SMSF Set Up

[12Percent]

Hi,

I have searched the forums, however many posts are quite old and I feel there may be new details and offerings to consider.

I have been researching setting up an SMSF for myself and my wife to consolidate our funds, I am looking at a turn key solution, the main contenders at this stage are esuperfund or ClearDocs.

The plan is to trade using The Chartists Growth Portfolio, so looking for the best solution to set up the SMSF, then open an account to transfer current funds then trade this investment strategy without the set up company coercing us to use their affiliates.

We bank with CBA and I invest with Commsec using savings outside of super, however i'm happy to set up an account with Macquarie as per ClearDocs set up, and keep the funds completey separate from our personal investments and cash.

Any experiences on using the banks direct investment vehicle such as Macquarie, seeing as the strategy doesn't trade too often, instead of using IB which would reduce commissions? Does using IB or brokers other than the cash account add complexity to the audit?

Any advice also on keeping lump sums and employer contributions separate between myself and my partner?

Is it easy enough to have the turn key fund account audited by any other company? As in, there aren't any issues having Cleardocs set it up, but then turn to esuperfund to carry out the annual audit? Obviously it makes sense to have the one company do both, just keeping my options open.

Thanks in advance,

 

[Belli]

If you haven't already, before you do anything I would consider it prudent:

• to understand the implications of the Superannuation Industry Supervision Act and it's associated regulations;
• to understand the compliance aspects of the Income Tax Assessment Act;
• to understand the compliance aspects of the Corporations Act if Corporate Trustee;
• Trust Law; and last but not least,
  
• to understand the Trust Deed of the SMSF.

All that before you get anywhere near an investing strategy provided the above doesn't put you off.

 

[MovingAverage]

Cleardoc is good if you know what you're doing, but if it were me I'd be seeking proper advice from someone who knows the ins and outs of structuring SMSF's before racing off to Cleardocs to set it up. There can be a very harsh penalty if things aren't done property and it could be an expensive lesson if not done correct. Good luck--and make sure you understand the admin costs of setting up and running an SMSF.

Yes it is easy to have a turnkey fund audited by some another appropriate auditor. A lot of accounts have a relationship with an auditor and will use their services, but you can use whoever you like so long as they are approved

 

[Belli]

Yes. And as the Trustee of an SMSF is required by the ATO to sign within 21 days of becoming a Trustee a declaration stating they understand their responsibilities, it's unlikely there will be any come back if things go pear shaped.

The "Oh, but I thought...." won't work.

 

[12Percent]

Hi Belli,

Appreciate the advice to digest the strict compliance first, definitely enough to scare off most, not me unfortunately.

Hi MA, there are some hints on the Cleardocs site that it does appear it is aimed at professionals using their service, for this reason I am leaning toward esuperfund for the ease of set up and audit in one company.

Forgive me for sounding naive, but if it is set up by a one stop shop like esuperfund and tailored to our situation, all employee contributions are invested in the ASX and accounted for and there's no fraudulent activity, where's the risk? What is likely to not be done properly?

Do you know of any real world examples of these problems occurring?

 

[MovingAverage]

Hi Belli,

Appreciate the advice to digest the strict compliance first, definitely enough to scare off most, not me unfortunately.

Hi MA, there are some hints on the Cleardocs site that it does appear it is aimed at professionals using their service, for this reason I am leaning toward esuperfund for the ease of set up and audit in one company.

Forgive me for sounding naive, but if it is set up by a one stop shop like esuperfund and tailored to our situation, all employee contributions are invested in the ASX and accounted for and there's no fraudulent activity, where's the risk? What is likely to not be done properly?

Do you know of any real world examples of these problems occurring?

here’s one very recent real world example of using a generic off the shelf investment strategy doc. https://www.adviservoice.com.au/2020/03/ato-steps-up-its-documentation-requirements/

Also, have you considers the pros and cons of using individual or corporate trustee. Don’t get me wrong, I’m not suggesting services such as Clear doc aren’t good and you shouldn’t use them I’m just flagging that docs governing SMSF can be complex and the devil can be in the detail.

 

[MovingAverage]

Hi Belli,

Appreciate the advice to digest the strict compliance first, definitely enough to scare off most, not me unfortunately.

Hi MA, there are some hints on the Cleardocs site that it does appear it is aimed at professionals using their service, for this reason I am leaning toward esuperfund for the ease of set up and audit in one company.

Forgive me for sounding naive, but if it is set up by a one stop shop like esuperfund and tailored to our situation, all employee contributions are invested in the ASX and accounted for and there's no fraudulent activity, where's the risk? What is likely to not be done properly?

Do you know of any real world examples of these problems occurring?

I should add I don’t know anything about esuperfund and my comments are more directed to a clear doc type service.

 

[frugal.rock]

for this reason I am leaning toward esuperfund for the ease of set up and audit in one company.

Our learned colleague @Skate uses the aforementioned fund, I believe.
He may be inclined to provide his opinion on his experience, in due course?

 

[tinhat]

The only personal opinions I can give, not tailored to others circumstances, about the set-up of a SMSF in general are:

A Corporate trustee is preferable to having individuals as trustees. The reason is that if the trustees are individuals, upon the death of one individual trustee the fund ends up in a stasis while the executor of the will of the deceased trustee acts on behalf of the deceased's estate. Rather messy all round.

In contrast, a corporate entity remains undisturbed as the trustee of the SMSF even upon the death of one of the directors/members.

In essence it makes little difference to the practical governance of a SMSF whether it is managed by a corporate trustee or individual trustees.

In the case of acting as individual trustees, it is my understanding that all members of a SMSF should be trustees.

In the case of a corporate trustee, it is my understanding that all members of a SMSF are required to be directors of the corporate trustee.

I don't want to say anything to you about investment strategy. What I will say, however, is that I am a rather active share trader within the family SMSF and I use a local small accounting firm for the SMSF, the family business, etc. In the past, the bookwork for the SMSF was onerous and the accountant's fees were substantial. These days, in contrast, the accountant has a live feed of all my share trading and the bank accounts and most of the reporting is automated. The compliance costs including bookwork, account preparation, actuarial certificate and audit are quite reasonable. Well worth being a SMSF.

I chase a return of 15-20% pa on the SMSF and I am prepared to take on the risk. I lost $50,000 this year on one holding that went down the drain and believe me that was very significant amount of money (I live a very modest lifestyle except for the wine a drink) but touch wood, the SMSF will end up about <edit>$80k</edit> in gain, on a rather modest asset base, despite that loss.

 

[sptrawler]

My wife and I had been running a smsf since 2007, initially we carried out all the accounting using BGL simple fund and a private accounting firm, to keep the costs down.
Now we use online super, which provides a similar service to esuper and from what tinhat says they all provide similar services.
I find the system has improved greatly since 2007 and the costs definite make it an attractive option.
Just my option.

 

[tinhat]

My wife and I had been running a smsf since 2007, initially we carried out all the accounting using BGL simple fund and a private accounting firm, to keep the costs down.
Now we use online super, which provides a similar service to esuper and from what tinhat says they all provide similar services.
I find the system has improved greatly since 2007 and the costs definite make it an attractive option.
Just my option.

Hi @sptrawler our accountant uses BGL which I understand many do.

 

[Belli]

A Corporate trustee is preferable to having individuals as trustees. The reason is that if the trustees are individuals, upon the death of one individual trustee the fund ends up in a stasis while the executor of the will of the deceased trustee acts on behalf of the deceased's estate. Rather messy all round.

Plus there can be a difference in benefits permitted to be made once preservation requirements are met. For the Trust Deeds I have examined, Corporate Trustees can pay a benefit whereas a non-Corporate Trustee may only pay a pension. May have inadvertently hit those who are individual Trustees and took of that $10k low hanging fruit but didn't read or amend the Trust Deed first.

The ATO has a good source of info but it is general.

https://www.ato.gov.au/Super/Self-managed-super-funds/

Have always found the esuperfund name a bit misleading as it isn't a superannuation provider.

 

[MovingAverage]

Another thing to think about, assuming you intend to rollover funds into the SMSF I seem to recall this can get a little complicated depending on whether your existing fund is defined or accumulation.

 

[12Percent]

Forgot to mention that, we are definitely going for the corporate trustee set up.

I like the fact that they are able to electronically access the Broker Data for the SMSF within CBA/Commsec for the Annual Compliance Requirements and No Broker Data records are required.

Looking forward to Skate's input if he would be so kind.

Appreciate all the input so far.

 

[Belli]

Forgot to mention this but first a disclaimer, I have no association with the dude.

The Guru's Guide to Self-Managed Super Funds by Grant Abbot is a jolly good read and I think contains some very useful information. It's available from various sources.

 

[Skate]

Our learned colleague @Skate uses the aforementioned fund, I believe.
He may be inclined to provide his opinion on his experience, in due course?

Forgot to mention that, we are definitely going for the corporate trustee set up. I like the fact that they are able to electronically access the Broker Data for the SMSF within CBA/Commsec for the Annual Compliance Requirements and No Broker Data records are required. Looking forward to Skate's input if he would be so kind. Appreciate all the input so far.

@frugal.rock & @12Percent, I usually don't get involved as most will do what pleases them but as you have asked, let me give you my opinion.

eSuperfund https://www.esuperfund.com.au/home
I've been with eSuperfund since 2003 & couldn't sing their praise any higher. Less than $1,000 per year & it's all done. I wholeheartedly endorse eSuperfund, the benefits to me are enormous as I'm a lazy bugger. They handle the initial setup & ongoing paperwork (I haven't got time for any of that)

eSuperfund handles ATO reporting
They handle all the ongoing paperwork & submissions, franking credit refunds are automatically direct credited to my trading account, meaning it couldn't be easier. eSuperfund is a one-stop-shop.

Your involvement
Sign the pre-populated forms & upload them to their portal, easy peasy. (They do everything)

Yearly payment
Less than $1,000 & they direct debit their yearly fee from your trading account, so you don't even have to remember to manually pay them. (as it's all taken care for you).

Direct Feeds
Superfund has direct feeds of CommBank & CommSec so there is no reporting my end (Important: they get data feeds only & can't access any of your accounts)

Skate.

 

[12Percent]

Brilliant, thanks Skate, I think my mind is pretty much made up.

Will report back along the way or on completion to update this thread in case it helps others.

Cheers.

 

[frugal.rock]

@frugal.rock & @12Percent, I usually don't get involved as most will do what pleases them but as you have asked, let me give you my opinion.

eSuperfund https://www.esuperfund.com.au/home
I've been with eSuperfund since 2003 & couldn't sing their praise any higher. Less than $1,000 per year & it's all done. I wholeheartedly endorse eSuperfund, the benefits to me are enormous as I'm a lazy bugger. They handle the initial setup & ongoing paperwork (I haven't got time for any of that)

eSuperfund handles ATO reporting
They handle all the ongoing paperwork & submissions, franking credit refunds are automatically direct credited to my trading account, meaning it couldn't be easier. eSuperfund is a one-stop-shop.

Your involvement
Sign the pre-populated forms & upload them to their portal, easy peasy. (They do everything)

Yearly payment
Less than $1,000 & they direct debit their yearly fee from your trading account, so you don't even have to remember to manually pay them. (as it's all taken care for you).

Direct Feeds
Superfund has direct feeds of CommBank & CommSec so there is no reporting my end (Important: they get data feeds only & can't access any of your accounts)

Skate.

Thanks Skate, you have made me reconsider a SMSF, as the whole thing was daunting when I considered it also.
Will have to look at it again now, based from your experience and endorsement. You have a lot to offer outside of the dump thread, however I understand the reticence.
Cheers.

 

[RazzaDazzla]

Why not Interactive Brokers for the Broker?

 

[12Percent]

G'day,

As of last week the SMSF is now 100% complete.

The process was relatively easy considering the amount of information required, the slowest part was waiting for the bank to set up the cash/trading accounts.

Esuperfund has easy to follow steps, they practically hold your hand the entire way and keep you updated on the progress throughout every phase.

Really pleased with our choice and recommend it to anyone considering taking the plunge.

Appreciate all the input.

Cheers,