What are SMSF Accountants?

SMSF Accountants

SMSF Accountants are specialist when it comes to preparing your self managed super funds tax returns. Your SMSF Accountants will need to see all the transactions conducted by your SMSF be it either contributions and earnings coming in or funds going out for any assets the fund purchases and all sundry costs.

When preparing the SMSF tax return your SMSF Accountants  will also audit your superfund, however SMSF Accountants  need to be licenced by ASIC to audit your superfund. So, if your Accountant isn’t licenced they will employ a specialist auditor to do so.

Having your own SMSF usually means you will invest in assets to earn income, usually shares, an investment property or other asset classes, in this case most SMSF will employ a Financial Advisor to put together an investment plan to follow. Some SMSF Accountants are also licenced Financial Advisors which can make it easier for the funds to deal with just one identity.

Financial Advisors work with SMSF Accountants to ensure the Self Managed Super Fund is compliant to the ATO Rules for SMSF’s, if the fund isn’t conforming there can be heavy fines for the fund. So it is important to ensure both your Accountant and Financial Advisor are up to date with SMSF compliance requirements.

If you intend buying property through smsf, then usually your Self Managed Super Fund will need to arrange a mortgage, again this is a specialized area of financing and it what SMSF Loans Melbourne does.

So when it comes to SMSF accounting we suggest you look up an SMSF Accountants and we have a resource page where we have listed a number of SMSF Accountants and Financial Advisors please feel free to call.

To review the list of SMSF Accountants please go here

To review the list of Financial Advisors please go here.

Having good SMSF advisor is the core of any SMSF trustee managing a successful Self Managed Super. So make sure your  advisor be it either your Accountant or Financial Planner has a good understanding of self funded superannuation rules.

SMSF Loans Melbourne helps Property Investors and SMSF to finance their investment property purchases by working with your accountant or Financial Planner to get the best solution for your situation.

For a quick chat or to arrange an appointment with SMSF Loans Melbourne contact us here

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SMSF Loans for Residential and Commercial Properties


SMSF Loans for Residential and Commercial Properties


One of the best things about an SMSF is that you can set up (pre approval) from the many of the SMSF Loans available to buy either commercial or residential a property. And many banks and financial organizations in Australia offer free information about SMSF, investment options and SMSF loans.

The SMSF concept is one of the fastest growing in the financial sector and many individuals are considering it to be their primary retirement plan.

SMSF Loans for Residential Properties

Residential SMSF Loans

You would have to agree with me ….
Australians have a great fascination with investing in residential property. And we have seen an increase in everyday Aussies like you and me investing in bricks and mortar of a residential house to increase their wealth.
And now with the government changes to the superannuation laws in the 1990’s there is now a provision which enables Self managed super funds buying property to use what is called a Limited Recourse Borrowing Arrangements i.e. LRBA.

LRBA’s are a little bit stricter in the way the funds are allowed to be borrowed, for one there are higher levels of equity (cash deposits) requirements compared to loans outside a SMSF. Generally, most lenders want a minimum of 20% deposit for a residential property being purchased in a Self Manged Super Fund.
Also any property purchased with a LRBA in place requires a certain legal structure to hold the property while there is a loan. The property is held in a bare trust which purposely made to hold just this one security until the loan is paid off. When the LRBA is paid the bare trust is dismantled and the property ownership is transferred to the SMSF trust.

SMSF Loans for Commercial Properties

Why commercial …. Bigger returns?
Investing in commercial property for everyday Aussies like you and me is the new frontier of property investing, either directly or in a SMSF.
And there is some great SMSF loans products available for self managed super funds to take advantage of to buy good commercial properties.
While there is still a requirement for a LRBA and the correct trust structures in place, SMSF loans for commercial properties can have fewer demands on the self managed super fund for a certain amount left in the fund after the purchase. Also with some lenders there is no requirement for the SMSF loan to service outside the fund.

Let Me Explain………..
With residential LRBA’s most lenders require the fund have a minimum amount left in the fund after the purchase either a fixed amount say $50,000 or say 20% of the nett assets of the fund.


If the fund has $100,000 before the SMSF loan the requirement of the lender being 20% the self managed super fund would need to have $20,000 cash left after the purchase. So the SMSF would have $80,000 for funds to complete the purchase along with the SMSF loan.
Likewise, if the requirement of the lender was $50,000 then the SMSF would have $50,000 for funds to complete the purchase along with the SMSF loan.
With Commercial SMSF Loans some lenders are lenient with this requirement.

And What about SMSF loans to service outside the fund?
In some cases, lenders will require the SMSF Loans to service outside the fund i.e. the members to be able to afford the SMSF loan as if it was being purchased in the own names directly. With commercial properties, certain lenders will just use the rent and the ongoing contributions going into the fund to cover the SMSF loans repayment.

However, these types of SMSF loans tend to have lower LVR requirements, meaning the SMSF will need higher cash contributions to cover the deposit and funds to complete the purchase.

Also, some lenders are now requiring a minimum net asset balance for the self managed super fund to enter into a LRBA. This is based on the ATO earlier recommendations that self managed super fund have a minimum amount of $200,000 in cash or assets, this just a recommendation not a legal requirement. And now it is very hard to find that same or similar recommendation on the ATO website

We are always available…..
SMSF Loans Melbourne helps Property Investors and SMSF to finance their investment property purchases by working with your accountant or Financial Planner to get the best solution for your situation.
For a quick chat or to arrange an appointment with SMSF Loans Melbourne contact us here

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Self Managed Super Funds or SMSF Investment Strategy


Self Managed Super Funds or SMSF Investment Strategy

One of the most common types of retirement plans are through your own super these are called a SMSF investment strategy.

Retirement plans are an important part of investment and future savings and can often save one from the heartache from bad investment decisions on the run. It also ensures that the members will into their retirement will live a lifestyle which he/she desires.

The main difference between super funds and other funds the members run the SMSF for their own benefit and are also responsible for the taxes and the members and the trustees can the same person or a corporate trustee.

When it comes to Successful retirement plans = require successful strategies and SMSF are no different.

Remember if you fail to plan, you plan to fail.

Can I do it myself?
An investment strategy decides the kind of investments you can makes with your SMSF. Under the current laws you can write your own SMSF investment strategy. When you decide to opt for a SMSF, the company issuing the fund/trust can provide an investment strategy template which you can use to choose your investments or you may wish to seek professional guidance from a financial planner.
A good SMSF investment strategy will give a wide range of options. SMSF options include shares, property or cash and other assets. In some cases the SMSF can purchase the assets either locally or from an overseas location.

One of the best things about SMSF investment strategies is that it considers many factors before indicating the amount of returns which can be derived from it. For example, risk is an important part of any investment strategy and SMSF strategies should it very seriously. SMSFs also require members and trustees to follow certain guidelines and meet legal requirements for the investments to take place.

Legal Requirements
Under the Act that governs funds, a trustee of the SMSF is responsible for the management of accounts which consider members’ benefits. It is the trustees responsibility to ensure that any investment decisions carried out by him is documented ensuring the investment of assets is planned according to the SMSF Investment Strategy. He must also monitor the performance of the assets carefully and implement an investing strategy will be benefit every member.
One of the highlights of a SMSF is control. Many fund members are part of a SMSF because of the same reason. SMSF Members/Trustees in control of a SMSF must be ready to implement their plan and review the progress from time to time. This rule has been made mandatory by law.

Some of the important factors which must be present in the SMSF investment strategy are:
1. The risks involved with making and holding SMSF investments and the returns that will come from these investments.
2. Ensuring that the cash flow requirements and SMSF objectives are followed.
3. The liquidity of the total investments in regard to the expected cash flow requirements.
4. The composition of the investments as a whole which also includes the diversification of the investments.
5. The ability of the SMSF to maintain its compliance to the sole purpose test.

What are the Investment objectives?
The overall objectives which the trustees need to keep in mind is that the assets must be invested in such a way that the retirement benefits are protected and increased. It could also enhance the death benefits of the members involved with the SMSF.
There should be a benchmark for reaching the objectives on time i.e. for retirement. As an example, an objective could be obtaining an average withdrawal of 6% from all investments in the SMSF on retirement as a pension.

Some of the things that investors need to keep in mind while are:
1. The needs and also the profile of every member.
2. The retirement age for each member.
3. The assets and whether they are suitable or legal to be part of the SMSF investment or not.
4. The other assets which members might have outside the SMSF. Often, it helps in determining how much of one asset the members need maintaining diversification as a whole for each member.

What is the risk profile of the members?
Often, as a trustee member of SMSF, one must ask whether the other members have similar risk profiles or not? If the risk profiles are different, should asset segregation take place for each individual member or should it be kept as a whole?

Also, it is important to ask what kinds of capital growths do the members seek from their investments. Do they want smaller yields for shorter times or higher yields for longer times?
The SMSF created should exist as an income provider to the members involved with it and passing the sole purpose teast.

The risk and risk tolerance will very from member to member and each member’s personal circumstances will be different and so the asset allocation is also likely to vary.
The main risk involved is the risk of making loss on investments. Investment profits are often measured by the amount of returns an individual receives after the investment. If, the returns are less compared to the initial investment, it can be considered a loss. The trustee must have the capability to identify and measure such loses accurately. Risk calculation is an important part of SMSF investment.
Risk factors includes interest rates, market change, political stability and changes of legislation affect risk. It is the trustee’s job to keep a constant check on the investment strategy and performance of the SMSF investments.

Understanding the correlation between risk and return is important and the trustee must determine a risk which is of acceptable level. This must be made after the SMSF circumstances have been taken into consideration. Risk tolerance is often used to determine the nature of the fund’s investments.

Diversification vs. Investment in one class of assets
Diversification of investments is a desirable thing but it should be done carefully and should be a key component of the SMSF Investment Strategy. One of the important advantages of diversification is that it reduces risks. However, for each diversification, separate risk calculations must be made and it must be ensured that the returns on the investment are secured.
Diversification of investments can be achieved by spreading it over different classes of assets, individual assets and investment managers. It can also be spread over different countries.
Also diversification can exist in one asset class such as shares i.e. instead of having say $100,00.00 in one company it could be spread across several companies in various industries
However, in the beginning, if the amount of money invested is small, diversification can be hard to achieve. Therefore, diversification can largely depends on the size and financial circumstances of SMSF.
The investment strategy should contain the diversification of the assets in question and should be able to mention the places where the investments have been diversified.
Paying expenses

A certain amount of liquidity must be maintained by trustees for tax payments and other payments as well. Other payments include broker fees, legal fees and administration expenses including accounting and annual audits. The payments must be done on time because they are liable for penalty and late fees if delayed.
Cost of investing

The trustees must consider the cost of making investments for the SMSF. Investments often involve additional costs and trustees must be aware of that. For instance investing in real estate comes with other cost such as rates and insurances ongoing maintenance. The cost of investing should be taken into account as a means of maximizing the profits.

Death is a natural phenomenon and can strike anyone at any point in time. Strategy plans should consider the death and disability needs to every member. It has become a requirement for every trustee to consider each member in the SMSF insurance needs on an regular basis.
Investment name
SMSF investments must be made in the name of the SMSF. The fund has the right to have the funds under its own name. An SMSF asset can never be in an individual’s name.

Audit is also an important part of the SMSF strategy. The auditor will review the investments and ensure that the investments are in line with the mentioned strategy. If any discrepancy is found, the auditor will make it a point to mention that to the trustees to make the appropriate changes.
Keep your strategy up-to-date

Every strategy should follow the latest rules and regulations. It is important to update or at least review the strategy plan very year. When reviewed the necessary changes must be made. A review must consider the following changes:
1. The fund acquiring a new type of asset.
2. A new member joining or leaving the fund.
3. A loan being taken out of the fund.
4. The fund buying a major asset

Strategies should also be reviewed if the trustee thinks the circumstances have changed or if there is sudden change in the number of members.

Retirement plans are important and must be done by every individual. A SMSF Investment Strategy ensures that finances are secured for the future. While the market is flooded with different retirement plans, not all are flexible and allow for maximum returns. Moreover, investment plans involve a lot of risk as in some cases the loss can be greater than the amount of investment. SMSF is an excellent way to build money as the investment options and allow lots of flexibility.

SMSF investments can be done through cash or other properties and other allowable assets. The SMSF strategy includes other factors as well which must either be met or considered by the trustee and the members of the SMSF. Since, it is expected that the investment amount will be a considerable sum, the requirement by trustees should be to go through the plan thoroughly.

One of the important highlights of the strategy is that it includes risk management as an important factor. Investment risks include losses which can be faced during investments and also low returns which again will result in losses. Other risks include market rates and political instability. Even the death of a member can be looked upon as a risk.

SMSFs have set guidelines which are mandatory for the trustee to follow. There should be a background information of every member involved with the SMSF and also the different types of investment that they want to make. The guidelines include the ability of the SMSF to exclude liabilities which means that it can release anything which blocks the returns from maximizing. There are other legal requirements which trustees must comply to while making the SMSF and drawing plans for it.

The SMSF must have clear objectives which clearly define the needs and requirements of each member and also whether the investments they make are suitable for the funds or not.
Diversification another important part of the SMSF and allows members to diversify their investment options. Diversification can be done over a variety of different assets in different parts of the country. However, members must state the reason and the assets they want to diversify.

Other important things about the SMSF Investment Strategy are paying expenses, insurance, the investment name and audits. All these factors must be kept in mind and they must comply with the latest legal requirements. The strategy should be reviewed every year to ensure that the investments are done in a legit manner and that the returns on the investment are the right side of profitable or in line with the investment strategy.

In short the SMSF investment strategy is best for individuals who want to retire with minimum financial risk with a healthy pension.

This information should be treated as general information only and not financial advice we encourage anyone who is thinking of starting their own Super fund is to seek out professional advice.

Recent related SMSF article SMSF Buying Propery

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Self managed super funds buying property

Self managed super funds buying property

Self managed super funds buying property

We all know….Australians have for a long time have had a love of owning their own property, in fact Australia has one of the highest home ownership in the world. So it make sense to take the next step and look at the options of a Self managed super funds buying property.

But Did you know?

You cannot live in a property that a SMSF owns and there are some other restrictions. However, when you look at the graph below you can see property values in Melbourne has doubled in the period from 2006 to 2016 it makes a compelling argument to consider property as a investment choice for your Self managed super fund.

Self managed super funds buying property

Tax Free

The property value increased over $400,000 for those ten years, that’s $40,000 per year equity increase. And if this was inside a SMSF and you sold the property after you retired that capital gain of $400,000.00 would be Tax free under the current taxation rules.

Not a bad little earner

So how can your Self managed super funds buying property?

Since 2007 the rules regarding a self managed super funds buying property have been relaxed enabling a self managed super fund i.e. SMSF to borrow funds to purchase a property, this can be either for a residential property or commercial property.

So it is a lot easier to now for a SMSF to buy property…. But how?

Depending on the funds available in your Self managed super fund most lenders will require a 20 to 30% deposit plus funds for stamp duties etc. plus the lender will require the fund to have cash left over to service its other commitments.

How much I hear you ask?

This depends on the lender some have a requirement of a % of net assets or a set amount.

As we said earlier you and fellow members of the self managed super fund or relatives can’t live in a property bought by a SMSF. However you can rent a commercial property that has been bought by your SMSF.

The other main difference regarding a self managed super funds buying property is the loan type is different as follows:
• When a Self managed super funds borrows funds to buy an investment property it is called a limited recourse borrowing arrangement or LRBA. This means the lender only has the ability to call on the assets directly related to the loans and not any other assets in the SMSF if there is a default on the loan.
• Most LRBA loans for self managed super funds buying property have a higher interest rate due to the “higher risk “and depending on the lender the SMSF will require a minimum deposit of 20%.
• There are a lot of lenders who do not provide lending for self managed super funds buying property, so there are limited options in the market.

The other things to consider

Most lenders like established properties with a comparable rental properties in the surrounding area and will not consider new properties for a SMSF loan

As the contract of sale, it needs to be a single contract purchase with a deposit payment and the remainder at settlement this rules out a land purchase and a construction of a property. ie. With land and house construction usually it consists of a land contact and a building contract.

Let us Help

SMSF Loans Melbourne supports you through the entire process and we work with your accountant, financial planner, solicitor and real estate agent to aid successful outcomes when the SMSF is borrowing to buy property.

If you have any questions regarding buying a property in your SMSF please contact SMSF Loans Melbourne for a free catch up or just a quick chat to review what your SMSF is doing regarding buying property and how we may help.

Contact SMSF Loans Melbourne here.

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