SMSF conversion

[ibgrace]

Hi - bear with me as this is first time on aussiestockforums. I am in the process of converting my super to SMSF. The company I first started dealing with wants to charge me $2.5k to do this. I was recently reading on this site that there maybe much cheaper alternatives - can anyone suggest? Also can I trade forex with my super or is it only shares etc.?

Many Thanks

 

[awg]

Hi - bear with me as this is first time on aussiestockforums. I am in the process of converting my super to SMSF. The company I first started dealing with wants to charge me $2.5k to do this. I was recently reading on this site that there maybe much cheaper alternatives - can anyone suggest? Also can I trade forex with my super or is it only shares etc.?

Many Thanks

Welcome to ASF

I am with Esuperfund, and I like them.

They charge $600pa for audit, it is possible for you to run your SMSF for as little as that amount each year! Setup was free.

there is an Esuperfund thread on this forum, use the search function to find it, and also other threads on SMSF, discussing other options.

Google them also, of course you should ring them and ask questions as well.

Many organisations charge a % management fee and/or a much higher audit cost.

Do plenty of research !!

you can legally trade forex with your super, (if the Trust deed allows it,) but as far as I know, Esuperfund does not have an agreement with a Forex provider, but they may have now, I have not checked recently, I dont trade forex.

On one of the SMSF threads there is a poster that claims their provider has a platform that lets you trade thru any provider, costs a bit more, PM him/her, when you find the post.

Esuperfund used to use IG Markets, but IG wont allow SMSF...there is a issue that makes some providers unwilling to allow SMSF to trade Derivatives ( essentially if u blow up, it can be hard for them to get back all their money if you lose more than the total of yr SMSF)

 

[ibgrace]

Many thanks AWG

Most appreciative for that. How can I start a SMSF and only have one trustee?

Thanks

Ian

 

[Julia]

Ian, best to get the necessary info from the ATO. I recall when I set mine up it was substantially more expensive to do the set up with a single member fund.

That may not still be the case, though, with the advent of ESuper and similar companies.

http://www.ato.gov.au/superfunds/content.asp?doc=/Content/00182478.htm&page=5&H5

 

[awg]

same as me.

the trustee of the SMSF is setup as a "corporate trustee"

that is a "special purpose" company that is registered with ASIC, whose sole purpose is to be a trustee for super, ASIC fee $40pa

or u can set up (or use) an ordinary company to do the same thing, but the annual ASIC fee is higher.

keypoint is that this is a legally allowable structure with a sole director

Esuperfund charge $600 to setup the company, this is a one-off fee, much cheaper than other rivals.

use Google to search "corporate trustee SMSF"

also search ASF, use my title awg, and keyword smsf, I have posted various matters on this subject, and so have others.

Google is yr friend, also make phone calls..DYOR essential!

 

[ibgrace]

Thanks all - most helpful

 

[lasty]

Many thanks AWG

Most appreciative for that. How can I start a SMSF and only have one trustee?

Thanks

Ian

Corporate trustee.

They tend to be more expensive on setup and they have ongoing costs.
But you may find it being peace of mind.

Just do you homework as awg mentioned.

Administration is the key here so ensure you have everything ticked.
If your administrator only updates periodically and you breach in anyway shape or form your tax advantages will be penalised.They are clamping down with hefty penalties.

 

[lasty]

Take a look here about SMSF non compliant issues.

http://www.theaustralian.news.com.au/business/story/0,28124,26026549-5001942,00.html

 

[awg]

Hi Lasty,

I believe you may be the poster I referred to in my 1st post, re a provider that offers a wide ranging platform?

re the non-compliance issue, I was chatting with a person VERY knowledgable about what has occured in the non-compliance area.

The essence of what he said is contained in the article you attached.

BUT the key thing he said is that to his knowledge the ONLY reasons non-compliance penalties have been made: that is

*breach in house asset
*early access
*(one other reason, sorry cant remember)

So you would have to make major errors to get non-complied.

The ATO and Super industry like scaring people. I bet they yell BOO to their cats!

having said that, I find the administration and constantly changing laws re super to be more of a burden than I anticipated, not to mention the need to make decisions about asset allocation.

 

[tasmart]

having said that, I find the administration and constantly changing laws re super to be more of a burden than I anticipated, not to mention the need to make decisions about asset allocation.

The complexity & volatility of the super laws really is a pain! I have a personal interest as I have just turned 55 so am contemplating a Transition to Retirement scenario with my SMSF. The ATO website still has a lot of out of date info on it and sends you in a circular web chase! It appears you have to set up a separate SMSF if you want to have both a complying pension paying fund and continue making contributions as well! Crazy! Bottom line is I think I will wait until I turn 60! Mind you KRUDD may have grabbed all the SMSF monies by then and used them to fund a 'safe' government funded pension or perhaps regulated the need for trustees to use an accredited FP

The Henry review is going to be interesting. Not only because of the actual report but also in which bits are actually enacted.

I think if I was contemplating transferring to a SMSF atm I would await the Henry report first.

 

[Julia]

The complexity & volatility of the super laws really is a pain! I have a personal interest as I have just turned 55 so am contemplating a Transition to Retirement scenario with my SMSF. The ATO website still has a lot of out of date info on it and sends you in a circular web chase! It appears you have to set up a separate SMSF if you want to have both a complying pension paying fund and continue making contributions as well! Crazy!

I don't think that's right at all. I had the choice of turning my entire fund into pension phase or just some of it, leaving the rest in the accumulation phase.

Bottom line is I think I will wait until I turn 60! Mind you KRUDD may have grabbed all the SMSF monies by then and used them to fund a 'safe' government funded pension or perhaps regulated the need for trustees to use an accredited FP

The Henry review is going to be interesting. Not only because of the actual report but also in which bits are actually enacted.

I think if I was contemplating transferring to a SMSF atm I would await the Henry report first.

I wouldn't. It's difficult to see how the benefits of the pension phase of a SMSF fund could get any better than they are with no tax to pay.
How do you know this won't change via the Henry review? They almost never make such legislation retrospective so I'd regard it as safer to do it now.

And I really think instead of guessing how things are supposed to be done and/or asking questions of anonymous people on an internet forum, it's worth paying for a consultation with an accountant who specialises in SMSF's.
If you can afford to have such a Fund, you can afford to get professional advice.

 

[tasmart]

And I really think instead of guessing how things are supposed to be done and/or asking questions of anonymous people on an internet forum, it's worth paying for a consultation with an accountant who specialises in SMSF's.
If you can afford to have such a Fund, you can afford to get professional advice.

I actually do have a good accountant and have modelled out my personal position. Certainly from age 60 with tax free capital gain & income TTR looks more worthwhile - although the limitation to between 4-10% and no lump sum allowance is a little limiting.

But my point is that super laws are unneccessarily complicated and unfortunately are probably going to get worse. Just the limitation on deductible contributions has significantly changed the endgame strategy.

The current focus on the poor financial knowledge of SMSF trustees is no doubt a prelude to some sort of regulatory change.Especially when you consider that small funds comprise 99.8% of super funds in Australia (393,600 in June 2008) with 31.1% of total super assets but only 2.4% of all super members.

 

[explod]

Hi Lasty,


BUT the key thing he said is that to his knowledge the ONLY reasons non-compliance penalties have been made: that is

*breach in house asset
*early access
*(one other reason, sorry cant remember)

.

If you utilise super to support yours or a family business, purchase property that you or a family member resides in, not allowed

 

[awg]

It would surprise me if major changes were made that discourage use of super, as the alternative would be to encourage reliance on age pension.

with an ageing population this would be counterproductive.

cant beat pension phase as an investment vehicle, due to no CGT, and concessional income tax.

wise to keep something out of super as well

depends on how much you have to some extent.

they should cap the tax free pension amount!.. know of a fellow with $30 million in super pension, pays no tax..obscene!

 

[awg]

If you utilise super to support yours or a family business, purchase property that you or a family member resides in, not allowed

yes thanks explod, family member in property was the third point i couldnt remember.

own business is deemed to be a breach of point #1 (in-house assets)


btw..did everyone else get the very detailed SMSF questionaire that I completed about 6 months ago?

many multi-part questions, pretty tricky, I knew nearly all, but a few I had to research, a couple I rang and clarified with ATO, or accountant, just to make sure I got 100% haha

 

[explod]

they should cap the tax free pension amount!.. know of a fellow with $30 million in super pension, pays no tax..obscene!

But I bet he paid an enourmous amount of tax to get there and with that amount of super will never be a drain on the system but his contributions would have helped the system. Good luck to him, it is something to aim for

 

[awg]

But I bet he paid an enourmous amount of tax to get there and with that amount of super will never be a drain on the system but his contributions would have helped the system. Good luck to him, it is something to aim for

yes, you are quite right, he still pays GST of course.

another thing that is perhaps not widely known, when you cark it, substantial tax must be paid on capital gains if the balance is left to non-dependant adult beneficiaries, other than spouse..ie defacto death duties.

also, the changes in max contribution mean very high balance super will be less common