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SMSF Jargon busting – Who are the related parties of an SMSF?


"Related Parties"

So you have a great idea to move some assets to your SMSF but you want to stay within the rules and keep your fund compliant. Then you hit the jargon associated with Superannuation rules and regulations.

You need to understand who are “related parties” of your SMSF for two reasons, to ensure compliance with the acquisition from a related party rules and to determine the in-house assets.

A related party is defined in the Superannuation Industry Supervision) Act 1993 known as the SIS Act. This is the bible when it comes to Superannuation so you should save that link above. Anyway in the SIS Act sec 10(1) a related party is defined as:

  • Fund member
  • Standard employer-sponsor of the fund or
  • Part 8 associate of a fund member or a part 8 associate of a standard employer-sponsor of the fund.

Ok the first one is easy. Any member including you yourself is a related party.

Standard Employer

A standard employer sponsor of a fund is an employer who contributes to the fund due to an agreement between the employer and the trustee of the fund. These were common in the early days of SMSFs but largely non-existent now.

Where an employer only contributes to a fund due to an agreement between the member and the employer such as under a salary sacrifice arrangement, they will not be considered a standard employer sponsor.

If an SMSF has a standard employer sponsor, which would be uncommon, the relationship will be noted either in the trust deed or in an attached schedule to the deed.

Part 8 associate

Now prepare for a headache to hit you hard after reading this one.

Part 8 associates are broken down in the legislation to Part 8 associates of individuals, companies and partnerships. However, if there is no standard employer sponsor, we only need to examine the part 8 associates of the members who will always be individuals.

The part 8 associates of a member are:

  1. a relative of the member (parent, grandparent, brother, sister, uncle, aunt, nephew, niece, linear descendant or adopted child of the member or their spouse or a spouse of the aforementioned)
  2. other members of the SMSF (and other trustees/ directors of a corporate trustee of the fund)
  3. a partner of the member (legal partnership, not ‘business partners’ i.e. company directors) and their spouses and children
  4. the trustee of a trust the member controls and
  5. a company sufficiently influenced by, or in which majority voting interest is held by the member and their Part 8 associates either individually or together.

A member of the fund will be deemed to control a trust where the member and/or their part 8 associates are:

  • entitled to a fixed entitlement of more than 50 per cent of the capital of the trust,
  • entitled to a fixed entitlement of more than 50 per cent of the income of the trust,
  • able or accustomed (formally or informally) to direct the trustees to act in accordance with their directions or
  • able to appoint or remove trustees.

A company will be deemed to be controlled by a member where the directors are accustomed or under an obligation to act under the instructions of the member and/ or their Part 8 associates or the member and/ or their part 8 associates have more than 50 per cent of the voting rights.

OK, so I warned you to beware of the headache inducing nature of dealing with “Part 8 Associates”. Was I right or was I RIGHT!

The best advice I can give you is to get advice before transferring assets and ask for the advice and get that advice in writing so all parties are sure of the scenario and no mistakes are made.

Are you looking for an adviser 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.

Herd Mentality and Bubbles – Be Careful When Following the Crowd


Whether you are a long-term investor or an opportunist, many investors find comfort in knowing that many others are investing the same way they are and they get caught up in the media hype on a certain sector. Think of the Dot Com craze in the late 90’s when many invested in this sector even though they did not understand it well and as prices rose even the hesitant among investors poured more money in for fear of missing out or FOMO as I prefer to term it. A good adviser should help you identify the risk of these fads and keep you well diversified.

Here is a good educational video from Franklin Templeton Investments on the subject.

I believe that you always need to do your own research on an investment and then cross check that with others. Be prepared to listen to those who may seem wacky, over optimistic or pessimistic before making your decisions. A good Self Managed Super Fund advisor should be able to get you a selection of research from different sources to stress test any investment.

Bubble’s go back a long time, even centuries and while we are weary of each investment that crashes we rarely learn enough to avoid the next one. From my personal collection is one of my favourite prints called Gekko’s Tulip Mania which you may have seen in the movie Wall Street 2. I have it hanging on my office wall as a constant reminder! You can read more on this bubble at Wikipedia – Tulip Mania

 “This is the greatest bubble story of all time… they call it the Tulip Mania.” - Gordon Gekko

“This is the greatest bubble story of all time… they call it the Tulip Mania.”
– Gordon Gekko

For those looking for a truly Australian history of bubbles I would recommend reading a 2003 paper by the John Simon and published by the RBA available free online called Three Australian Asset-price Bubbles

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.

 

Medibank Private Allocations at a Glance – How Much Do I Get?


Medibankl

The full pricing and allocation details for Australian public applicants has been indicated in a Government Press Release.  Applicants will be able to get confirmation of their individual allocation from Tuesday, 25 November 2014 by visiting medibankprivateshareoffer.com.au  or calling 1800 998 778.  Applicants will need to have their Application Reference Number available.

Transaction confirmation statements will be sent to successful applicants from Thursday, 4 December 2014.

The Government has also exercised its right to claw back a further 20 per cent of the shares previously allocated to the Broker Firm Offer which will no doubt annoy the Broking community even further after a huge scale back in their offer.  I cannot help feel there will be a huge amount of shareholders with mediocre holdings and headaches for their accountants and advisers trying to track  applications, allocations, scale backs and refunds of excess funds.

Medibank Private will list on the ASX at 12.00pm AEDT on Tuesday, 25 November 2014.  Its ASX code will be MPL.

Final price per share paid by institutional investors $2.15
Discount per share on final insto price for retail investors 15 cents or 7%
Final price per share paid by retail investors1 $2.00
Proceeds
Total proceeds returned to Commonwealth $5.679B
Allocation of shares as a % of total shares
Retail allocation 60.0%
Total institutional allocation 40.0%
Domestic institutional allocation 22.9%
Offshore institutional allocation 17.1%
Details of Retail Offer
Total number of individual Applications Approx. 440,000
Dollar amount allocated to Retail Offer $3.311 billion
Average shareholding for Retail Offer Approx. $5,850
Policyholder Applicants’ allocation2 33.2%
General Public Applicants’ allocation2 66.7%

 

Medibank Private Share Offer – How Much Will You Get

General Public Offer

Applicants who applied under the General Public Offer have received allocations as follows:

General Public Offer Applicants who did not pre-register who applied for Receive*
$2,000 The full amount you have applied for
$2,001 to $7,000 $2,000 + 75.00% of your Application within this band
$7,001 to $14,000 $5,750 + 20.00% of your Application within this band
Over $14,000 $7,150 + 5.00% of your Application within this band

 

General Public Offer Applicants who pre-registered who applied for Receive*
$2,000 to $2,300 The full amount you have applied for
$2,301 to $7,000 $2,300 + 86.25% of your Application within this band
$7,001 to $14,000 $6,353.75 + 23.00% of your Application within this band
Over $14,000 $7,963.75 + 5.75% of your Application within this band

Policyholder Offer

Applicants who applied under the Policyholder Offer have received allocations as follows:

Policyholder Offer Applicants who did not pre-register who applied for Receive*
$2,000 to $2,300 The full amount you have applied for
$2,301 to $7,000 $2,300 + 86.25% of your Application within this band
$7,001 to $14,000 $6,353.75  + 23.00% of your Application within this band
Over $14,000 $7,963.75 + 5.75% of your Application within this band

 

Policyholder Offer Applicants who pre-registered who applied for Receive*
$2,000 to $2,600 The full amount you have applied for
$2,601 to $7,000 $2,600 + 97.50% of your Application within this band
$7,001 to $14,000 $6,890 + 26.00% of your Application within this band
Over $14,000 $8,710 + 6.50% of your Application within this band

For example, a General Public Offer Applicant who did not pre-register who applied for $10,000 will receive:

Application band Receive*
$2,000 $2,000 (100% of $2,000)
$2,001 to $7,000 $3,750 (75% of $5,000)
$7,001 to $14,000 $600 (20% of $3,000)
Over $14,000 n/a
Total $6,350

* The final allocation of Shares will be subject to rounding and application of the Final Price to any allocation above $250,000.

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

 SMSF Specialist Advisor™ & Financial Planner

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

Verante Financial Planning

Tel: 02 8853 6833,  Mobile: 0413 936 299

liam@verante.com.au

PO Box 6002 BHBC, Baulkham Hills NSW 2153

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

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.

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