Esuperfund SMSF brokers

[aarbee]

I'm with esuperfund and finding them quite good.

They now allow you to open an IB account for $8 trades, so if you do plan to make a lot of trades you can put most of your business through them.

You will still have to have a main brokerage account, but there's nothing forcing you to use it once you have an IB account set up as well.

I am with eSuperfund and need to take up the option of trading via IB. However, I can't find any reference to IB on the eSuperfund website.
Are you actually trading with IB in your eSuperfund SMSF account?

Best regards

 

[aarbee]

Further to my previous post, I have just received confirmation from eSuperfund that they no longer allow IB as a broker.
This is not what I wanted to hear. I will seriously consider moving my SMSF account to an accountant for more flexibility.

Can anyone suggest a good/reliable accountant for SMSF with reasonable fees?

Very interested to hear.

Cheers

 

[merlinnn]

Further to my previous post, I have just received confirmation from eSuperfund that they no longer allow IB as a broker.
This is not what I wanted to hear. I will seriously consider moving my SMSF account to an accountant for more flexibility.

Can anyone suggest a good/reliable accountant for SMSF with reasonable fees?

Very interested to hear.

Cheers

I know I was one of the last to scrape in with IB, that was December last year give or take. I have been looking around for a few months and found a company called green frog super. Most of them appear to charge around $1200.00 to $2000.00 a year depending on what they offer. Some are also transaction limited and then charge up to $3.00 per additional transaction. The other thing I have noticed is a lot of providers advertising their service less the end of year audit, which you later read in the fine print. The average audit price seems to be around the $400.00 mark.

Good luck

 

[Leiothrix]

Re: To present members of Esuperfund

Thank you coolcup, really appreciate that. What about their fees, is it as they say $699 per annum plus $249 for the ATO? Was there any extras?

There is also a ~$40/year ASIC fee if you choose to use a corporate trustee. I definitely recommend a corporate trustee, a little bit of extra work (and $500ish) to set up, but after that makes things simpler.

I've only had them for less than 12 months, but am happy so far. Gives me control of my destiny.

I got sick of seeing red on my industry super, at least if I lose anything with the SMSF I can only blame myself.

 

[Bill M]

^^^Thanks for that Leiothrix.

 

[IB12]

I know I was one of the last to scrape in with IB, that was December last year give or take. I have been looking around for a few months and found a company called green frog super. Most of them appear to charge around $1200.00 to $2000.00 a year depending on what they offer. Some are also transaction limited and then charge up to $3.00 per additional transaction. The other thing I have noticed is a lot of providers advertising their service less the end of year audit, which you later read in the fine print. The average audit price seems to be around the $400.00 mark.

Good luck

Anyone else know a decent SMSF administrator (annual admin + audit)?
Assuming eSuperfund will no longer be offering IB as an acceptable broker, they won't be able to administer for those who have/or want an IB trading platform. So it's time to look elsewhere.

I've looked around iCareSuper looks like they offer good value: $74/mth (including audit) which works out to be about ~$900 p.a.
http://www.icaresmsf.com.au/

 

[Pager]

I don’t know why the restricted choice of brokers is such a huge problem or concern when choosing to use Esuperfund or not, Ebroking is $20 minimum brokerage, that’s about as good as it gets, only IB would be cheaper?

Unless your doing significant turnover of trades would the additional cost of using an accountant or other administrator be worthwhile?, then with IB you cannot reinvest dividends, they hold the stock as custodian, may be a very small risk but if IB went belly up it may take years to get your money back if at all, at least with other brokers YOU hold the stock.

Then if you are trading so frequently that using IB makes a huge difference then you’re running the risk of being seen to be running a business which isn’t allowed for a super fund.

Don’t get me wrong, I think IB are great and I pump plenty through them trading futures but don’t do anything for my super.

 

[DrEric]

then you’re running the risk of being seen to be running a business which isn’t allowed for a super fund.

I would also like to know if this is the case, as i have been told the same, but would have a preference towards IB.

any SMSF auditors to shed light?

 

[jorgon]

Then if you are trading so frequently that using IB makes a huge difference then you’re running the risk of being seen to be running a business which isn’t allowed for a super fund.

I would also like to know if this is the case, as i have been told the same, but would have a preference towards IB.
any SMSF auditors to shed light?

It is often said that an SMSF cannot run a business, but there is actually no absolute prohibition against this in superannuation law. Of course the trust deed would need to allow it - most well drafted ones would do so. The reason why some professionals advise SMSF clients not to run a business is that the ATO may question whether the fund is complying with the sole purpose test (that the fund is being maintained for the sole purpose of providing retirement benefits for the members, or to their dependants if a member dies before retirement). So it cannot for example, be a form of employment for a member. It cannot provide remuneration for the member (with some exceptions). And it is doubly important that there is a reasoned argument for the business operation in the investment strategy in the light of the resources and ultimate demands on the fund. And if an SMSF runs a business it may be much more difficult for the fund to maintain separation of its funds from the trustee, to ensure that all investments are at arms length, to avoid a member or trustee receiving financial assistance from the fund, or to avoid the fund acquiring an asset from the member or trustee. It can be seen however, that if the business arises because of the extent of sharedealing through an online stockbroker these risks are small.

As for whether there is a business being operated by sharedealing the ATO has a page about that here
Basically the ATO says that a decision is made in each particular case depending on:-

1. 
   the nature of the activities, particularly whether they have the purpose of profit making
2. the repetition, volume and regularity of the activities, and the similarity to other businesses in your industry
3. the keeping of books of accounts and records of trading stock, business premises, licences or qualifications, a
4. registered business name and an Australian business number
5. the volume of the operations
6. the amount of capital employed.

If the fund is sharedealing the accounts would need to be drawn up a little differently - see the ATO page here.

 

[McLovin]

Jorgon

You seem pretty clued up. A couple of questions if I may.

1) Can a SMSF lend to a related party (ie a family trust)?

2) Is there any restriction on foreign investment (property) by a SMSF?

My thinking is both would be OK, but I'm just trying to double check. My accountant is on holidays and an opportunity has come up.

Thanks

McL

 

[Ves]

1) Can a SMSF lend to a related party (ie a family trust)?

I'm in holiday mode... but off the top of my head you cannot lend to a related individual. You can lend to a related party entity (company or trust) in limited circumstances. It would be defined as an "in house" asset. The fund cannot have total in-house assets of more than 5% of total fund assets. The loan would need to have a proper "arms-length" interest rate and everything should be properly documented. It basically needs to be done as you would a commercial transaction with a third party.

Re: the foreign investment properties. We have clients who have done this, but just be aware that some foreign domiciles require you to set up complicated asset structures if you are not a resident. The SMSF cannot purchase the company direct in a lot of cases. Pretty sure that in the US for instance you have to establish a US registered company which buys the property and in which the SMSF becomes the share holder. Could be wrong, but something to keep an eye on.

The property itself may be OK in satisfying the SMSF rules, but the ownership structure may conflict with some of the SIS act rules if you are not careful. Be very careful with related party definitions and in house asset rules if you need to register a company to buy the property. Would definitely seek legal advice on your specific circumstances before making a move.

All of the standard asset rules apply to the foreign property (ie you cannot buy residential property from a related party).

Please DYOR, but hope this provides a good starting point. Happy New Year.

 

[McLovin]

I'm in holiday mode... but off the top of my head you cannot lend to a related individual. You can lend to a related party entity (company or trust) in limited circumstances. It would be defined as an "in house" asset. The fund cannot have total in-house assets of more than 5% of total fund assets. The loan would need to have a proper "arms-length" interest rate and everything should be properly documented. It basically needs to be done as you would a commercial transaction with a third party.

Re: the foreign investment properties. We have clients who have done this, but just be aware that some foreign domiciles require you to set up complicated asset structures if you are not a resident. The SMSF cannot purchase the company direct in a lot of cases. Pretty sure that in the US for instance you have to establish a US registered company which buys the property and in which the SMSF becomes the share holder. Could be wrong, but something to keep an eye on.

The property itself may be OK in satisfying the SMSF rules, but the ownership structure may conflict with some of the SIS act rules if you are not careful. Be very careful with related party definitions and in house asset rules if you need to register a company to buy the property. Would definitely seek legal advice on your specific circumstances before making a move.

All of the standard asset rules apply to the foreign property (ie you cannot buy residential property from a related party).

Please DYOR, but hope this provides a good starting point. Happy New Year.

Thanks Ves,

I'm pretty much on top of the requirements at the other end, and it will require me to set up a holding company. The nice thing is that there's no CGT in the country, so I'm just trying to work out the best way to structure it from this end. I've been tossing up a few ideas, I think I will just use the family trust and leave the SMSF out of it. I pretty much put in a low, low ball offer because the guy who owns the land has his lenders all over him and amazingly he accepted.

I just wanted a rough outline of how to proceed, will definitely check with accountant/solicitor.

 

[Bill M]

Jorgon

You seem pretty clued up. A couple of questions if I may.

1) Can a SMSF lend to a related party (ie a family trust)?

2) Is there any restriction on foreign investment (property) by a SMSF?

My thinking is both would be OK, but I'm just trying to double check. My accountant is on holidays and an opportunity has come up.

Thanks

McL

Hello McLoving, as this is the ESuperfund thread, you may find this very interesting. Scroll down to the Investments Disallowed part. It clearly states "Clients of ESuperfund are not allowed to invest in overseas property." I don't know if you are with them or not but there is some good reading there anyway, cheers.

Link here: http://www.esuperfund.com.au/Libraries/WebsitePDF/3_Investment.sflb.ashx

 

[McLovin]

Hello McLoving, as this is the ESuperfund thread, you may find this very interesting. Scroll down to the Investments Disallowed part. It clearly states "Clients of ESuperfund are not allowed to invest in overseas property." I don't know if you are with them or not but there is some good reading there anyway, cheers.

Link here: http://www.esuperfund.com.au/Libraries/WebsitePDF/3_Investment.sflb.ashx

Thanks, Bill.

I'm not with them, but I'll have a look.

 

[merlinnn]

It is often said that an SMSF cannot run a business, but there is actually no absolute prohibition against this in superannuation law. Of course the trust deed would need to allow it - most well drafted ones would do so. The reason why some professionals advise SMSF clients not to run a business is that the ATO may question whether the fund is complying with the sole purpose test (that the fund is being maintained for the sole purpose of providing retirement benefits for the members, or to their dependants if a member dies before retirement). So it cannot for example, be a form of employment for a member. It cannot provide remuneration for the member (with some exceptions). And it is doubly important that there is a reasoned argument for the business operation in the investment strategy in the light of the resources and ultimate demands on the fund. And if an SMSF runs a business it may be much more difficult for the fund to maintain separation of its funds from the trustee, to ensure that all investments are at arms length, to avoid a member or trustee receiving financial assistance from the fund, or to avoid the fund acquiring an asset from the member or trustee. It can be seen however, that if the business arises because of the extent of sharedealing through an online stockbroker these risks are small.

As for whether there is a business being operated by sharedealing the ATO has a page about that here
Basically the ATO says that a decision is made in each particular case depending on:-

1. 
   the nature of the activities, particularly whether they have the purpose of profit making
2. the repetition, volume and regularity of the activities, and the similarity to other businesses in your industry
3. the keeping of books of accounts and records of trading stock, business premises, licences or qualifications, a
4. registered business name and an Australian business number
5. the volume of the operations
6. the amount of capital employed.

If the fund is sharedealing the accounts would need to be drawn up a little differently - see the ATO page here.

Thanks for the above information. I too am seeking confirmation on this as I am expecting to be making several hundred trades this year with the current system I am following. I can understand the debate between carrying on a trading business vs being an investor out side of an SMSF. However if you are trading inside an SMSF and all profits are being put back into the fund where would the problem lie? I have emailed my provider about this, hopefully they can give me a black or white answer. Everything around the SIS Act seems to be grey and up to the ATO to make it black or white!!

Any other opinions are most welcomed with this issue.

For what its worth I ended up going with ICARE super as well not Green Frog as originally debated. Small company with a personal touch, so far extremely helpful.

 

[merlinnn]

I spoke with my provider and mentioned I will probably make around 300 trades and he said that would be fine. Apparently the ATO as stated above will look at everything at a case by case basis, which doesn't really help anyone. The only thing we can do is trust in our advisers and be sensible I guess.

 

[Bill M]

Just one more question I haven't found the answer for.

If I go with individual trustees it will most likely be my wife and I. My wife doesn't understand financial matters and leaves it all up to me.

Can I as one of the trustees make decisions on my own? For example I see a stock that I want to buy, the price is right and I wish to do it now. Do I need the second trustees permission? I would already have permission, what I am concerned about is acting swiftly on my own without having to chase up my wife who might be at work.

So, can trustees work on their own? Or can you get bogged down having both trustees signing papers to make investments?

 

[jorgon]

Just one more question I haven't found the answer for.

If I go with individual trustees it will most likely be my wife and I. My wife doesn't understand financial matters and leaves it all up to me.

Can I as one of the trustees make decisions on my own? For example I see a stock that I want to buy, the price is right and I wish to do it now. Do I need the second trustees permission? I would already have permission, what I am concerned about is acting swiftly on my own without having to chase up my wife who might be at work.

So, can trustees work on their own? Or can you get bogged down having both trustees signing papers to make investments?

Hi Bill M

This has to be viewed in two parts:-
(a) agreement as to the investment strategy
(b) day to day implementation of that strategy

The agreement as to the investment strategy is crucial, because the auditor will check that you have an investment strategy, that it is regularly reviewed, and that investments have been made in accordance with it. Where there are two members of the fund and there is one investment strategy covering the investments made with both their account balances, then obviously the members must understand and agree the strategy. If the investments are segregated then a member must understand and agree the strategy applying to their own account balance. Since the investment strategy should carefully set out the type of investments envisaged and weigh up the risks and possible advantages of each in the light of the fund's current and future resources and current and future obligations, as well as in the light of the other resources and obligations of the members (outside the fund), it should be in clear enough terms for your wife to understand and accept it.

As for the day to day implementation of the strategy, it will usually be accepted that it is impractical to seek the other member's approval for a particular trade. The small print in the trust deed might say whether (and if so how) such decisions can be delegated to one of the members. If it does not specify how this can be done, it is up to the trustees to decide this and I would suggest that you add a paragraph to the investment strategy which says that the day to day implementation of the investment strategy is delegated to one of the members and appointing that member. Or this could be in a separate document signed by both of you. Alternatively it might be possible to make this appointment using the documentation provided by your fund's stockbroker's account.

 

[Bill M]

^^^ Thanks for the reply jorgon, cheers.^^^

 

[sydboy007]

Just one more question I haven't found the answer for.

If I go with individual trustees it will most likely be my wife and I. My wife doesn't understand financial matters and leaves it all up to me.

Can I as one of the trustees make decisions on my own? For example I see a stock that I want to buy, the price is right and I wish to do it now. Do I need the second trustees permission? I would already have permission, what I am concerned about is acting swiftly on my own without having to chase up my wife who might be at work.

So, can trustees work on their own? Or can you get bogged down having both trustees signing papers to make investments?

Crucial thing for your wife to understand is that she has a legal obligation to understand the investment strategy.

While she may not be involved in the day to day trades she shouldn't be totally oblivious to what's going on either as there's no defence should you get up to some tricky business - this is more a general warning to spouses considering being a trustee and thinking they can get away with signing a few documents each year as the sum of their required involvement.

No idea how much auditing the ATO does of SMSF trustees, but it would not be good for your wife during one to sound as if she's not clued in to what is happening.

If your wife is not contributing to the fund it might be safer to set your self up with a corporate trustee instead.