Self Managed Super

[Prospector]

Hi, can I set up a SMSF to purchase a business, and also be employed by the business and be paid? Thanks.

No. SMSF are not allowed to be a business.

 

[jono1887]

where do you get the information on running a SMSF from?

 

[awg]

where do you get the information on running a SMSF from?

http://www.ato.gov.au/superfunds/content.asp?doc=/content/00098951.htm&mnu=38107&mfp=001/007

 

[jono1887]

http://www.ato.gov.au/superfunds/content.asp?doc=/content/00098951.htm&mnu=38107&mfp=001/007

k, thanks

 

[Ben L]

No. SMSF are not allowed to be a business.

I think you misunderstood what I was asking, I want to use mys SMSF to purchase a business as an Invesetment, the same way you purchase Real estate or shares. Where can I find what are permitable investments from?

thanks

 

[Ben L]

Just in regards to business. Isnt buying shares in a company the same thing? Except someone else is running it instead of myself? thanks

All i could find from the ATO was this

Make sure the SMSF complies with the sole purpose test at all times while the fund is in existence, including when investing fund assets and paying benefits upon retirement of members.
Make sure you developed an investment strategy that you regularly review.
Ensure your investment strategy takes into account the retirement goals of your members.
Take into consideration the risks involved in certain investments.
Take into consideration what bills your SMSF has to pay and allow enough cash to meet these expenses.
Take into consideration when benefits will need to be paid.
Consider diversifying your SMSF’s investments.
Have a separate bank account for your SMSF and pay the expenses of your fund from that bank account only.
Make sure that your fund’s ownership of its investments is assured. We prefer the assets to be in the names of all of the individual trustees as trustees for your fund, or in the case of a corporate trustee, in the name of the company as trustee for your fund.


In certain states, legislation may prevent you from holding assets using your fund’s name. In this circumstance, a caveat, instrument or declaration of trust needs to be executed for the asset.



Make investment decisions that will provide for your retirement.
Don’t invest without considering your strategy and your overall goals for retirement.
Don’t mix your SMSF money with other money.
Don’t have the assets of your SMSF in another entity’s name.
Don’t provide financial assistance to members or relatives of members.
Don’t make investments to help someone else out. If your SMSF buys art, generally you can not use it privately.
Don’t buy wine as an SMSF investment and then drink it.
Don’t buy jewellery as an SMSF investment and then wear it.
Don’t use any of the assets of your SMSF for your own personal use or allow members or related parties to use those assets.

 

[awg]

I think you misunderstood what I was asking, I want to use mys SMSF to purchase a business as an Invesetment, the same way you purchase Real estate or shares. Where can I find what are permitable investments from?

thanks

hope this helps

http://www.atcbiz.com.au/self_managed_super_fund_smsf_articles.php?new=h2xdt2d175&num=&np=YES

As you can see, the answer is yes and no, depends on the circs.

get a binding written ruling from the ATO, before you do something, unless it is clear. ( I have done this about something else)

ring the ATO for a free chat first

Consult an accountant.

If yr fund is non-compliant, huge hassles later

 

[Ben L]

Thanks awg, some of it makes sense, but only 5% of total assets being
in-house makes things tough. But i can see ways around it already. thanks

 

[Sir Osisofliver]

Arrgh.

Ok I know it's unusual to hear a FP be critical of super...but quite frankly super is the worst investment in your future you can make. It brings me to tears that the majority of people think that superannuation is wonderful - because it means that they are believing the hype. Advertising like Bernie Fraser standing there and saying "In-dus-try su-per funds" like some freaking brainwashed zombie.

It's a horrible investment - and what's worse it's mandatory. If it wasn't mandatory I wouldn't have a cent in super personally, since I am forced to have super I have super as a SMSF - because then at least I can control the outcome to some extent. I can't borrow against my super, I can't touch it until I hit 55, (and when I do it will be drawn out faster than you can say transition to reirement).

If you really want to find the source of my annoyance google 2003 senate enquiry into superannuation by PriceWaterhouseCooper. When the Govmint set up super they asked the insurance companies on how to set these things up. Of course when they then audited the things they found that the projections that the insurance companies used were way off. and I mean way off and the govmint wanted to know why. The response - we don't have enough in super to make it grow at a high enough rate. It's like giving a fox the keys to your chicken coop to look after them for you whilst you go away for the weekend. When you get back and there are less chicken than you thought there should be the fox says, "well you didn't have enough to start with".

The fees that get removed from that industry is just insane.


Let me give you an example.

I had a client recently that came to me who'd been done over so bad I couldn't believe it. Lets call her Georgie. Georgie came to me after her investments were doing so badly in the GFC. When she went to a FP five years ago, he'd recommended that she put everything she had in super, which meant selling the three investment properties that her husband (who had passed on) and her had built up over the years and paid off, and drawing against the unused equity in the family home. Then transferring the money into super and placing half of the generated funds into a "diversified portfolio of managed funds" and half into a large annuity.

Of course the annuity was paying her an income (and decreasing in size whilst doing so), the Managed funds were paying her an income (and underperforming the market for five years), and when the GFC came along two of her funds decided that they couldn't pay distributtions, and all of them went backwards, more than wiping out any gains she had made in the portfolio, and giving the poor dear stress because she was worried she couldn't pay her mortgage that the planner had recommended she get.

If she'd left it alone and not done a thing (which of course meant that the planner wouldn't have got his pound of flesh) she would have been so far ahead of where she is now and she wouldn't have a worry in the world.

Grrrr.


Cheers

Sir O

 

[pilots]

Arrgh.

Ok I know it's unusual to hear a FP be critical of super...but quite frankly super is the worst investment in your future you can make. It brings me to tears that the majority of people think that superannuation is wonderful - because it means that they are believing the hype. Advertising like Bernie Fraser standing there and saying "In-dus-try su-per funds" like some freaking brainwashed zombie.

It's a horrible investment - and what's worse it's mandatory. If it wasn't mandatory I wouldn't have a cent in super personally, since I am forced to have super I have super as a SMSF - because then at least I can control the outcome to some extent. I can't borrow against my super, I can't touch it until I hit 55, (and when I do it will be drawn out faster than you can say transition to reirement).

.
If you really want to find the source of my annoyance google 2003 senate enquiry into superannuation by PriceWaterhouseCooper. When the Govmint set up super they asked the insurance companies on how to set these things up. Of course when they then audited the things they found that the projections that the insurance companies used were way off. and I mean way off and the govmint wanted to know why. The response - we don't have enough in super to make it grow at a high enough rate. It's like giving a fox the keys to your chicken coop to look after them for you whilst you go away for the weekend. When you get back and there are less chicken than you thought there should be the fox says, "well you didn't have enough to start with".

The fees that get removed from that industry is just insane.


Let me give you an example.

I had a client recently that came to me who'd been done over so bad I couldn't believe it. Lets call her Georgie. Georgie came to me after her investments were doing so badly in the GFC. When she went to a FP five years ago, he'd recommended that she put everything she had in super, which meant selling the three investment properties that her husband (who had passed on) and her had built up over the years and paid off, and drawing against the unused equity in the family home. Then transferring the money into super and placing half of the generated funds into a "diversified portfolio of managed funds" and half into a large annuity.

Of course the annuity was paying her an income (and decreasing in size whilst doing so), the Managed funds were paying her an income (and underperforming the market for five years), and when the GFC came along two of her funds decided that they couldn't pay distributtions, and all of them went backwards, more than wiping out any gains she had made in the portfolio, and giving the poor dear stress because she was worried she couldn't pay her mortgage that the planner had recommended she get.

If she'd left it alone and not done a thing (which of course meant that the planner wouldn't have got his pound of flesh) she would have been so far ahead of where she is now and she wouldn't have a worry in the world.

Grrrr.


Cheers

Sir O

Every FP will always tell you what makes him the most money, he would be a fool to tell you any other thing, all PF are ONLY SALES PEOPLE, no different to a car sales man.

 

[Prospector]

:topic
But you know Sir Osisofliver, it was only the other day that I realised what your name meant!

I agree with what you say, but what you are describing is bad financial advice and planning and really has nothing to do with super as such. We had an adviser several years ago who had advised a similar approach and borrowing to gear heavily into shares. We were not happy with the level of debt he was advising, so we didnt pursue it. So it But apart from this year, our SMSF has been a great investment vehicle for us. Just not the way he wanted us to do it. We bought some land instead through the super fund.

 

[Julia]

I agree with Prospector's comments, Sir O. I'm really happy with my SMSF.

However, I'm not so wise about what Sir O's nic means. Can someone explain it?
(I feel a bit like Pauline Hanson.)

 

[Prospector]

I agree with Prospector's comments, Sir O. I'm really happy with my SMSF.

However, I'm not so wise about what Sir O's nic means. Can someone explain it?
(I feel a bit like Pauline Hanson.)

cirrhosis of liver!

 

[Sir Osisofliver]

cirrhosis of liver!

Why do think I always sign off...

"Cheers"

Sir O

 

[Sir Osisofliver]

:topic
But you know Sir Osisofliver, it was only the other day that I realised what your name meant!

I agree with what you say, but what you are describing is bad financial advice and planning and really has nothing to do with super as such. We had an adviser several years ago who had advised a similar approach and borrowing to gear heavily into shares. We were not happy with the level of debt he was advising, so we didnt pursue it. So it But apart from this year, our SMSF has been a great investment vehicle for us. Just not the way he wanted us to do it. We bought some land instead through the super fund.

Seriously Prospector - go google the Senate Enquiry - and remember this applies to everyone without a SMSF. You might also have some fun if you looked up some law case files about certain breaches of superannuation legislation in relation to fees by some of the largest and well known companies in Australia who paid jointly a whopping 1.2 Billion dollars in Fines to the Australian govmint....and shrugged it off as they were making triple that by continuing what they were doing.

makes me want to barf.

Cheers

Sir O

 

[Prospector]

Seriously Prospector - go google the Senate Enquiry - and remember this applies to everyone without a SMSF. You might also have some fun if you looked up some law case files about certain breaches of superannuation legislation in relation to fees by some of the largest and well known companies in Australia who paid jointly a whopping 1.2 Billion dollars in Fines to the Australian govmint....and shrugged it off as they were making triple that by continuing what they were doing.

makes me want to barf.

Cheers

Sir O

But isnt this exactly why an SMSF is good, providing you can get good financial advice?

I use cheers a lot too btw! Seems to be a twenty thing to do, have copied it from my kids!

 

[Sir Osisofliver]

But isnt this exactly why an SMSF is good, providing you can get good financial advice?

Well the fact that it is under your control is a great thing.....but answer me this Prospector...which do you think will give you a better level of return.

a) A portfolio of stocks and property held in your SMSF or

b) The same portfolio of stocks and property that uses a safe and appropriate level of leverage to optimise your returns over the longer term.

Of course the answer is B. Since we are dealing with longer time frames when we deal with super and retirement, the inability to use safe structured leveraged products is a major negativity for using Superannuation as an investment vehicle which the "tax benefits" associated with super do not make up for.

I use cheers a lot too btw! Seems to be a twenty thing to do, have copied it from my kids!

Hey I'm down with the kids Prospector. (although I must admit this current hairstyle of every teenage boy I see at present makes me laugh. They look like a cross between a fuzzy toilet brush and a Minimoy from Arthur and the Invisibles.

Cheers

Sir O

 

[Prospector]

Of course the answer is B.
Hey I'm down with the kids Prospector. (although I must admit this current hairstyle of every teenage boy I see at present makes me laugh. They look like a cross between a fuzzy toilet brush and a Minimoy from Arthur and the Invisibles.

Cheers

Sir O

Ok, I see the point you are making now cirrhosis.

The hair - Bed hair, my friend! You can even buy products called 'bed hair look'

Cheers

 

[jono1887]

The rules are there to protect the majority of the population. Just look at the number of stories that have come out about people that have been advised to leverage heavily against their homes and have now lost everything in the GFC. The thing is, the majority of the pop is highly uneducated in dealing with finances and allowing super fund managers to leverage against their super may result in even more risky investments which would probably set them back in the long run rather than benefit the everyday member of society.

just my

 

[Julia]

Arrgh.

Ok I know it's unusual to hear a FP be critical of super...but quite frankly super is the worst investment in your future you can make. It brings me to tears that the majority of people think that superannuation is wonderful - because it means that they are believing the hype.

So would it be your preference for the compulsory contributions to Super to be abolished, Sir O?
If that were to happen, how likely do you think it is that the average Australian would do anything about providing for their own retirement?

You know many people simply won't. So what other system can you suggest to ensure the provision of retirement income does not fall on the taxpayer, who is already providing more than they should in pensions for those who have failed to save.