# Self managed super - what are the costs?



## markrmau (15 February 2006)

I often see comments saying that self managed super is not worthwhile unless you have about $200k.

Why? What are the additional complience costs? Would it be true for people who already have appropriate investment information?


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## DaleGG (15 February 2006)

Hi

The main reason that ASIC suggests that amount is to make it unattractive for people with very little funds in Super to create one of their own; and, to stop sharks from selling you something that is not viable.

It might be better though to consider instead:

what returns do you currently get?
what returns do you think you can get from your own investing?
will those returns less annual costs be more than the existing funds?

If you genuinely believe that you can perform better than the funds then you might find that self managed super makes sense to you.

The annual costs will vary but allow about:

$100 pa to Government agencies for registration and filing fees
$250 to $750 for audit costs
$500 to $1,500 for accounting costs

Why so much variation?  

Because it will depend upon the quality of the information that you present to your accountant and the complexity of the issues involved.  Furthermore, it will depend upon your accountant and how much they charge.

I hope that this helps a little

Dale



			
				markrmau said:
			
		

> I often see comments saying that self managed super is not worthwhile unless you have about $200k.
> 
> Why? What are the additional complience costs? Would it be true for people who already have appropriate investment information?


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## Prospector (15 February 2006)

Hi there
We started (partner and I) our own SMSF perhaps 10 years ago.  We are self employed. It was at the suggestion of our accountant.  We started off with about $50,000 (that was 10 years ago).  For the first two or three years we just left it in the hands of so-called experts (Share Brokers - quite a high profile company) until we realised we were going backwards.    

So I (the female half) decided I would be more active in what we were doing.  We love the fact that we now control where we invest the money.  We sold some shares and bought a canal waterfront block of land; even in a declining property market that land has increased in value by 150%.  I researched the share market and invest in the share market and also have some cash at high interest.  All of these assets must be kept separate from any personal accounts, and must be in the name of the Super Fund.

There are strict compliance rules but these are easily managed.  ASIC fees costs $212 a year, and all transactions you make must be audited.  We expect to pay around $3000 this year in accounting fees, but I also give the accountant all the information he needs - he just has to check it (I use MYOB to reconcile both cash accounts; have to get the land re-valued every couple of years, and each share trade is examined.)

For the current value of our Super, the fees are about .6% pa.  Try finding a super fund where the fees are less than that!

It is easily the best financial decision we have made, but that might not be the case for others.  I do spend quite a bit of time managing it because I am allowed to have some spec stocks under the Trust Deed, and these are somewhat volatile so have to manage that.  We are in the accumulation phase at the moment, but will soon change the portfolio to an income one (eg sell the land and buy shares that pay good dividends) in the next five years or so as we reach near draw-down phase.

Hope that helps


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## markrmau (15 February 2006)

Thanks for the comments DaleGG and Prospector. From these figures, it looks like you would want to have around 200k as a starting point.


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## Julia (15 February 2006)

You also need to allow for establishment costs.  Mine was just under $700.

Prospector:  you mention the payment of ASIC fees so I guess your SMSF is as a Company?  Another option (which avoids the annual payment to ASIC ) is to set up the Fund with two (and I think you can have more than two) Trustees.  I've done it this way.  A disadvantage of this can be that everytime you sign something it requires signatures of both Trustees.  This can be overcome by having the 2nd Trustee complete a POA for the purposes of signing of documents in your SMSF.

I'm expecting accounting and auditing fees for last financial year to be  somewhere between $2000 and $3000.

Like Prospector, I am much happier having direct control of my investments.
You can still outsource advice if you feel you need to.

Julia


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## Prospector (15 February 2006)

Julia said:
			
		

> You also need to allow for establishment costs.  Mine was just under $700.
> 
> Prospector:  you mention the payment of ASIC fees so I guess your SMSF is as a Company?  Another option (which avoids the annual payment to ASIC ) is to set up the Fund with two (and I think you can have more than two) Trustees.  I've done it this way. Julia





Yes, right on both counts!  Actually we may not pay any ASIC fees - we have several companies and I think I may have got mixed up with the Super Fund.

And you are also supposed to review 'the trust deed' every couple of years too!  This costs around $200.  Think I might encourage the kids to be an accountant!!!


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## Duckman#72 (15 February 2006)

DaleGG said:
			
		

> It might be better though to consider instead:
> 
> what returns do you currently get?
> what returns do you think you can get from your own investing?
> ...




Hi All

Don't be sold on a self managed superannuation fund on the sole basis that it will cost you less money. That is completely the wrong reason to start one.

Although the questions listed by Dale are important, another key question is:  
a) How much are you able to contribute each year to the fund?

The reason SMSF are so popular for self-employed people is due to the fact you can claim a tax deduction for the contribution and also self-employed people generally have more ability to contribute excess cash to the fund. 

I have seen numerous salary/wage employees start a self-managed super fund with $50,000 or less and make a complete hash of it. Don't get me wrong - the small majority make it work but the large majority don't. Why? Compliance costs. It can cost just as much in audit and accounting fees for a fund with $1M as it does for a fund with $50,000. 

The more money you have in the fund the cheaper it is (economies of scale). Lets say a 2 member fund - investing in Term Deposits and half a dozen direct shares and managed funds. The audit fees would be say $350 and the accounting fees could be say $1550. Forgetting the Super Levy of $45 you pay to the ATO each year your compliance costs are approximately 4% of the fund if you have $50,000 invested. The retail funds can do it much cheaper than that.   

Don't forget that despite Prospector saying it was the best thing she and her partner ever did - have a look at her situation. They were in a position to put waterfront property into the superfund. Not everyone is going to be able to do this. You cannot borrow through the superfund.

Don't be hung up on fees - if you want the job done properly it will cost you. But at the same time don't start up your superannuation fund on the basis that it is cheaper to do it yourself.

The other point that I would make is that the compliance aspect of superannuation has increased threefold from 10-15 years ago. The ATO are closely monitoring non-complying funds (and also auditors). Gone are the days when you do anything in your super fund and then plead ignorance as a defence.

For the record Mrs Duckman and I have our own superannuation fund and we love the freedom and control we have over our investments - but it annoys me how SMSF are touted as being a brillant strategy everyone (regardless of the amount of super monies held, likely future contributions, knowledge of investments, administration costs, set up fees etc).    

Duckman


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## Prospector (15 February 2006)

Duckman#72 said:
			
		

> Hi All
> 
> 
> Another key question is:
> ...





Yes, agree with you on all counts Duckman!  

And that is why our SMSF was set up - we had a run of high profits and we were able to put the money into the SMSF as we didnt need it for business purposes.  We also had several super accounts that we were able to merge with the SMSF, and eliminate those fees too.  

The SMSF has become very popular with choice of super fund, and this has resulted in many people suggesting this is the way to go!  But on reflection maybe it doesnt suit your average employee.  I guess I also associated SMSF with self-employed people, but with super choice, that has now changed.  And it does take time to manage.


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## beachbum (15 February 2006)

I started a superfund 8 years ago with the small amount of 22k. I have only traded shares in that period of time and the only extra contribution was when I rolled over 17k from an employer. The fund is now 92k. I trade mainly mid tier resource stocks with tight stops. It just depends on how much time you want to spend doing this. I like the challenge and I'm in control. As far as I'm concerned I take less risk than people who hand their money over to a managed fund. At first it was  a hard slog as the costs involved listed by others took a fair wak of 22k and I made my fair share of trading errors. I wouldn't recommend starting with such a small capital base like I did but if you are prepared to put in the effort, rewards will follow.


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## Bulltrader (15 February 2006)

Have been looking at starting my own SMSF. I have approx $60k and the fees seem not to justify doing it. However I've come accross this site:

http://www.nicholasneedham.com.au/costs.asp

which states that they only charge $685 per annum for everything including accounting, audit fees etc, no matter how many transactions and, wait for it, no establishment costs.

What's the catch? Has anyone used them?
Is there some other costs, written in the fine print, which they will come up with once I've signed up? Am I missing something?

Cheers

Bulltrader

PS I'm not in any way affiliated with Nicholas Needham, just want to know if they are legit.


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## macca (16 February 2006)

We have had a self managed super fund for about 7 years, our annual costs are $700 for the accountant and $45 to the ATO.

I have read on other forums that people using NicholasNeedham are quite happy, BUT I have never had any contact with them. 

Macca


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## Prospector (16 February 2006)

OK, so now I am curious about my accountants fees.  He always says that because he has to audit every single transaction then the fees are high - because I do a number of share transactions.

Last year I did a total of 35 trades, had two bank accounts all of which were documented and reconciled, and use Portfolio Planner that even calculates capital gains/loss.  For which I was charged $2700.

Any comments please?


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## sails (16 February 2006)

We have just been hit with a $1550 accountancy bill (including the audit) for the SMSF and like you Prospector, everything was in neatly in order and reconcilled monthly - all the hard work was done for them. 

 Obviously no real industry standards out there for pricing, so I guess it is a case of shopping around in future.


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## Julia (16 February 2006)

Prospector said:
			
		

> OK, so now I am curious about my accountants fees.  He always says that because he has to audit every single transaction then the fees are high - because I do a number of share transactions.
> 
> Last year I did a total of 35 trades, had two bank accounts all of which were documented and reconciled, and use Portfolio Planner that even calculates capital gains/loss.  For which I was charged $2700.
> 
> Any comments please?




Prospector:

You say above "because he has to audit every single transaction".
My understanding was that the accounting and auditing had to be carried out by different people?  Can anyone else comment on this?  Mine is in the process of being done at present but volume of work would be pretty similar to what you've quoted.  When I dropped all the stuff off, I asked out of curiosity how many hours of work she anticipated.  Answer  about 16.
If we take $2500 as average fee, that would be roughly $150 per hour which probably isn't out of the way for accountants.

I guess another factor is feeling confident your accountant and auditor are going to get everything right.  After all, if there are mistakes, they are not the ones up for heavy penalties by ASIC because of non-compliance.

Julia


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## Duckman#72 (16 February 2006)

Julia said:
			
		

> Prospector:
> 
> You say above "because he has to audit every single transaction".
> My understanding was that the accounting and auditing had to be carried out by different people?  Can anyone else comment on this?  Mine is in the process of being done at present but volume of work would be pretty similar to what you've quoted.  When I dropped all the stuff off, I asked out of curiosity how many hours of work she anticipated.  Answer  about 16.
> ...




You are exactly right Julia. The audit and accounting work are technically not to be undertaken by the same person however the ATO have allowed firms that are large enough to have an accounting section and audit section to establish "chinese walls" to enable everything to be done under the one roof.

It is an area that the ATO are closely reviewing. Until the ATO's involvement in policing SMSF accountants were just signing off audits as par for the course once they finished preparing the financial statements.

You get what you pay for. 

I looked at the website for Nicholas Needham and note that they are "Qualified Accountants". Unfortunately the accounting profession is not as strict with the use of "Qualified" as other professions. A "Qualified Accountant" can be someone that has completed an Associate Diploma of Business from TAFE. On their website they mentioned that the cost for them to prepare and audit an average super fund was $500. I wouldn't be interested in going to a firm that employed "qualified" auditors and accountants at a charge out rate of $50 per hour (which is what this could equate to - or even less). To charge out so cheaply they need to do one of two things - the accountants must be on low charge rates or the accountants must be spending very little time on each job. Both would seem to be problematic.

Sails and Prospector made the comment that there weren't any industry standards on pricing - well that is correct. However there is a reason that the ATO and ASIC quote $1700 per annum on their respective websites - that is considered to be industry standard!    

Sure you can get your personal income tax return done at say H&R Block for $65 but there is a very good chance that you will get someone that has done a 2 month bridging course only a month earlier. As I said - you pay for what you get.

Sails comment made me smile - something about "all the work had been done". 

Julia is correct again in saying that you need to feel confident in your accountant and auditor. Spot on. I would be interested in knowing how many ATO audits Nicholas Needham come across as a percentage of the number of funds they prepare. 

This thread is right back to the start - IMO if you can't afford to pay $1500 for the compliance work on your super fund you are not in a position to start one up.


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## Prospector (16 February 2006)

Thanks for your comments people.  Yes, the audit and the returns are done by two different people, but the firm is big enough to have its own audit branch, at least, I am assuming that.  

I have had queries about my accountants fees from doing our company returns, which last year were ridiculous. They also charge $220 per  ASIC report, which is really just a print off of their data base unless something like an address changes.  So while $1500 may be the go for Super Funds, we are paying almost double that.  I dont mind at all paying the amount we do, providing the accountant practice doesn't see us as the golden egg!  And we are talking about South Australia here, where rents and company costs are way below Sydney and Melbourne.  Except our Taxes (petrol, Land tax and stamp duty) are way way higher :swear: 

It is a bit of a saga but my original accountant who was great, felt unable to cope with some issues with his private life, as well as keep up to scratch with the GST.  So he joined forces with a bigger group.  Bad move for all concerned.  He says all of his original clients are complaining about the fees, so I was curious to see what others are paying.

Next year the accountant will be going back to his own practice (well, that is the plan) and so the costs will fall drastically without all the overheads.

Cheers


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## macca (17 February 2006)

Just thought I would add that before moving to my $700 accountant I used to be with a retirement advisor who used to charge $1400 pa.

After they moved into a palatial office I thought "who paid for this?"

I decided I would get some comparison prices, I asked at 3 accountants and the prices ranged from $600 plus GST to $1000 plus GST, about 3 years ago.

I had a chat with the $600 guy and he showed me a sample annual return, it was EXACTLY the same as the one I paid $1400 for   

I said that looks familiar, he said "Yes, there are 2 accounting software packages that are very popular in the industry, we must be using the same program"

Each year I print out a list from Commsec of my trading activities for the year, and hand over the usual bank statements etc. I usually have maybe 20- 30 trade a year.

One difference may be that I am not drawing a pension from the fund, I would think if I was taking money out then that would require a LOT more diligence on their part, $$$ !! 

But if you are still paying in with no drawings I think I would be shopping around, by the way, my guy is a Chartered Accountant. He does charge $175 to press print on the word processor for the Company return, so I get that myself now and press "print" on my own PC.


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## Prospector (17 February 2006)

Duckman#72 said:
			
		

> Sails and Prospector made the comment that there weren't any industry standards on pricing - well that is correct. However there is a reason that the ATO and ASIC quote $1700 per annum on their respective websites - that is considered to be industry standard!
> 
> .





Duckman, I would like to see that that info and just wave it under my Accountants eyes.    Have had a quick browse on the ATO website under Super Fund but was wondering if you could let me know where it is?
Thanks if you do


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## Duckman#72 (17 February 2006)

macca said:
			
		

> Just thought I would add that before moving to my $700 accountant I used to be with a retirement advisor who used to charge $1400 pa.
> 
> After they moved into a palatial office I thought "who paid for this?"
> 
> ...




Hi Macca

Might I suggest you look for an accountant that is working out of a tent. His/her overhead costs would be much lower again. 

When you say the annual return was EXACTLY the same as the one being prepared for you - you must mean it looked like it was in the same format. That is because regardless of the software used by tax agents, Accounting Standards require the annual returns to be reported in a structured, clearly defined and consistent manner. I hate to tell you but they will all look much the same. Is that what you are paying for - "the look" of the report? Might I recommend you also be concerned about the content.

Software is only as good as the person using it. Garbage in - garbage out. A lot of software products (such as MYOB and Quicken) are sold on the basis that you are "reducing the time of accountants and therefore fees". This is not always right - if the chart of accounts are not setup correctly, or the bank account reconciles only because of an adjusting entry, or the accounts are not reconciled at all, software programs can cause more problems than if the accountant was using the bank statements and cheque butts.      

A lot of problems with fees seems to stem from what people expect their accountant to do. Try and get your accountant to present you with an Engagement Letter that spells out what their brief will be. Do you know how to calculate the correct capital gain or loss from your share transactions? Do you know what is legitimately allowable as a deduction? Can you prepare the ITR yourself? If not - let the accountant do it. 

It amuses and amazes me that people boast about how good their accountant is based on the size of the fee! And it is understandable. Most people don't know as much as they think they know about tax. They only correspondence they get from their accountant is:
a) A letter outlining the funds performance and likely tax payable/refundable
b) The folder containing tax returns and financial statements
c) The bill.  

Unfortunately accountants don't often spend the time they should explaining what they have done for clients, and the benefits they have created. It is an area that they need to work on. All a person sees is a pile of papers and a bill. There are those that purchase based on price and those that will be based on quality. Sometimes they go together - often they don't.  

Duckman


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## Duckman#72 (17 February 2006)

Prospector said:
			
		

> Duckman, I would like to see that that info and just wave it under my Accountants eyes.    Have had a quick browse on the ATO website under Super Fund but was wondering if you could let me know where it is?
> Thanks if you do




Hi Prospector

Goto the ATO website and search for Factsheet: POTENTIAL SMSF TRUSTEES.  NAT 13556-05.2005

Also www.asic.gov.au/fido/fido.nsf/byheadline/Is+self+managed+super+right+for+you%

Hope this helps. Mind you it is only an industry average. Quote "SFSF can typically cost around $1700 to run each year and quite often cost more."

Duckman


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## visual (17 February 2006)

Duckman,
you are absolutely correct ,however Macca also has a point,well illustrated by Peter Lynch,in his beating the street book.(in the end though accountants like doctors have to be taken on trust,unless you yourself know something about accounting and can tell how well they are doing their job,in which case you wouldnt need them anyway,unless you were extremely busy)
I hasten to add the book is about investing not about accountants,but 
Excellent book too by the way :


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## Prospector (17 February 2006)

Thanks for that Duckman - I agree with the cheapies issue, however I really think our accountant is seriously overcharging, and challenged them on this recently - actually refused to pay their bill and sent only half!  I based this on the number of hours I estimated it would take, added a few more, at a rate of $250 per hour plus GST.  Thought this was more than generous


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## bullmarket (17 February 2006)

I have found this  ASX web page that has some general information and links to other sites related to SMSF's in general that might help someone.

cheers

bullmarket


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## Duckman#72 (17 February 2006)

Prospector said:
			
		

> Thanks for that Duckman - I agree with the cheapies issue, however I really think our accountant is seriously overcharging, and challenged them on this recently - actually refused to pay their bill and sent only half!  I based this on the number of hours I estimated it would take, added a few more, at a rate of $250 per hour plus GST.  Thought this was more than generous




No problem Prospector - and I wasn't having a go at you concerning the questioning of your fee. You seem to have a realistic idea on what are reasonable chargeable rates and the time involved to complete your job. A lot of people pluck what fee they think they should be paying out of the air - not basing it on anything. "My mate got his done for $1200 - and mine should be less than his" sort of stuff.


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## macca (18 February 2006)

Hi Duckman,

I can only assume you are in the industry.

Never thought to look for one in a tent, I am quite happy to use one with a nice and tidy office, competent, well presented staff who can direct me to the appropriate link at the ATO if questioned. They also give me printouts of the latest changes from the ATO if applicable to me.

As I said, he uses the same software as the previous guy, if he as a Chartered Accountant, with links to a national and international group of Chartered Accountants, puts in garbage, then I have the same chance that the last guy could also put in garbage, don't I ?

I don't do any of the Tax return myself, I simply print out a summary of my trades from Commsec, copy all my term deposit and bank account stuff and give it to them.

I only object to paying $175 for them to PRINT the trustee company annual return, I still have to fill it in anyway, so why not print it myself ?

As previously stated, I do not draw a pension so it is pretty simple if you have the right software, but I have no doubt that to purchase the software and keep it up to date would cost a few $$$$

About that engagement letter, yes we have to sign one of those, quite detailed aren't they.

Anyway, that's my situation.


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## Duckman#72 (18 February 2006)

macca said:
			
		

> Never thought to look for one in a tent, I am quite happy to use one with a nice and tidy office, competent, well presented staff who can direct me to the appropriate link at the ATO if questioned. They also give me printouts of the latest changes from the ATO if applicable to me.
> 
> As I said, he uses the same software as the previous guy, if he as a Chartered Accountant, with links to a national and international group of Chartered Accountants, puts in garbage, then I have the same chance that the last guy could also put in garbage, don't I ?
> 
> ...




Come on Macca - you can get your accounting fee down lower than $600! Don't tell me you use someone that actually has links with the ATO. That sort of thing seems lavishly, wasteful to the extreme. How extravagant. 

But seriously - why are you asking your accountant to direct you to the appropriate sites at the ATO? Most accountants would be giving you the advice both verbal and written themselves. Or are you cost cutting again?  

And I'm curious - why is your engagement letter so long? I am learning all the time from people on this forum such as yourself and Sails that "all the work has been done" and "he just presses the PRINT button", and "it's pretty simple if you have the software". What do these people that masqerade as accountants actually do!!! There can't be anything left to put into the engagement letter. 

I will do some more research on this Macca and get back to you. In the meantime - don't let your accountant's secretarial staff get new uniforms - or you'll be up to $620 next year.

Duckman


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## macca (20 February 2006)

Hi Duckman,

Not quite sure why you are being so sarcastic.

I simply responded to a question by another poster and you seem to take it as a personal insult.

This is a public forum where we come to share our experiences on topics of mutual interest, if I can help other posters then I will.

My advice was given in an effort to help those considering a SMSF realise that, as in most things, it is wise to get a comparison price.

I now understand why Tech/A feels as he does


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## Duckman#72 (20 February 2006)

macca said:
			
		

> Hi Duckman,
> 
> Not quite sure why you are being so sarcastic.
> 
> ...




Just playing devil's advocate Macca. Sorry.

The general tone of this thread started out warning those looking to start a SMSF to be wary as the costs (in general) are more than people anticipate and realise. Then the thread seemed to turn around to suggest how easy it is and how cheap it can be.    

Duckman


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## Julia (20 February 2006)

I agree re note of caution before establishing a SMSF.  I'm really happy with mine, but have been a little surprised at the suggestions in this thread of setting one up with anything under $200K.

Also, don't underestimate the work involved in running a Fund.

Good luck to anyone who decides to do it, but please don't think: "whoop de do - if I stop paying fees to a Super Fund manager and have my own fund, then I'm on a quick path to endless success".  Just remember that YOU have to take responsibility for everything to do with the Fund, including fulfilling your obligations as far as the ATO and ASIC are concerned.

Julia


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## Julia (15 May 2006)

I'm in somewhat of a state of shock to have received the accountant's and auditor's bill today - total of $3200!  I was expecting around $2000 based on last year's charge .

Has anyone else had their accounts recently?  The auditor alone was $464.

I've since phoned another couple of accountants who have said "probably around $2000" and am seeing one tomorrow with the current statements in order to get a firm quote.

And there's the ATO levy of $45 on top of that!

Would appreciate others' comments.

Julia


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## Prospector (15 May 2006)

Hi Julia

I paid almost exactly that for my accountant's SMSF bill this year.  My return consisted of approx 35 trades (buys and sells), dividends, costs associated with having a block of land (eg paying for water, sewerage, fences etc), and two banking accounts.  This included the Audit fees which weren't separated out because the Accountant practice is allowed to do this 'in-house'.

All my accounts were reconciled thru MYOB, and each dividend and trade was documented in my software designed to keep track of shares.  All printed out for them.

How does this compare with the complexity of your fund?


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## Julia (15 May 2006)

Hi Prospector,

Probably all up, about the same, in that I don't have any land with its associated financial activity, but you have obviously done more to help the accountant than I had, with your MYOB work.  No. of trades would probably be between 40 and 50, and dividends for about 25 - 28 companies for most of the period.  Two bank accounts.

I'm seeing another accountant tomorrow with all this year's paperwork so he can give me his quote for doing the same work..  Will keep you posted.

Julia


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## Prospector (16 May 2006)

HI Julia
Nice to see someone else who trades the same amount as I did!  My accountant scoffed at the number of trades I had done - 'never seen as many in all my life' - arrogant Y^%$er!  Obviously he knows nothing about shares and maximising profits/loss!  He probably still holds the shares he bought when he was 20!

Am trying to change but suffering from lack of inertia - plus I have to get all the Trust deeds off him if I do change!

Good luck with it all!


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## macca (16 May 2006)

Hi Prospector,

If you wish to change accountants, you shop around to find one that you feel comfortable with.

Then THEY contact your old acct and ask for the paperwork to be sent to them direct.

No need to have a face to face situation with them


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## Prospector (16 May 2006)

That's what I thought too Macca - the one I was referred to by someone else insisted that I get all the documents myself - I think accountants have become the new stock brokers - they get too much business, can charge too much and then blaming it on the complexity of the Taxation system, GST etc etc, and can be just,. well, lazy!


I bet they are a bit cross with the new super rules after the age of 60 - because now people just wont need an accountant to deal with all the draw down rules that used to apply - ha ha!


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## Duckman#72 (16 May 2006)

Prospector said:
			
		

> I bet they are a bit cross with the new super rules after the age of 60 - because now people just wont need an accountant to deal with all the draw down rules that used to apply - ha ha!




Hi Prospector

I think it would be the opposite actually - the Government have opened the floodgates for more people to start their own self managed super funds.

Even at $3000 for acounting and audit fees per annum - on a fund with assets of $250,000, a self managed fund is still the cheaper option over the majority of off the shelf packages. It is just that it gets up the nose of SMSF trustees that there is an invoice for the amount - whereas in an off the shelf product it can be lost and absorbed without seeing a cheque written out for it. 

Duckman


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## Julia (16 May 2006)

Today I took all the paperwork which precipitated the bill for $3200 into another accountant.  He uses the exact same software, and quoted in writing that his bill for the same work would have been $2200 max, i.e. $1000 less!

Also, he is happy to get onto the tax return immediately after 31 June whereas the present accountant wouldn't accept the material until February this year which meant I was holding onto two lots of everything for three quarters of the year.



Julia


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## chemist (17 May 2006)

Julia said:
			
		

> ...Also, he is happy to get onto the tax return immediately after 31 June ...




Sounds good but beware, 31 June could be a long time coming.

cheers,
Chemist


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## Julia (17 May 2006)

chemist said:
			
		

> Sounds good but beware, 31 June could be a long time coming.
> 
> cheers,
> Chemist




Hello Chemist,

And would you believe I read your comment and thought for a couple of seconds "what on earth is chemist on about"!  Then woke up.  I think I get it wrong every year and have no idea why.

Thanks

Julia


----------



## Prospector (17 May 2006)

Duckman#72 said:
			
		

> Hi Prospector
> 
> I think it would be the opposite actually - the Government have opened the floodgates for more people to start their own self managed super funds.
> 
> Duckman





Hmm, hadnt thought of that!   My goodness, that is also rather scary that suddenly a lot of dare I say, uninformed people might suddenly want control of a heck of a lot of money on the advice of accountants who may or may not have their 'clients' best interests at heart - particularly as I do believe their fees for Super Funds in the drawdown phase will dry up!   Can you imagine how the compliance Department in the ATO will need to be beefed up to ensure all Fund Trustees are doing the right thing!


----------



## Prospector (17 May 2006)

Julia said:
			
		

> Hello Chemist,
> 
> And would you believe I read your comment and thought for a couple of seconds "what on earth is chemist on about"!  Then woke up.  I think I get it wrong every year and have no idea why.
> 
> ...





He he -  nice one!  

Glad to see your efforts were worthwhile Julia.  I am having a meeting today with my nice accountant (I have an original nice one who sold his practice to another business, and it is the latest one I have all my issues with :swear: )  to talk about Super Fund strategies - will be interesting to see what he has in mind as a result of the recent budget.  He no longer does accounting as such but has an Investment Practice.  He only gives us advice as he feels we have a pretty good grip on Investment opportunities but obviously need advice on Tax Issues.  It was his idea to start up our own SMSF several years ago, and that was a gem!


----------



## Julia (25 August 2006)

Do we have any accountants or tax specialists on the forum?

Last year I paid $3300 for the tax return and audit on my SMSF and believe I was decidedly overcharged.  There were just Australian shares plus cash in two bank accounts.  No property or anything complicated.

Now time to get last financial year's return done.  I took the relevant info into an accountant yesterday and got a quote of $700 plus GST.

My question is:  can an accountant actually stuff up the tax return and/or audit on a SMSF?  It seems pretty straightforward to me but perhaps I'm missing something.  In other words, can I trust this much cheaper quote to get me a reliable result?

I'd appreciate any comments from anyone who knows about this.

With thanks

Julia


----------



## tech/a (25 August 2006)

Julia
I wouldnt expect so.
However why not *have a second quote * and if around the same go with the one with the best credentials.
Personally I would look for one recommended by a client or 2.

I pay a heap for the firm that looks after my Company,personal and super.
However its a value judgement --- based upon tax paid (or not paid) advice when I want it and the quality and effectiveness of that advice.


----------



## doctorj (25 August 2006)

Julia said:
			
		

> Do we have any accountants or tax specialists on the forum?
> 
> Last year I paid $3300 for the tax return and audit on my SMSF and believe I was decidedly overcharged.  There were just Australian shares plus cash in two bank accounts.  No property or anything complicated.




The fee you pay for the audit will come down to two factors.  The time and the risk.

Accountants will charge clients between $150 and $350 per hour worked depending on the complexity of the job and hence the level of staff member required. 

The fee will increase with the level of risk the firm perceives to exist in the job.  If the fund holds more assets, trades more regularly or holds more inherently risky assets (eg. shares or derivatives compared to fixed interest) the fee will increase.

Ensure you receive a signed engagement letter from your accountant that details the scope of work and the fee to be charged.  Whilst the fee may very, if its materially different you will have recourse.

As tech said, the quality of the account is as important than the fee.  Do remember though that good staff exist in even the cheapest firms.

The quality of the job will vary.  If you’re just looking at the audit as a hoop to jump through to be compliant with SIS (or whatever it is for SMSFs) then any accredited chump can sign it off.  If you view an audit as a value adding mechanism for managing your risk just as you would a stop loss on a trade then quality becomes an issue.  The risk for you is that the audit won’t detect a mistake and you wind up wearing a fine down the track.  As long as the work performed by the accountant met the scope of work and was suitable to substantiate their opinion chances are you wouldn’t be able to make a successful claim against them even if they don’t detect a problem they should have found.


----------



## Duckman#72 (25 August 2006)

Julia said:
			
		

> Do we have any accountants or tax specialists on the forum?
> 
> Last year I paid $3300 for the tax return and audit on my SMSF and believe I was decidedly overcharged.  There were just Australian shares plus cash in two bank accounts.  No property or anything complicated.
> 
> ...




Hi Julia

Just a couple of questions. How many shares do you hold in the fund and are they actively traded?

Also - who maintains your trust deed and prepares compliance paperwork for the fund? Is this your accountant or do you have a super adviser?

I haven't got enough time to answer in full at the moment but will try over the weekend.

Regards

Duckman


----------



## Freddo (25 August 2006)

Julia said:
			
		

> Do we have any accountants or tax specialists on the forum?
> 
> Last year I paid $3300 for the tax return and audit on my SMSF and believe I was decidedly overcharged.  There were just Australian shares plus cash in two bank accounts.  No property or anything complicated.
> 
> ...





Julia,

I use cash, shares for my SMSF have never paid more then $750 for return and audit combined and I have used 3 diff accountants. $3300 sounds very expensive to me. I've got good grasp of ATO and APRA rules and know my fund is compliant.

Freddo


----------



## clowboy (25 August 2006)

Julia,

I also am not sure who is running your super fund on a day to day basis?  Are you doing this yourself?

I have a very basic SMSF with a VERY small amount of funds in it but my fees run on a scaling system dependant on number of investments held.  I have less than 3 investments in the fund which cost me $45.10 per month to have run by the accountants.  From memory the next three adds $15 a month and so on or something to that effect.

Bearing in mind that it is a very simple fund with very few assets, my aduit fee last year was $165.

Grand total = 541.20 + 165 = $706.20

A couple of months ago I got some fee called ATO supervisory levy, not sure what that is and would be glad if anyone knew.

Cheers


----------



## Julia (25 August 2006)

clowboy said:
			
		

> Julia,
> 
> I also am not sure who is running your super fund on a day to day basis?  Are you doing this yourself?
> 
> ...




Hi Clowboy,

The ATO supervisory levy is an annual fee ($35 from memory) which is payable to the ATO.  It doesn't affect what you pay your accountant or auditor.

Thanks for info re what you have paid on your fund.

Julia


----------



## Julia (25 August 2006)

Duckman#72 said:
			
		

> Hi Julia
> 
> Just a couple of questions. How many shares do you hold in the fund and are they actively traded?
> 
> ...



Hi Duckman,

Currently there are 21 companies.  There are two bank accounts:  An E-trade online trading account and a separate ANZ which feeds into and out of the online account.

In the E-trade account during last financial year there were 46 transactions, either Buy/Sell or Interest.

In the V2 ANZ a/c there were 88 entries -=  dividends and interest plus the odd subscription etc cheque.

Would be very appreciative of your comments.

I have had another quote which was $1900 inc. GST.  I am just puzzled by such a large discrepancy and hope that if I go for the cheaper version the accountant can't "stuff it up".  I'm pretty ignorant about the ATO's requirements but believe that the audit in my case is more a formality than anything else.  There is just nothing complicated about what I do with the Fund.

Thanks very much to everyone who has offered their opinion.

Tech:  you have a much more complex situation than I do.  In your case, I can understand that you will happily pay for advice that will make you and your business more profitable.  That's not what I'm looking for or expecting to receive.  I just want an ATO compliant tax return and audit.

I have had assurance from the ATO in the past that the Fund is complying.

Julia


----------



## Julia (25 August 2006)

Freddo said:
			
		

> Julia,
> 
> I use cash, shares for my SMSF have never paid more then $750 for return and audit combined and I have used 3 diff accountants. $3300 sounds very expensive to me. I've got good grasp of ATO and APRA rules and know my fund is compliant.
> 
> Freddo




Thanks Freddo.  That's reassuring.

Julia


----------



## 123enen (25 August 2006)

Julia, there are a few like this

http://www.nicholasneedham.com.au/costs.asp


----------



## deftfear (26 August 2006)

I wouldn't say I am an expert in this area but I have completed quite a few SMSF audits in the past so I can speak more on the audit side of things rather than accounts preparation.

In my opinion, if you are being charged $700 for accounts and auditing the accountant isn't doing a thorough job. The firm I worked in previously was large enough to audit its own funds (with chinese walls, which worked very well in our case) and the minimum we would charge for an audit was $500. On top of this there were accounting fees of at least $1000 up to $2,500 for a fund with shares, managed funds, property, private unit trusts, term deposits and first mortgages. I would say this firm was expensive, but a thorough and accurate job was done....yet while auditing these SMSF we still found errors. (I know that sounds contradictory, but there are so many little things that can be wrong)

At one stage we audited some funds for another accounting firm that had previously audited their own funds and decided they wanted to outsource the audit. They were doing account and audits for around the $700 figure. Now when we were auditing these funds we were finding many errors, some basic and some not so basic. In my opinion, I didn't think that these funds were being prepared correctly, and we spent a lot of time chasing up information (which was hard to get from the accountants) and a number of the funds were not complying with the SIS act. In the past, the $700 would have been just to prepare the accounts, and I doubt anyone would have actually looked at auditing the fund, they just presumed the accountant did a good job. We also found that a lot of these trust deeds were not up to date and that they no longer complying.

To give you a bit of a back ground of the work that is involved with auditing a fund we had 2 main activities, checking that assets exist and are owned by the fund and make sure income and expenses are correctly stated. These were the 2 most time consuming parts, although there were a lot of other smaller things too.

Checking assets: If you hold about 20 shares we would take a random sample of about 7 shares. For each share we would check the shareholder is correctly stated ie XYZ Pty Ltd As trustee for XYZ superannuation fund; dividend income; confirming dividend income banked into the funds bank account or DRP; shareholding at 30th of June (going to share register website and confirm this, if not able to confirm online call the share registry); the change in market value is correct and citing sale or purchase documents if either of these occured.

Bank accounts: check the bank account holder's name as above; check to make sure the bank balance didn't go into credit for the year (ie less than $0) and check money going out of the account to ensure it is for purposes relating to the fund.

Land/ property: Do a land title search to confirm land holders name and to ensure that there are no encumberances or covenants over the title (eg is it used for security with a bank); citing lease agreements to confirm rent paid; confirm rent paid into bank account; is correctly valued (updated every 3 years as prospector stated) and checking expenses to documentation.

As you can see just from checking assets, if a thorough job is done it is quite time consuming. If we find something wrong, that is even more time consuming because sometimes changes need to be made, letters written to the trustees and to the ATO. There were also extensive reviews, my work would be checked by my team leader, which was then checked by the audit partner. 

In my time working with SMSFs I saw good and bad from them. If you were actively involved, traded in mainly shares or direct property the funds peformed well. However others would invest a lot of $$$ in managed funds which defeats the purpose of having a SMSF, you pay fees to the investment manager as well as to the accountant, you are much better off to have a super fund with BT, Colonial or an industry fund. I often felt clients were pushed to SMSF to generate more income for the firm, not for the well being of the client.

Personally I will be looking at an SMSF in the next 2 years, although my balance won't be all that high (20k) I can prepare the accounts myself and just need to pay someone to audit the fund, but by directly investing in shares I feel I will be able to outperform my current industry fund. 

I hope that helps a few of you, I can provide some insights into the accounts preparation if people are interested in that also, although its not all that different to the audit, just prepare the information needed for the audit. Please note that none of this information is advice, just my opinions of what I have seen while auditing SMSFs.


----------



## Duckman#72 (27 August 2006)

deftfear said:
			
		

> In my opinion, if you are being charged $700 for accounts and auditing the accountant isn't doing a thorough job. The firm I worked in previously was large enough to audit its own funds (with chinese walls, which worked very well in our case) and the minimum we would charge for an audit was $500.
> 
> At one stage we audited some funds for another accounting firm that had previously audited their own funds and decided they wanted to outsource the audit. They were doing account and audits for around the $700 figure. Now when we were auditing these funds we were finding many errors, some basic and some not so basic. In my opinion, I didn't think that these funds were being prepared correctly, and we spent a lot of time chasing up information (which was hard to get from the accountants) and a number of the funds were not complying with the SIS act. In the past, the $700 would have been just to prepare the accounts, and I doubt anyone would have actually looked at auditing the fund, they just presumed the accountant did a good job. We also found that a lot of these trust deeds were not up to date and that they no longer complying.




Hi Julia

Back again - good points by Deftfear.

I'll start by talking about the audit. The auditor of a SMSF is required to prepare an audit strategy before commencing the audit and takes into account likely risks and the level of auditing required for the size of the fund. In essence there are two audits within each fund. Firstly the audit of the financial statements and secondly the compliance audit of the fund. 

To audit a SMSF an auditor needs to review the following: Financial Statements, Income Tax Returns, Investment Confirmation (Property,Managed Fund and Share Price valuation), Employer Confirmation of Contribution, Bank Statements, Insurance Policies, Calculations of Capital Gains/Losses, Review of Investment Strategy, Review of Trust Deeds, Actuarial Reports, to mention the majority (and I understand that some of those like Actuarial Certificates don't apply to all).

I will give you an idea of the "expectation gap" that can exist between those running SMSF and auditors. Most people think they just need to have a investment strategy and that the auditor just needs to sight it. Wrong. Yes, the auditor must sight the strategy, but then he/she must determine if it is a suitable strategy for the "primary purpose of retirement" and then review the fund to see that it is inline with that investment strategy. 

The auditors must also review all the minutes prepared by the SMSF including all supporting documentation to support purchase/sell decisions. (These are the things that the ATO are looking at when undertaking audits of SMSF) 

But here is the kicker. You may have heard the term "Principle of Materiality". This is an accounting term that comes into play when determining whether something is substantial or "material" enough to be reported on by the auditors in their report. Unlike most audits - when auditing a SMSF the auditor does not have the discretion to let breaches go, however small. They are technically supposed to be reported to the ATO. The SIS Compliance checklist for the auditor to review is quite comprehensive.

You might ask "why have the ATO come down so hard?" There are a couple of reasons. Firstly, SMSF's have exploded over the past 5 years. Mums and Dads who previously knew nothing of running a super fund have suddenly been thrown in as masters of their own retirement monies. Before being run by the ATO, small SMSF's had to report to APRA - who were toothless tigers. There was all sorts of cowboy stuff happening - Ferrari's being purchased in fund names for private use, beach houses bought for use of fund members, loans from the super fund to members etc. The ATO took over from APRA and immediately did their own research. They were appalled to find the level of non-compliance issues among the SMSF's. The ATO were equally appalled at the clean audits being signed off on when issues were clearly reportable. So they set about trying to get the funds back in line.   

There were two ways to do this - firstly audit all the SMSF themselves. Now for a resource strapped outfit like the ATO that was not possible so the next best thing is to get the auditors to do their job in the first place!   

As for the cost of this - I agree with Deftfear. If you are getting an audit for less than $250 I think the level of work is potentially questionable - for your fund in particular Julia. Make sure that you get a separate account for the audit (although this is more a problem for your accountant). 

One way accountants have tried to keep a cap on fees is to "do the audit" at the same time as preparation of the financial statements. The ATO are now looking very seriously at this issue. If the Practice is big enough the ATO will allow "Chinese Walls" within the one office but the days when one and two partner practices both prepared and audited the statements are on the way out.

As for the cost of having your accounts prepared there are a number of things that you can do to assist to reduce the cost. Firstly find out from your accountant what software program they are using and see if they would like you to write up a cashbook, prepare an excel spreadsheet, or use an accounting program. In a lot of cases it is easier for the accountant to code straight from bank statements so a short written summary for each transaction is needed. Sure you have software that calculates the capital gains and losses by I will guarantee you that you accountant will calculate it again anyway. Firstly thats his job, and secondly the software doesn'yt always calcualte correctly - or more accurately "the user of the software doesn't calculate it correctly". If you can prepare a summary of all dividends,buy/sell transactions - that would help. Also make sure you have an orderly folder for all your share paperwork - in alphabetical/or chronological order. 

Also ask if things like Trust Deeds are looked at for compliance purposes. Ask if minutes are typed up if needed. I would expect that your fund would cost about $900 - $1500. Just my opinion. Price is certainly a consideration but the cheapest price isn't necessarily the best outcome for your fund - I might add neither is the most expensive quote!! 

The other thing to be careful of is  - gossip. There will be a heap of people on the forum that will say they get their SMSF audit and accounts done for $700/$800 and have no problems. That's great but everyone is different. You will get very good accounting firms for $800 and you will get some real sharks for $4000. My only comment is that the "real bargain" accountants out there, doing a fantastic job for $700 are in the minority in my opinion. You need to compare apples with apples - some funds are Defined Benefits not Accumulation, some only have managed funds, some have 50 shares v 5 shares, some actively trade others sit and hold, some have had 10 buy back arrangements throughout the years others not one, some are in pension phase, some have property which requires valuing and the list goes on. It is a little bit like saying my next door neighbout got a tax refund of $2000 and I only got $300 - he works at the council, has a wife and two kids our refunds should be the same!! Doesn't work that way.

One more thing - Australia operates on a "self assessment" tax system. Many people think just becasue they lodge their returns the ATO are approving and accepting their ITR's. Wrong. You can put anything you like in your ITR - it is only when the ATO come around to reviewing your return that the house of cards comes tumbling down.

Hope this has helped.

Regards

Duckman


----------



## Julia (27 August 2006)

Deftfear and Duckman

Many thanks to you both for such detailed and helpful comments.

I have some reservations about how capable the $700 accountant would be just from the general conversation plus his assurance that there would be no problem in him doing the audit as well, in view of the fact that he appears to be a one man band.

The other quote I have is from an accountant with a good reputation and in whom I would feel confident - $1900 incl GST.

I'm just astonished that there can such huge variation in cost:  $3300 last year, $1200 the year before that, and now a choice between $770 and $1900.

My appreciation to everyone who has offered their opinion.

Julia


----------



## Prospector (28 August 2006)

I cant believe it has come to THAT discussion again so quickly Julia 

My life is flashing before my eyes!

I think you are wise staying away from the cheaper person - I thought the only people authorised to do audits were totally independent, or those companies who have an independent auditing arm separate from the accounting practice.

I believe I make it too easy for my accountants - eg
Bank statements for 2 Bank accounts are all reconciled with detailed 'cheque' stubs through MYOB

Share buys and sells, dividends, and CGT is entered into My Portfolio Planner (access based spreadsheet), which I then print off - all calculated for them; all buy/sell statements provided in PDF,
I print off the Portfolio Management Statement from NAB online which details the name of the entity (ie the Super Fund) and the value as at 5pm 30th June
Copy of Land Title document, 
and they still charge me $3000+    

Maybe I need to give them some angst!

Have lodged my info with them last week, will see how it goes!


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## Julia (28 August 2006)

Prospector

I guess your providing them with those completed details doesn't actually save you any money because they are going to have to go over all of it themselves anyway and enter the info in whatever format they are using.

Did you ever come to a final agreement about payment for the last one?
I recall that you paid them a certain amount but not all of it?
Did you get a quote for this year's?

Julia


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## Prospector (28 August 2006)

Agreement might not be the right word to use Julia.  For the Super Fund return I paid their bill; but for our company returns and personal returns I paid them what I thought based on the time taken and detail involved.  This amount to just over half of their invoice!  They banked the cheque; we later had a meeting to discuss it and I guess I wouldnt budge!  And that was the last I heard!

Does your new Accountant want to obtain copies of the the Super Trust deeds etc etc?  I approached another accountant and they wanted me to do all the chasing up, so inertia set in and stayed with my current ones.  Call it a love/hate relationship I guess!


----------



## Julia (29 August 2006)

Prospector said:
			
		

> Agreement might not be the right word to use Julia.  For the Super Fund return I paid their bill; but for our company returns and personal returns I paid them what I thought based on the time taken and detail involved.  This amount to just over half of their invoice!  They banked the cheque; we later had a meeting to discuss it and I guess I wouldnt budge!  And that was the last I heard!
> 
> Does your new Accountant want to obtain copies of the the Super Trust deeds etc etc?  I approached another accountant and they wanted me to do all the chasing up, so inertia set in and stayed with my current ones.  Call it a love/hate relationship I guess!




Well, that was definitely a win to you, Prospector.  You must have studied "Assertiveness 101"!

 Did the potential new accountant want copies of the Trust Deeds etc?
Well actually that is one of the reasons I'm hesitant about him.  I said that I had uplifted all that from the previous accountant and could make it available to him, and he just waved the idea away and suggested that was quite unnecessary.  He also saw no need to even look at my Investment Strategy and said "I'm sure you have something that's more or less OK".
You can understand perhaps why I think it might be better to pay someone else a bit more?

Can someone, maybe you Duckman, explain the difference between a CPA and a Chartered Accountant, if any.

With thanks

Julia


----------



## Duckman#72 (29 August 2006)

Julia said:
			
		

> Can someone, maybe you Duckman, explain the difference between a CPA and a Chartered Accountant, if any.
> 
> With thanks
> 
> Julia




Oh dear Julia!! I get the feeling I am about to open Pandora's Box. But here goes.

The CPA's (Certified Practicing Accountants) and CA's (Institute of Chartered Accountants) are the eminent accounting bodies in Australia. CPA's outnumber CA's in the ratio of about 5:1. 

About 5 years ago there was a vote by the two bodies to merger that was overwhelmingly supported by one membership group and overwhelmingly rejected by the other membership group. So many resources are currently being wasted by having two major accounting bodies that are doing effectively the same role (liasing with ATO, being on government policy boards, lobbying, professional development etc) however the problem was that after the merger both groups would have had the same status. Which was not on!!  

Put simply - it is easier to become a CPA than a CA. 

To commence your CPA studies you need to have completed an undergraduate degree. You can be employed or unemployed. Candidates need to complete 5 subject topics. The exams are multiple choice only and there are no assignments or workshops that candidates need to attend. You are able to do as many subjects at the same time. If you are a CPA you are not eligible for automatic CA status.

To commence your CA studies you need to have completed an undergraduate degree. You need to be employed in an accepted workplace (ie a chartered accounting firm or a company that has been accepted by the Institute of Chartered Accountants such as BHP, Rio, Westpac etc). Basically you need to have a CA mentor. There are 5 modules to complete involving both written assignments, speaking presentations, workshop participation and final exams, of which only 20% is multiple choice. It is impossible to do more than one module at a time. You need to pass all areas to pass the module. If you have your CA badge you are eligible to apply for CPA membership. Due to the more rigorous testing less people undertake it. The CA program used to be called "The Professional Year" - even though it took at least 18months (yes they are "Number One in Numbers"  ) 

One thing that the CPA's do much better is market themselves. As a result most people don't know the difference between CA's and CPA's - and worse - they think that CPA's are more qualified!!! This is a real frustration for CA's.  There has been a big push in the past few years to educate the public but there is a lot of ground to make up. More members mean more membership dollars and more advertising and the CPA's have done it well. 

Don't get me wrong - there are good and bad CA's and CPA's - I'm just saying it is more difficult to achieve the status of CA in my opinion.

There are other bodies such as NIA's (National Institute of Accountants) but I won't confuse the issue.        

Regards

Duckman


----------



## doctorj (30 August 2006)

It might be worth looking into something like MLC's (http://www.mlc.com.au) Masterkey Custom SMSF product.  I'm not sure what their fees are like but they provide web access to your superannuation portfolio where orders can be input to buy or sell anything on their investment menu which includes ASX listed shares, hundreds of managed funds and some unlisted securities.  You can also transfer assets like property directly into the fund.

They take care of the accounting and audit functions for you.

The big draw back is they require you to open the fund with the assistance of a financial advisor who of course will want to charge you a fee.


----------



## Prospector (30 August 2006)

Julia said:
			
		

> Well, that was definitely a win to you, Prospector.  You must have studied "Assertiveness 101"!
> 
> Did the potential new accountant want copies of the Trust Deeds etc?
> Well actually that is one of the reasons I'm hesitant about him.  I said that I had uplifted all that from the previous accountant and could make it available to him, and he just waved the idea away and suggested that was quite unnecessary.  He also saw no need to even look at my Investment Strategy and said "I'm sure you have something that's more or less OK".
> ...




Ah yes.  Mine definately wanted to see the Trust Deeds.  It sounds as though he wasnt going to do the audit part - as he would need to know that what you had done was 'legal' according to the Deeds, and he would also need to know your investment strategy too.  

I wonder, what percentage of his clients have been audited?  

Maybe that is the difference between 'good' and 'bad' accountants and is probably  the question we should be asking of our accountant?  Or is the Tax Audit TOTALLY random?

Does anyone know?


----------



## Julia (30 August 2006)

Ah,Duckman, it is as I suspected.  Many thanks for clear explanation.


Doctorj, thank you for the suggestion.  Will have a look, though I like the idea of having someone in the local area.  Daryl Dixon & Associates provide a complete Super service.  They offer all the handling, e.g. dividend notices, contract notes, the lot, all go to them, they keep all records, do the return and audit, everything for a total of $3300 max p.a.  That's why I was so annoyed with my previous accountant charging the same amount for just the return and audit.

Julia


----------



## Julia (10 October 2006)

Has anyone used self funding installment warrants in their super fund?

Or alternatively, does anyone - e.g. maybe you, Duckman - have any comment about doing this?

Would appreciate any comments.

Julia


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## ghotib (10 October 2006)

We're slowly working our way round to a self-managed super fund, as part of working our way round to giving 60-hour a week jobs and the Big Smoke the flick.

Our latest step was to buy the book "How to Control Your Super Now... with a self-managed super fund!" by Tony Melvin and Ed Chan. It's part of a series called Road to Wealth, which seems to consist of a website ( http://www.knowledgecentre.net.au/ ), books, and a DVD series which is priced up in the hundreds. The website is a contact collecter; registration is free but required to access any information, and (ooops) they forgot to include the privacy policy. I was fairly positive about the book until I saw the website. Now I'm feeling diddled of my $25 and I might never get around to reading it.

Anyone know anything about the series, the authors, or the book?

Ghoti


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## Duckman#72 (10 October 2006)

Julia said:
			
		

> Has anyone used self funding installment warrants in their super fund?
> 
> Or alternatively, does anyone - e.g. maybe you, Duckman - have any comment about doing this?
> 
> ...




Hi Julia

I don't use them in my fund but, yes the self funding instalment warrants are promoted as a great tool to use within a superannuation fund. Mainly due to the ability to effectively "borrow"' without actually borrowing - which, as you know, is not permitted. Depending on the share they can work very effectively. I have a friend who has St George warrants and is very happy with them.   

If you go to the Macquarie website - they have a fairly extensive explanation of warrants and illustrated examples of how they work within a self managed fund environment (or at least they used to have the website - haven't checked recently)

Regards

Duckman


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## markrmau (10 October 2006)

My intention was to use installment warrants in the super - as you know it is one of the few (only?) forms of gearing allowed.

At this stage, I haven't found any warrants I wanted to buy (i really believe in waiting till the right opportunity presents itself).

I would have liked to buy AWC call warrants but both brokers I spoke to were quite cool about the idea (despite the positive analyst reports coming out) so I decided not to.

I ended up buying AOE and HZN (off my own bat, not broker reccs). Leverage to a slow moving stock is the same as a volatile stock really.


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## yonnie (5 May 2007)

Duckman#72 said:


> The reason SMSF are so popular for self-employed people is due to the fact you can claim a tax deduction for the contribution and also self-employed people generally have more ability to contribute excess cash to the fund.
> Duckman




I am a self-employed share trader since last year. I know that a salary earner only pays 15% on his/her contribution taken out of the salary.

How does that work for the self-employed?

thanks


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## Duckman#72 (5 May 2007)

yonnie said:


> I am a self-employed share trader since last year. I know that a salary earner only pays 15% on his/her contribution taken out of the salary.
> 
> How does that work for the self-employed?
> 
> thanks




Hi yonnie

Works just the same as for an employee. Contribution tax is 15% for an employee or the self employed.

If you make $5000 super contribution (which you intend to claim as a tax deduction) - 15% tax applies.

Regards

Duckman


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## LeGorfou (6 May 2007)

I paid $1667 to my account, who is also my auditor last year. I think I got value for money as the fund had just started and I am paying allocated pensions (myself and my wife) out of it. He raised a number of valid queries which I could answer. For one thing we had meeting minutes of every decision we have made.

I had a so called financial adviser for the first year, on a flat rate basis, who also advised me on setting up the fund, but I gave him the flick this year as his advice was pretty useless if not wrong. Financial Adviser advice you so that they can become rich. FA use is what they are IMHO. 

The administration of the fund is a lot of work, which I don't mind doing as I am retired.  It would be a slog if I was still working.

We have about $650k in the fund and look like easing about $100k from it this year. (That of course is not due to my genius but because you would have had to be a f***ing genius to loose money on the stock market in 2006-2007.)


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## ROE (6 May 2007)

Prospector said:


> OK, so now I am curious about my accountants fees.  He always says that because he has to audit every single transaction then the fees are high - because I do a number of share transactions.
> 
> Last year I did a total of 35 trades, had two bank accounts all of which were documented and reconciled, and use Portfolio Planner that even calculates capital gains/loss.  For which I was charged $2700.
> 
> Any comments please?




I think he's ripping you off just to have 35 Trades audit? come one how hard is it to audit something like that..everything is black and white and in CHESS records anyway....Time to look for another one? What state are you in?


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