Can I still transfer shares I own to my SMSF?


YES you can if they are listed shares, unlisted cause a lot more issues.

In an unexpected move back on 30 May 2013 the Government decided not to proceed with the proposed banning of off-market transfers of listed securities (shares, listed hybrids etc) by  people to their self managed super fund (SMSF). This means that shares can still be transferred between SMSFs and related parties off-market as of November 2017.

The Government had previously announced that off-market transfers of listed securities between SMSFs and related parties would be banned from 1 July 2013. It was announced as a measure to prevent people abusing the system even though there was little proof of any abuse being widespread. Hopefully, the fact that they went so close to legislating such measures will serve as a warning to those who tinker at the margins of abusing the facility. I would expect the ATO to use the new penalty regime to target a few clear cases of abuse to ensure that the message gets through loud and clear!  (more…)

Government bonds arrive for retail investors but may not jump out of the gate


Legislation passed through parliament yesterday that followed through on a promise by “the world’s greatest treasurer” Wayne Swan that Government bonds will be listed for the retail market (I nearly said the ASX but now we have to be generic as we have Chi-X as well). the Treasurer took his time getting the legislation together but now we have it in place.

Click the link below to read more of this article

http://www.smh.com.au/business/government-bonds-set-to-fail-with-retail-investors-20121102-28nqj.html

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? Then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF Specialist Adviser 

 Follow SMSFCoach on Twitter Liam Shorte on Linkedin NextGen Wealth on Facebook   

Verante Financial Planning

Tel: 02 98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Magnitude Group Pty Ltd ABN 54 086 266 202, AFSL 221557

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

What information do I need to provide for my SMSF Audit


At the end of each financial year your Self-Managed Super Fund will need to be audited by an independent third-party SMSF auditor. 

Having your SMSF audited isn’t exactly exciting, but it is an essential part of the compliance process. Looking to save money on the audit by going for a cheap service may come back to bite so I always recommend paying a decent fee to an experienced auditor is worthwhile. If they are not doing at least 25 audits a year then don’t use them as experience is crucial and it is necessary to have knowledge of what to look for and how to guide you the ultimate client.

The SMSF audit involves a review of your fund and the strategies and transactions during the year to ensure it remains a ‘complying fund’ in line with the ATO’s definition.

Who can audit my SMSF?

Your SMSF can only be audited by an approved SMSF auditor.  SMSF auditors are most commonly qualified accountants; however there are some additional requirements.

Members of the following organisations are qualified SMSF auditors:

  • SMSF Specialist Auditors, accredited by the SMSF Professionals’ Association of Australia (My personal preference)
  • CPA Australia
  • The Institute of Chartered Accountants Australia
  • National Institute of Accountants
  • Association of Taxation and Management Accountants
  • Fellows of the National Tax and Accountants Association Ltd

SMSF Specialist Auditors, as appointed by the SMSF Professionals’ Association of Australia, are also qualified to complete this important SMSF function.

SMSF Audit Check-list

The person performing the SMSF audit will require a number of documents and may seek these from your Administrator, accountant or directly from you the Trustees.  The auditor will generally have a standard SMSF audit check-list, however the following will give you some guidance on what you are generally asked to provide:

  • Financial statements of the fund.
  • Cash Management and Bank statements for all fund accounts including Cheque, Savings and Term Deposits.
  • Managed fund /Wrap annual transaction and income report.
  • Share Broker’s statement showing all transactions.
  • Holding statements for all shares held during the year and the end of year balance.
  • Buy & sell contracts for all shares held during the year including Off Market Transfers and any corporate actions.
  • Statements showing clearly the ownership of all fixed interest securities like bonds, hybrids and notes.
  • Contracts for any property purchased or sold
  • Copy of the Title deed showing evidence of ownership for any property in the correct name.
  • Property valuations and updated if starting a new pension.
  • Building & Liability insurance certificates of currency
  • Lease agreements and rental income statements
  • Documentation for any art or collectables including evidence of Insurance in the name of the SMSF.
  • Details of any debts owed by the SMSF including loan statements showing repayments
  • Documentation of any related party loans or investments
  • Confirmation of any contributions or withdrawals
  • Confirmation that the member is eligible for contributions or meets a condition of release for withdrawals
  • Pension or lump sum benefits payment details including copies of Pension Agreements and minutes.
  • Information on any  other investments not mentioned.
  • Completed SMSF Investment Strategy in writing including consideration of members’ insurance needs.

This is not an exhaustive list and your SMSF auditor may require additional documentation.

For further information on the issues raised in this blog please contact our Castle Hill SMSF Centre or Windsor Financial Planning Office. While we are not auditors we can point you in the right direction of people you can trust.

I hope this guidance  has been helpful and please take the time to comment. Feedback always appreciated. Please reblog, retweet, put on your Facebook page if you found information helpful.

Liam Shorte B.Bus SSA™ AdvDipFS AMC

Financial Planner & SMSF Specialist Advisor™

 Follow SMSFCoach on Twitter  Liam Shorte on Linkedin  NextGen Wealth on Facebook   

Verante Financial Planning

Tel: 02 8853 6833,  Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St, Castle Hill NSW 2154

308 George St, Windsor NSW 2756

 

ABN 20 060 778 216 • AFSL No.232686

Liam Shorte is a partner in VERANTE, Corporate Authorised Representative of Genesys Wealth Advisers Limited, Licence No 232686, Genesys Wealth Advisers Limited ABN 20 060 778 216.

Important information :

The information in this article is provided for illustrative purposes only and does not take into consideration your personal circumstances. You are encouraged to seek financial advice suitable to your circumstances to avoid a decision that is not appropriate. Any reference to your actual circumstances is coincidental. Genesys and its representatives receive fees and brokerage from the provision of financial advice or placement of financial products.

Superannuation — tax certainty for deceased estates – Government MYEFO announcement good for SMSFs


The release of draft taxation ruling TR 2011/D3 in July last year caused much concern when it suggested that the pension exemption ceases automatically upon death (unless a reversionary pension was in place).

Under those proposed rules if an SMSF member died with assets carrying unrealised Capital Gains, even if the deceased were receiving a pension, upon death the pension would cease (unless the pension qualified as an auto-reversionary pension). If SMSF assets were then sold/transferred, the SMSF would have CGT implications.  (more…)

Is your SMSF lending money to someone?


Is that loan in your SMSF’s best interest?

The Tax Office issued an information sheet on their website last November warning trustees about the perils of lending an SMSF’s funds to the wrong person. This includes your own business, someone who advises you or a family member or friend.

An all too common occurrence is the practice adopted by some people of withdrawing funds from their SMSF to “temporarily” help keep their business afloat when cash flow is tight.

Has your SMSF loaned money? If so, you need to make sure the loan terms comply with the law and are in the best interests of your funds sole purpose test which is to provide for your retirement.

The boys and girls at the ATO are rightly concerned some trustees are lending money from their fund to people who provide advice or assist in the running of the fund. This may not be in the best interest of your SMSF, and may place your retirement savings at risk. If someone is recommending you set up a SMSF and then to lend them or a related party money for a development, you have to ask yourself in who’s best interest are they working? Might be time to scrutinise the minute details of this “too good to be true one time only opportunity”.

So when would a loan agreement not be seen to be in the best interest of your SMSF ? Basically, when you have given discount loan rates or favourable terms – this could have serious consequences. Here is one example they give:

 when you have given discount loan rates or favourable terms – this could have serious consequences. In addition to putting your member’s benefits at risk, your SMSF could be found to be non-complying and would, therefore, not qualify for concessional tax rates.

They advise that before lending any money, you should consider your fund’s investment strategy and determine whether the investment is appropriate and, in particular, whether lending money to people providing you with services or advice is in the best long-term interests of your SMSF.

If you are not sure about making these types of investments choices, they recommend that you seek advice before entering into such arrangements.

If you still decide to go ahead and lend money from your SMSF, the ATO advise that “you should:

  • write an appropriate loan agreement and have it signed by all the parties involved
  • ensure the loan agreement specifies all the terms of the loan, such as:
    • what the security for the loan
    • what is the repayment period
    • when repayments will be paid
    • the amount of the repayments
    • the interest rate
  • ensure the interest and repayments are received by the fund according to the loan agreement
  • take appropriate action to protect the fund’s investment if the loan agreement is not followed
  • ensure the loan is sensible and does not put the members’ benefits at risk
  • ensure that the conditions of the loan agreement do not provide the borrower with favourable terms.

Remember that you are the one ultimately responsible for running your SMSF, and you must make sure you understand your duties, responsibilities and obligations.”

With regards to taking funds out to help your business, you need to firstly know that should the business go under that your Superannuation is in most cases protected in bankruptcy from creditors so you should be careful about accessing this protected asset.

Regardless of how much you trust a person even if they are your accountant, lawyer, financial planner, mortgage broker or best mate, you need to get independent third-party advice. Don’t be embarrassed about not completely trusting the promoters scheme as it is often too late later to get your funds back and hindsight is a cruel tormentor when facing loved ones having lost your retirement nest egg.

For further information on the issues raised in this blog please contact our Castle Hill SMSF Centre or Windsor Financial Planning Office.

I hope this guidance  has been helpful and please take the time to comment. Feedback always appreciated. Please reblog, retweet, put on your Facebook page if you found information helpful.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF Specialist Adviser 

 Follow SMSFCoach on Twitter Liam Shorte on Linkedin NextGen Wealth on Facebook   

Verante Financial Planning

Tel: 02 98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Magnitude Group Pty Ltd ABN 54 086 266 202, AFSL 221557

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Are SMSF Investors really comparing Hybrids vs. Company Shares?


 

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Every article I  read at the moment the commentators are more and more sceptical about the recent issues of Australian listed hybrids and notes. They constantly compare the hybrid against the equity in the actual shares of the issuer.

And yes I have been saying to younger clients who wanted to invest that I personally would buy the shares of the blue chip issuers, not the hybrid, because the successful hybrid issue shifts risk from equity investors to the hybrid investors and if you are going to take long-term risk then get recompensed for it from the  issuer.

Yet the majority of people buying these hybrids are not my younger clients and they probably don’t look at the case for hybrids vs. shares. They are my SMSF Retiree and Pre Retiree clients. They look at the investment case of hybrids vs. their HISA (High Interest Savings Accounts) rates and term deposit rates. I know from these clients the majority of the demand for Australian hybrids has come from maturing term deposits and falling interest rates as the RBA cuts.

The banks and their advisers have worked out these “yield plays” seem to be in favour and hybrid issuance is increasing as term deposit and cash rates fall. They are tempting clients to put some of their “defensive portfolio” in to this sector rather than trying to grab some of the Share portfolio allocation.

Commentators say that the banks who are the main issuers are getting the best deal and yes their ratings have been improving when they finalise these issues.

They recommend that you buy the Shares in these companies rather than the “mutton dressed up as lamb” hybrids.

Christopher Joye in the SMH provided the following as an example where he compared the results using CBA PERLS IV vs. CBA Shares themselves over the period July 2007 to July 2012. Yes, with hindsight, you would be far better off owning the shares but they miss the point. Regardless of the outcome many SMSF trustees have a lower risk tolerance and they would be content with the returns from the PERLS IV (25.4% over 5 tumultuous years) during that period while they may have had a meltdown if in the CBA shares during the highlighted volatile period July 07-Mar ’09.

The other point I should make is that clients are making much smaller risk adjusted plays in these hybrids by quality issuers only and are willing to hold to maturity. When they have  a $100K Term Deposit maturing they are placing 10K-30K in to one or two of these hybrids and putting the rest back on Term Deposits. It is recognition that these hybrids do carry more risk and that they understand that risk.

Their aim is not to attain equity like returns but an average portfolio income in the 5.5-6% mark and that can no longer be achieved by cash and TDs alone. So yes they are taking on more risk to achieve their objectives but they are not being silly and getting over exposed. That is why we have avoided Crown, Caltex, Bendigo & Adelaide and even SunCorp issuances.

So yes the Banks get the benefit of cheaper finance but SMSF investors get access to that yield, in bite sized manageable chunks that they require with less volatility than the underlying share. The risks in hybrids are not to be scoffed at but if you do your home work, understand the risk, keep the allocations small and think long term, then they may have a place in your portfolio.

If you want to read more about hybrids generally, the ASX has produced a guide – Understanding hybrid securities – that you can download here.

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? Then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF Specialist Adviser 

 Follow SMSFCoach on Twitter Liam Shorte on Linkedin NextGen Wealth on Facebook   

Verante Financial Planning

Tel: 02 98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Magnitude Group Pty Ltd ABN 54 086 266 202, AFSL 221557

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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