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SMSF Strategies for 2009 :
Seminar 6 seats left
18th November Tuesday 6 PM
Coronation Club,
86 Burwood Road, BURWOOD NSW
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Since the 9 May 2006 Federal budget, superannuation has become the most tax effective vehicle for wealth accumulation, asset protection & estate planning. Superannuation is becoming the first or second largest asset for most individuals.
This ATMA professional development group presents a great opportunity for advisors to learn how interesting strategies can be structured so that they can assist their clients to maximize their retirement benefits.
Advert: Company Formations $455 Instant Email
Strategies covered
- How to get more money into super
- Why paying off principal of your own home loan could be the worst decision you would ever make
- How a 50 year old can pay only 4% interest on own home loan
- Instalment warrants Vs joint venture Unit trust arrangement
- Preservation and conditions of release requirements
- Re-contribution strategies - are they still alive
- Splitting super with spouse
- Transition to retirement pensions
- How 75 + year olds can contribute into super
- Other interesting and complex strategies
Manoj Abichandani
SMSF Specialist Advisor
 
Manoj has worked in the SMSF industry forthe past 19years and currently audits more than 250 funds. He develops SMSF strategies and advises accountants on complex SMSF matters.
Cost of seminar is $55 and for ATMA members $44, to book click here
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Problems
with Personal guarantees in an installment warrant arrangement
Trustees are not allowed to borrow |
Trustees of a SMSF due to Section of 67 of SIS Act are not allowed to borrow any money. There are however three
exemptions to borrowing or instances when trustees may be allowed to borrow
without making the fund non-compliant:
(a) To pay a benefit, or superannuation
contribution surcharge liability (no longer levied), for a maximum of 90 days
for up to 10% of the value of the SMSF's assets; or
(b) To pay for a settlement on a security transaction for a maximum period of 7 days, for up to 10% of the value of the
SMSF's assets; or
(c) Borrowings that
are a part of an instalment warrant arrangement.
What is an Installment Warrant Arrangement?
Instalment warrants are complex financial
arrangements whereby the SMSF buys an asset via an instalment warrant agreement
where there is some debt funding or borrowing to purchase the asset.
Instalment warrant transaction is
characterized by an asset held in trust for the SMSF, where the SMSF holds a
beneficial interest in the income and the rights to acquire the asset. The SMSF
may be required to make regular instalments or repayments.
Recourse by the lender, in the case of
failure to settle the loan, is required to be solely over, and limited to, the
asset held in the trust arrangement (limited recourse loan).
After commencing the borrowing, the SMSF is required
to make at least one payment before purchasing the asset outright. Whilst there
is no formal requirement for regular repayments/instalments, the lack of
repayments may bring into question the commercial rationale of the underlying
investment and whether the sole purpose test (Sec 62 of SISA) is being
breached.
There are some lenders (banks: such as Westpac,
NAB, St George etc) who are prepared to lend to a SMSF under an instalment warrant
arrangement. Trustees (and their advisors) must be very careful in selecting
any of their offerings because if the arrangement / mortgage documents are not strictly
as per Sec 67 4A of SISA guidelines, the auditor may report the contravention of
borrowing rules to ATO in an ACR.
This means that ATO may rule that the fund becomes
a non-compliant fund and pay tax at the highest marginal tax rate. That by
itself should not be a problem if the new asset is the only asset of the fund,
since the fund is likely to have no income in the future due to interest
expense of borrowing and thus never pay tax again, unless the asset is sold in
future and capital gain is realized.
Procedures
which the auditor may conduct in auditing compliance of instalment warrants arrangement
with the SISA and SISR may include:
- Checking the SMSF's trust deed, to determine, if SMSF is permitted
to borrow via an Instalment warrant arrangement.
 - Examination of investment strategy, to determine
if instalment warrant arrangements and the percentage of funds devoted to
them are allowed within that strategy.
- Identification of asset purchased and checks if the vendor
is a related party so as to ensure that the transaction is permitted under
the SISA, SISR and trust deed.
- Determination of whether the debt arrangement or loan agreement
is a non-recourse agreement as required by the SISA, whereby the other
assets of the SMSF are not used as security for the loan.
- If the borrowing is provided by a related party, such as the
member, check to identify any potential non arm's length dealings. If less
than commercial interest rates are being charged, it may be a means of
making additional contributions to the SMSF, whereas an excessively high
interest rate charge, may fail the sole purpose test, or potentially be a
scheme to access benefits.
- Ensure the funds borrowed were used to purchase a new asset
held in the instalment warrant arrangement.
- If any arrangements outside the SMSF exist, such as, a
personal guarantee, which may have recourse to the assets of the SMSF,
other than the asset acquired (or any replacement), as this may be a
breach of the borrowing restriction exception granted to instalment
warrant arrangements.
- If the asset is a property, ensure that it is not leased
to a related party unless it is a business real property.
Please note, all lenders currently, are
insisting a personal guarantee from members.
If you are an auditor, click here to read 8th
bullet point of paragraph 331 on page 121 of GS 009 Guidance Statement GS
009 Auditing Self Managed Superannuation Funds Issued by the Auditing
and Assurance Standards Board on 31st October 2008.
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www.trustdeed.com.au provides online service for creating, storing & managing legal documents for Companies and Trust deeds for SMSF, Family, Unit & Hybrid Trusts, click here for more information.
 New / Update SMSF Trust Deeds cost only $110 and can be created in 20 minutes, Trust Deeds are emailed instantly!
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FIRST TRUST DEED FREE |
if you are an advisor, financial planner, accountant or a solicitor, we can offer you to create one trust deed on our system for free. This offer is valid provided you purchase 10 or more new SMSF deeds or update 10 SMSF trust deeds for your clients. To claim your first free trust deed, first register on our website www.trustdeed.com.au and phone our office on 02 9638 2807 for a promotional code.
If want to communicate with your clients, advising them the need & advantages to update their trust deed, click here to download a pro-forma letter to your clients.
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| remeber you can create a SMSF trust deed at any time 24 / 7 |
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www.trustdeed.com.au goes on live help
If you are an advisor and use our website for your clients SMSF Trust Deed. You now have access to SMSF Specialist Advisor who will answer all your technical questions online for you. Simply click the button above and start chat.
New or update your existing SMSF Trust Deed for $110 You can keep the trust deed up to date for the next five years for only $165.
Our SMSF trust deed has been prepared with input from accountants who have over two decades of experience in setting up structures for their clients and have combined knowledge of auditing and lodging tax returns for more then 2000 SMSF's, their practical experience is an invaluable contribution.
For further questions on our trust deed, ring 02 9684 4199 or email sales@trustdeed.com.au |
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Our Website has complete Document manager for all future downloads
We are the only online SMSF Trust Deed providers where you can purchase a Trust Deed 24/7 for $110
It takes only Less then 20 minutes to register and build a SMSF Deed.
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| Phone 02 9684 4199 or visit www.trustdeed.com.au |
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This email is sent by:
Sales Team
www.trustdeed.com.au
Deed Dot Com Dot Au Pty Ltd
P 02 9684 4199 F 02 9838 3060
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PO Box 1010 Dundas NSW 2117
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