FAQ’S
Setting Up A Smsf
As the Trustee of your fund (SMSF), you control your own money and you decide how and where to invest. All your investments and bank accounts are in the name of your super fund. Yes, your SMSF fund requires a bank account through which you can pay administration fees, tax expenses, and any setup fees or receive any ongoing payments (super contributions, rent) associated with the assets you hold in your SMSF.
We don’t handle your funds or have access to your SMSF cash account. We receive a copy of the bank statement in CSV format to help us complete your administration work.
The first step is to understand your responsibilities, the costs and benefits before you setup a SMSF.
Start by doing your research
- Visit the ATO site to view their new SMSF Videos
- Visit the ASIC Money Smart Site – SMSF Section
You can decide to obtain a financial plan, by seeking advice, which will outline the benefits of SMSF’s and it could determine if an SMSF is suitable for you.
Generally speaking, if you are looking for greater investment choice and control of your superannuation, capped dollar based fees that are a deductible cost to your fund with asset protection, then these are some of the benefits of an SMSF.
If you have enough ($150,000 – $200,000) to setup a SMSF to purchase property, you receive employer super contributions (9.5%) and have over $150,000 in combined super savings ( between 1-4 people) and the time and experience to make investment decisions and attend to your funds book keeping, then an SMSF could be right for you.
We recommend that you always seek advice first.
For an SMSF to maintain its 15% concessional tax status and to remain compliant with the ATO,
It must meet the following 3 tests
- Establishment Test – Has to be established in Australia
- Active Member Test – more than 50% of members need to be residents of Australia
- Central Management and control Test – This relates to who strategic decisions of the fund, such as formulating an investment strategy, reviewing and monitoring investment performance to name a few.
The super regulations allow for a ‘temporary absences’ so in the absence of any other evidence, an absence of “not more than 2 years” is temporary.
An option is to appoint an enduring power of attorney, but this requires that one member resigns as director of the corporate trustee company and the new power of attorney replaces this person and manages the smsf’s strategic decision making without the influence of the departed member.
We suggest that you seek advice before setting up a SMSF and the best methods of managing your SMSF whilst overseas
If you are investing in property, it is better for an SMSF to have a corporate trustee, rather than individual trustees for the following reasons.
Asset protection by holding the asset in trust for the super fund
Lower penalties - 1 x penalty fee of $10,800 instead of 2 x $10,800 if you were individual trustees and you contravened the super laws
Borrow more from a lender with a company trustee
Change members (add or remove ) without triggering stamp duty and Capital gains tax
Moving overseas – the fund can continue with a replacement director, but an individual trustee fund would typically need to be wound up
Compliance – proof that assets are held separate to personal assets as the company holds the assets not members as with individual trustee SMSF’s
Payment of benefits - Funds with Corporate Trustees can pay benefits in either lump sum or pension form. Funds with Individual Trustees must have as their primary purpose the paying of pensions only (monthly, annual etc)
Asset protection, (b) Borrow up to 80% ( c ) gain tax concessions (d) ATO penalty fees are applied to each trustee of a SMSF with a company trustee you pay one penalty fee of $10,800
The ATO and the SIS Act requires that single member SMSF funds, must use a company to act as trustee. The longer-term benefits of having a company trustee will generally outweighs the initial extra cost.
Super stream is a federal government initiative designed to reduce time, costs and improve super contribution reporting efficiencies, by adopting an electronic service address. Under the new scheme, SMSF members must provide their employers with an electronic address such ie: supermate. The super stream provider will forward your contribution data to your bank or to your administration provider. Super stream, will result in great cost reductions and less time consumed on producing paper super contribution statements which are sent to employees and their respective super funds.
ATO Super Stream Web page : https://www.ato.gov.au/Super/SuperStream/
My SMSF Property uses SUPERMATE – which is a free service for our clients
The Electronic service address is SUPERMATE (add this address into your accounting software or fwd to your payroll)
For all new clients and existing clients of My SMSF who wish to rollover super into your SMSF, or out, due to a wind up, will need to do the following
Contact the ATO on 13 10 20 option 2 and update the following information
ESA provider to – SUPERMATE
SMSF Bank Account Details : Name, Acc No, Bsb
You may commence your rollover request via one of the following methods
MyGov – add SMSF and then verify, ESA Address, Bank Account details and rollover ( OUT ) or ( IN) fund name : Eg: Qsuper for a rollover or SMSF name for rollover out.
You may complete these steps on the current super providers site where you need to confirm, ESA Provider, SMSF Name, ABN, TFN check and Bank Details
You need to understand your responsibilities, the cost’s and benefits before you set up an SMSF.
Start by doing your research
- Visit the ATO site to view their new SMSF Videos
- Visit the Money Smart Site – SMSF Section
You can decide to obtain a financial plan, by seeking advice, which will outline the benefits of SMSF’s and it could determine if an SMSF is suitable for you.
Generally speaking, if you are looking for greater investment choice and control of your superannuation, capped dollar-based fees that are a deductible cost to your fund with asset protection, then these are some of the benefits of an SMSF.
The Risks are, more responsibility, more administrative tasks and no compensation for failed investments
If you have enough( $150,000 – $200,000 ) to setup an SMSF to purchase property, you receive super contributions and have over $150,000 in combined super savings ( between 1-4 people) and the time and experience to make investment decisions and attend to your funds administration tasks, then an SMSF could be right for you.
We recommend that you always seek advice first.
To establish your SMSF your administration provider will ask you to provide 100 points of certified identification for each member and a copy of your Trust deeds title and signature pages. You do not need to provide your originals.
Primary Documentation
- Birth Certificate – 70 points
- Passport – 70 points
- Citizenship Certificate – 70 points
- Drivers License 70 points
Secondary Documentation
- Medicare Card – 25 points
- Credit Card or Account Card – 25 points
- Bank Statement – 25 points
- Motor vehicle registration or insurance document – 25 points
- Utilities bills – 25 points
* please note that some industry funds require a 3rd document as proof such as a utilities bill
You can choose a fund name using the examples below, but by far the most popular format is to use your surname and first name initials
R & S Smith Super Fund
(Except for using terms such as royal, chartered, trust or defamatory terms) Here are some other examples of acceptable names:
- The Super Success Super Fund
- JK & RW Smith Family Superannuation Fund
- Smith Retirement Super Fund
- An SMSF can have 1- 4 members;
- Each individual trustee of the SMSF is also a SMSF member
- No member of the SMSF is an employee of another member of the SMSF, unless those members are related and
- No trustee of the fund receives remuneration for his or her services as a trustee.
(Note: Trustees can receive remuneration for non-trustee services they provide to the fund in a separate professional capacity. Seek advice on this.)
A person who is currently licensed or registered under a law to practice in one of the following occupations:
- A justice of the peace (JP)
- Legal practitioner
- Medical practitioner
- Accountant
- Financial Adviser ( with more than 5 years’ experience in the industry)
- Police officer
You can locate a JP or a person who can witness your documents, at a pharmacy, bank or a police station
Investing In My Smsf
In September 2007, the (SIS Act* ) Super laws were amended to allow borrowing via an instalment warrant ( section 64A) and on the 7th of July 2010 to a Limited recourse borrowing arrangement ( L.R.B.A – 67B) by an SMSF. Provided that your SMSF trust deed allows direct property and has the ability to borrow, then your SMSF is able to purchase investment property or commercial property. You will need to seek advice from a financial adviser to discuss how you can invest your super in direct property.
* superannuation industry supervision act
You or your employer can make concessional contributions ( taxed at 15% ) by (cash / EFT or cheque) to your SMSF’s bank Account. This includes your employer SGC 10% plus any salary sacrifice amounts you make up to the contribution thresholds below.
- People up to age 75 are allowed $27,500 annually (includes 10% employer paid super)
- You can contribute $110,000 per person, in after tax contributions from 1 July 2021. From age 67 up to age 75, these contributions are subject to work test requirements.
Concessional contributions cap
| Income Year | 18 years to 67 years* | 67 to 75 years* | |
| 2021/2022 | $27,500 | $27,500 – need to meet work test | |
| 2022/2023 | $25,000 | $27,500 – need to meet work test |
Note: Since 2019-2020FY, SMSF members, may carry forward and use any unused concessional contribution shortfalls up to the cap amount each year for a period of five ( 5) years from 2018-2019FY, provided the member has less than $500,000 in super.
Non Concessional contributions Cap
| Income Year | 18 years to 67 years* | 67 to 75 years | |
| 2021/2022 | $110,000* | $110,000 – need to meet work test | |
| 2022/2023 | $110,000* | $110,000 – need to meet work test |
*Bring forward Rule – where a member can contribute three ( 3 ) years of non contributions; in a financial year period; where the cap has not been used previously. This option, is available to super members under 67 years of age, provided that their SMSF has less than $1.6 million total assets.
There is a proposal to repeal the work test; from 1 July 2022; which, will only apply when making non concessional (after-tax) contributions or salary sacrifice contributions.
If you wish to make a personal contribution for which you intend to claim a tax deduction, you will still need to meet the requirements of the work test. All employed people can claim a tax deduction for salary sacrifice super contribution amounts. This excludes the employer 10% SGC amount. You will need to first complete a notice of intent to claim a deduction using the approved form and give it to your super fund or accountant or SMSF administrator.
Depreciation is the natural wear and tear that occurs to a building and the assets within it over time and it’s one of three (3) key tools property investors use to make holding investment property more affordable and tax effective. If you purchased a Residential or Commercial Property in your SMSF, particularly newer properties, then you are able to claim depreciable items such as on the wear and tear on the building, fittings, carpets, furniture. You will need to obtain a depreciation schedule for your Property, in order to make a claim.
SMSF Depreciation Example : If you have $3,000 in depreciation costs you could save $450 per annum (ie $3,000 x 15% = $450).
Investing in property within a SMSF must be for investment purposes and it must be tenanted to unrelated parties with rent set at commercial rates neither above market price or below
Refer to section (SIS Act – 62 Sole purpose test, sections, 71 & 109, )
You cannot do the following when investing in SMSF property:
- Purchase a house to live in, to put your grand parents in, or your children while they are studying
- Purchase a holiday home and occupy it for a couple of weeks a year
You can
- Rent a commercial property to your business or yourself
There are exceptions for which advice must be sort
It is common for a lot of correspondance to be received for listed shares and Exchange traded funds.
One way to reduce the paper load is to elect to receive electronic notices.
To do this you will need to register your SMSF and your details with these two registry’s
- Computer Share – https://www-au.computershare.com/Investor/Wizard/Registration
- add your HIN ( located on the ETF provider or Listed company share statement )
- add your SMSF or individual details
- confirm your email address
2. Link Market Services – https://investorcentre.linkmarketservices.com.au/Login/Login
- add your HIN ( located on the ETF provider or Listed company share statement )
- add your SMSF or individual details
- confirm your email address
Holding Bitcoin or other crypto currencies can be problematic if not handled correctly.
The super laws or the SIS Act 1996 highlights the sections that are most relevant to bitcoin or altcoin investors.
Section 62 – Sole purpose test – neither disallows or allows specific investment in crypto currency. The extent of this section is to ensure that people are investing in assets suited for their retirement taking into consideration the needs of all members and their risk appetite and their circumstances and to further ensure that death benefits are maintained for members and their next of kin.
Section 66 – related party transactions – where crypto currency is concerned no purchases are allowed from persons related to the smsf members, although there are exceptions for which advice must be sort
Section 71 – in house assets – 5% allocation into in-house assets is permitted, which is assessed annually at tax time
Section 109 – arm’s length provisions – assets are acquired and disposed of at commercial rates and terms without any benefit or personal OR present day benefit to members of the fund
Section 13.18aa details the allowed collectable assets in an SMSF
The key considerations are the audit requirements to ensure that bitcoin and crypto currencies are
- Valued annually, transaction receipts are provided
- Confirm the holding address of assets, which need to be offsite from a members abode and secured safely so there is no personal benefit from the asset
- It is not a requirement to insure crypto currency, as it is not a physical asset or a collectable as defined in section 62a SISA
Contact us for more details on our services
Smsf
When you apply online you will receive an email pack with a checklist and part access to our online Dashboard. You need to sign and email or upload the highlighted documents
We setup and do all of the following:
• SMSF Company Trustee
• SMSF Trust Deed
• Apply for ABN/TFN for your SMSF
• Setup a bank account for your SMSF
• Rollover your super ( at no additional cost) for total benefit transfer. We assist you with partials
• We provide replacement insurance advice ( via our affiliate business)
• Costs: SMSF Setup with corporate Trustee $799
Bronze SMSF Annual Admin – $1,100
( accounting & auditing, email support only limited access online)
Silver SMSF Annual Admin – $1,550
(accounting & auditing, phone & email support,online access, discount pricing
The ATO now requires that SMSF members start to actively manage their SMSF; unlike a trustee company; once an ABN is granted for the fund
If your fund had no activity in its first(1st) year such as;
- No Assets purchased
- No contributions
- No income received
but a bank account was setup, a return not required(RNN) may be lodged. The ATO however, does not need to accept this return and the ATO might ask your fund to de-register its ABN. New rules for newly established SMSFs – From 1 January 2015, all SMSFs need to lodge an SMSF Annual Tax Return in the year they were established. This is required even if no assets are held in the Fund.
The ATO will, require the Superannuation Supervisory Levy to be paid even when there is no activity in a SMSF Fund. This is typically done when a return is lodged and the levy is added to the income tax return for the fund. In previous years it wasn’t necessary for a new SMSF to lodge an Annual Tax Return until it held assets. There was an amendment announced by the ATO that a SMSF can no longer avoid lodging an annual return.
For an SMSF to maintain its 15% concessional tax status and to remain compliant with the ATO,
It must meet the following 3 tests
- Establishment Test – Has to be established in Australia
- Active Member Test – more than 50% of members need to be residents of Australia
- Central Management and control Test – This relates to who strategic decisions of the fund, such as formulating an investment strategy, reviewing and monitoring investment performance to name a few.
The super regulations allow for a ‘temporary absences’ so in the absence of any other evidence, an absence of “not more than 2 years” is temporary.
An option is to appoint an enduring power of attorney, but this requires that one member resigns as director of the corporate trustee company and the new power of attorney replaces this person and manages the smsf’s strategic decision making without the influence of the departed member.
We suggest that you seek advice before setting up a SMSF and the best methods of managing your SMSF whilst overseas
Registering your SMSF for GST is only required once the funds turnover is greater than $75,000 annually,
GST registration? Is only required for income over $75,000
This means
- You cannot charge GST to your tenant
- They tenant cannot claim GST if you are not registered
To Register for GST phone on 13 28 66
Click on the following link to learn more – https://www.ato.gov.au/Business/GST/Registering-for-GST/
WHO PAYS LAND TAX
Land tax is payable on all houses, unit’s and land which is not earning any income, calculated from midnight on the 31st of December of each year in NSW & VIC. In other states, WA, SA, QLD it is calculated on the 30th of June of each year. The only exclusion or total exemption from paying land tax is a principal place of residence and primary production land in most states.
HOW LAND TAX IS CALCULATED AND WHAT IT COSTS
The rate for the 2016 tax year in NSW is $100 plus 1.6 per cent of the land value between the threshold ($549,000) and the premium rate threshold $3,357,000 and 2% per cent of the land value above the premium rate threshold. land tax is payable on the combined value of land above the threshold and for all property held in a particular state. Rates vary in each state.My SMSF Property, provides a guide to assist you with land tax, but you should always seek advice on land tax matters.
My SMSF Property’s Electronic service address is MySMSFMailbox
please forward this address to your employer’s payroll or Human Resources department
Email: [email protected] ( only use this for super contribution payment confirmations)
Our Provider is GBST – who do not charge you any fees for this service
Common Questions:
1. I am trying to associate my own My Wealth Mailbox account with another member of my SMSF. How do I do this?
Each SMSF can have a primary login and any number of associated accounts. The process to add an additional member account is simple –the primary SMSF member (the person already registered – you) needs to log in to their My Wealth Mailbox account and go to “Settings”. Here, there is an option to “Add Mailbox Access”. All that’s needed now is to provide your SMSF member’s name, their email address and role (member).
Following this registration, your associated member will be provided with a temporary password via email. Once they have logged into the My Wealth Mailbox account and changed their password to something more secure, they are also ready to start receiving SMSF contribution messages!
2. Is the ESA “MYSMSFMAILBOX” all I need to provide my employer/payroll?
Correct, the ESA “MYSMSFMAILBOX” allows the Gateway to recognise that you have a GBST My Wealth Mailbox account. Remittance notices relating to your SMSF will be sent to the GBST My Wealth Mailbox with this ESA. Using your SMSF ABN, we are able to identify the remittance slip as yours and place it in your My Wealth Mailbox account.
3. My employer has paid a contribution to my SMSF and it has gone through to my bank account. Why is nothing appearing in the My Wealth Mailbox account?
Certain clearing services are not yet set up with the SuperStream Gateway. The fastest way to clear this issue up is to approach your employer and find out what clearing service they use and ask them if they are set up to forward contributions on to the Gateway. GBST will be unable to receive your contribution remittance notices until the clearing service used by your employer is Gateway compliant.
P.A.Y.G INSTALLMENTS
The ATO has decided to place your fund on Pay As You Go installments for 1-2 years
You received a P.A.Y.G installment notice in the mail or an email notice to access MyGov. This is generated by the ATO on a quarterly basis. You will get four (4) of these installments per financial year. Please make prompt payment of these instalments to avoid interest charges.
When you tax is completed we take these payments into consideration against your tax payable bill. If your tax payable is greater, then you pay the difference between these four bills and the tax
payable amount. If it is less, you will get a refund from the A.T.O
More details: https://www.ato.gov.au/Business/PAYG-instalments/How-to-vary-your-PAYG-instalments/