advisory services and our specialist advisers can guide you in this process.

The need for expert advice from a qualified SMSF financial adviser can help make the process effortless for our SMSF investors. Without a qualified adviser and SMSF specialist accountant involve to carry the advice, investment and administrative burden for the trustees, the responsibility of taking on the role of trustee may be seen as a disadvantage. Being a trustee of your fund requires a considerable amount of detailed work on compliance-related tasks as well as managing and researching investments. The risk of non-compliance under SIS legislation is increased in a self-managed fund (versus a public offer or corporate fund) due to a potential lack of superannuation knowledge – hence the need for expert advice from qualified financial advisors.

In formulating an investment strategy, trustees must consider all of the fund members and the dates at which they will retire. This is crucial to ensure that the fund has sufficient liquidity to be able to fund the retirement benefits on these dates without needing to redeem investments before their recommended minimum investment timeframes. These skills, as well as being able to watch the investment markets, are not acquired easily – again underscoring the need for expert advice from qualified financial advisors.

There can be several benefits for borrowing into shares using margin loans or sometimes redrawing equity from an existing asset such as property and using it to gain exposure in a share portfolio. One upside to utilising a loan drawn against an existing asset is that there is no risk of receiving a margin call as there is third-party security introduced in this transaction. Where taking on a margin loan is possible, borrowings to acquire shares is acceptable if:

• It is a collection of identical shares
• In a single company or entity
• The same market value as each other 
• The same class (eg. Ordinary, Preference)
• Bought at one time 
• Disposed of as a collection, not be sold-down over time
• additional or bonus shares can be added (such as a dividend investment plan)

Risk on borrowing to acquire shares is the possibility of receiving a margin call. This means investors must ensure there is an availability of cash to top-up cash requirements if investment decrease.

Borrowing to acquire property is possible under a limited recourse borrowing arrangement (LRBA). The SIS Act does not place restrictions on where the loan can be obtained, to acquire an asset, provided the arrangement is on commercial terms. Lenders can be a Related Party or a Commercial Institution. Expert advice is required to facilitate a seamless process and our SMSF advisers have been a great deal of help to our SMSF investors.  

Loans from a Non-related Party- non-related parties are considered to be loans from a commercial lender such as financial intuitions as in: 

• Banks and Financial Institutions
• Non-bank lenders
• Property Trusts
• Mortgage Funds
• Other Individuals, Trusts, Companies not related to the Fund.

Ask our specialist SMSF advisers for help with your SMSF loan questions. The simple steps for a Limited recourse Borrowing Arrangement’ (LRBA) Process is: 

• Establish an SMSF or use an existing SMSF
• Identify the type of asset to being considered to be purchased
• Establish a Bare Trustee
• Establish a Bare Trust Deed
• Documents are to be executed, approving the arrangement
• Select the asset to be acquired

Self-managed superannuation funds (SMSFs) are often considered by investors who seek greater independence in managing their super fund. We can provide you with personal advice and also help you take on all the administrative and compliance duties at your discretion.