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‚Äôt 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 ‚Äėcomplying fund‚Äô in line with the ATO‚Äôs 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‚Äô 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‚Äôs 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‚ĄĘ AFP

Financial Planner & SMSF Specialist Advisor‚ĄĘ

SMSF Specialist Adviser 

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

Verante Financial Planning

Tel: 02„ÄÄ98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

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.

Superannuation ‚ÄĒ 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 ‚Äútemporarily‚ÄĚ 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‚Äôs best interest are they working? Might be time to scrutinise the minute details of this ‚Äútoo good to be true one time only opportunity‚ÄĚ.

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 ‚Äď 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.‚ÄĚ

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‚ĄĘ AFP

Financial Planner & SMSF Specialist Advisor‚ĄĘ

SMSF Specialist Adviser 

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

Verante Financial Planning

Tel: 02„ÄÄ98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

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 ‚Äúyield plays‚ÄĚ 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 ‚Äúdefensive portfolio‚ÄĚ 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 ‚Äúmutton dressed up as lamb‚ÄĚ 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 ‚Äď Understanding hybrid securities ‚Äď 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‚ĄĘ AFP

Financial Planner & SMSF Specialist Advisor‚ĄĘ

SMSF Specialist Adviser 

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

Verante Financial Planning

Tel: 02„ÄÄ98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

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

2 Hits to Retirees On The Cards – Term Deposit Rates down & Swanny On The Pillage


Danger to Retirement IncomeWait until you see the news reports this week talking about how great it is for mortgage holders and first home buyers rejoicing at the drop in interest rates by the RBA on Tuesday. In reality only 1/3 of the population has a mortgage but they get the headlines.

However the self-funded retiree or those in pre-retirement looking to save for a decent¬†income¬†in retirement will not be rejoicing as they have to get used to a 4 in front of their Term Deposit rates and worry about the possibility of a 3 within 12¬†months. These are the people who often don’t have the ability to work a little extra overtime or take on part-time job to¬†supplement¬†their income as older workers aren’t exactly swamped with¬†employment¬†offers.

It may be time to bite the bullet and lock some of your funds in for 2-5 years for the best rate you can get as¬†anything¬†around¬†the 5% mark is looking very attractive and not a big risk in terms of exposure to rising rates as the USA has guaranteed they will keep their rates at or near 0% until 2015. I can’t see Australia¬†getting¬†to far out of step with them in the coming years and it is more¬†likely¬†we will have to lower rates further to weaken our dollar for the economy’s sake.

Other governments are buying our Dollar to invest in what they consider stable Australian Government Bonds and Companies. A blog by my friends at Macro Business lists new countries targeting Aussie assets as reported by various media including the AFR is scary including:

Czech Republic, Kazakhstan, Switzerland, Brazil, Poland, Hong Kong Vietnam, Abu Dhabi, Kuwait,  Qatar , South Korea and of course China with possibly Peru, Malaysia and Singapore as well. All their interest means demand for our currency rises and the exchange rate goes up which the RBA has to try to manage through Interest rate strategies. All that does not bode well for your average Aussie SMSF investor seeking yield or in more simple terms income.

So time to either load up with the best long-term interest rate you can get risk free or prepare to re-enter or increase your exposure to the share market and¬†other¬†sources of income. Be careful chasing yield and understand the risk of any investment paying more than 1-2% above the RBA’s 3.25%.

The second possible hit is harder for me to discuss as I tend to be apolitical in my views under normal circumstances but I feel I have to say something as the leaks to the media in the last few weeks seem to be softening up the SMSF sector for some hard hits.

So on top of the interest rate cuts to your¬†income¬† we have a¬†Treasurer¬†likely to just compound the problem because¬†in his desperation not to give the Liberals ammunition to throw at him over budget deficits appears willing to¬†destroy¬†the confidence in the Australian Superannuation system by dipping his hands in to the “honey pot” that is the retirement savings of everyday Australians. He is being goaded on by the unions and industry fund sector who control a massive¬†position¬†of the retirement pot but mostly those with¬†insufficient¬†savings¬†to¬†fund¬†their¬†retirement. They seem hell-bent on making sure NO ONE can afford a comfortable retirement and all will depend on an Age Pension to some degree. They¬†have Self Managed Super Funds (SMSF) in their sights! It may be more layers of¬†compliance¬†fees or reduction in tax concessions or some similar theft of your savings by stealth but we know something is coming so better to be prepared.

I urge all SMSF investors and self funded retirees in general to get on the front foot before the Half Year Budget update and be prepared to speak up to your local member of parliament and write tot he press now rather than later to try to stop this government pillaging your savings to fund a  meaningless surplus. If the opposition took the pressure off the need to bring in a surplus that would help too but I know I am dreaming with that idea. The short-term gain of accessing funding from our Superannuation will lead to a huge drop in confidence in a system that has already been hammered in the last few years by Government changes and the CFC.

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

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‚ĄĘ AFP

Financial Planner & SMSF Specialist Advisor‚ĄĘ

SMSF Specialist Adviser 

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

Verante Financial Planning

Tel: 02„ÄÄ98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

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.

Managing the Government Guarantee on Term Deposits as an SMSF Trustee


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SMSF trustees are able to take advantage of cash accounts backed by the Federal Government’s Financial Claims Scheme (FCS), commonly known as the government guarantee, to improve the security of their capital and achieve good levels of interest.

In 2012 the Government announced the guarantee on deposits was to be reduced to a $250,000 cap, down from $1m cap in place since 2008. The lower limit is a concern to many SMSF Trustees given that it reduces competitiveness between the Big 4 banks and smaller the regional banks and the building societies.

The initial reaction especially for the risk averse was for Term Deposits larger than the cap to drift back to the CBA, ANZ, Westpac and NAB, given their much higher credit ratings. They have capitalised on the move and as a consequence we see lower term deposit rates from the Big 4 for amounts more than $250,000 since February 2012.

So what strategies are available to retain the government guarantee and to secure the higher interest rates.  Here are some ideas for the SMSF Trustees and Self funded Retirees to consider:

  1. Do your research on your target providers and consider if the guarantee is really needed. If you are willing to take the risk on the solid backing of many of Australia’s financial institutions. If you are happy with them then you may just opt for the highest interest rate paying one and don’t be afraid to ask them to get you a better deal than advertised as you can get 0.05 to 0.2% by asking! It all adds to your bottom line so don’t be shy.
  2. If you have more than $250,000 to invest, you could split your investment between a number of providers. At www.ratecity.com.au and www.mozo.com.au  they give you details of a number of different institutions such as ING DIRECT, ME Bank, Greater Building Society and Rabobank. Don’t be afraid of these names not being too familiar, they have the guarantee! You could split deposits across 3-4 institutions as well as your current Big 4 favourite and maintain the guarantee on your portfolio.  It does involve a bit of work to set up initially but if you’re wanting a government guarantee, then it’s worth the initial effort, think of it as an Insurance policy application!
  3. The added benefit is that should you need access to some funds urgently then you may only have to break one of the Term Deposits instead of previously breaking the one large one and incurring Break Fee, which we all hate. You may stagger the terms to ensure even more flexibility.
  4. Now you may not be comfortable with this one as the level of knowledge about this sector is not great among individual trustees but you might consider buying some bonds for a higher return. By investing lower in the capital structure in those well-known banks where you are confident that they will continue to trade, you can pick up a higher return. While senior bonds are higher risk than term deposits, the main benefit they have is that they are liquid and can be sold very quickly.
  5. Yields on Australian dollar bonds are not great at the moment as market expectations for a low growth world economy spreads with the IMF this week reducing forecasts even further. Your adviser or fixed interest broker can guide you towards the better risk and decent yielding bonds and you can expect 2.5 to 5.5% for what I would consider suitable risk for a moderately conservative investor if well diversified.
  6. Don’t chase a guarantee or safety to far and limit exposure to underpaying securities like the 10-year government bond, 2.58 per cent. For $50,000, some of the best-paying, three-year term deposits with the deposit guarantee are paying in excess of 3.2 per cent.
  7. If you want diversity without the extra paperwork think about outsourcing this sector to a professional fund manager like Macquarie Income Opportunities Fund. Schroders or Henderson also have decent offerings in this conservative end of the sector. Look for a mindset in a Fund Manager that sees Capital Preservation as a core to their strategy.
  8. Instead of lending to the bank, buy the bank or at least blue chip shares that provide decent dividends. Buy no more than a handful of reliable blue-chip stocks that pay a regular dividend and are forecast to continue to do so through thick and thin. These should be ‚Äúbottom drawer‚ÄĚ stocks. If you have only got a small part of your wealth invested in them then you can afford to let them ride the volatility but you still need to watch their sector for any major changes (think Blockbuster video demise after online streaming). I am talking about the 1 or 2 banks, the consumer staples like Wesfarmers and inflation linked income companies like APA Group which owns Australia‚Äôs largest natural gas distribution and storage infrastructure network, constituting mainly gas transmission and distribution, mostly servicing power generation, industrial, and commercial customers.

All to0 hard? Well at Verante Financial Planning we have access to a facility that can access over 20 Term Deposit providers in one place with a one-off application form and easy transfer from institution to institution at maturity for the best rates.Have a look at Australian Money Market

In summary it appears most people are unsure about the future and want guarantees on their investments while on the other side younger people don’t want to take on additional debt at this time. This means we’re likely to see rates remain low for some time. By doing some research and comparing what’s available in the market and maybe seeking advice for a second opinion you can find the Term Deposit that suits your needs.

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‚ĄĘ AFP

Financial Planner & SMSF Specialist Advisor‚ĄĘ

SMSF Specialist Adviser 

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

Verante Financial Planning

Tel: 02„ÄÄ98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

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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