SMSF Matrix Diagnostics

Transcription

1 SMSF Matrix Diagnostics The SMSF Matrix Diagnostics is a system designed to accurately review and analyse critical data about your clients SMSF. The system also provides a comprehensive report designed to identify specific opportunities and needs for each of your clients funds. The annual review programme for the diagnostics is maintained jointly by Unison and the Partner Firm. The intent is to support your firm as a specialist SMSF adviser. A step by step programme is jointly managed by the firm and implemented by Unison at no cost. The process is designed to present clear written opportunities for clients as they relate to their needs and objectives. This report will help your clients as trustees of their own Self Managed Superannuation Fund (SMSF) achieve these key objectives: Maximise every opportunity to create wealth in a SMSF by working with their professional advisers Take advantage of all available strategies that may help reduce tax payable. Ensure an SMSF can protect, grow and transition members wealth in the way they want, with professional advice to help avoid the hidden traps. The SMSF Matrix Diagnostics will review: Trustee structure Trust deed currency Insurance levels and costs Property Investment overview Tax health check Estate planning suitability A number of contribution maximisation strategies Estate Planning and Tax Tax Planning Investment and Strategic Advice Superannuation Matrix Solutions Report * SMSF Matrix Report 31 Copyright Unison Financial Group 2014

2 Date SMSF Fund Name Members PAYG or Business Owners SMSF ABN State Name of Corporate Trustee (if applicable) 1/01/2000 Enter Super Fund Name Enter State Enter Full Name of Corporate Trusteee (if applicable) Corporate Trustee Sole Purpose (Y/N) Date of Current Trust Deed Deed Appoints trustee on death or incapcity (Y/N or unknown) No. of SMSF Members / Trustees Names of SMSF Members / Trustees Member Dates of Birth Please Answers Enter the Date of the Trusts Deed No. of Members No. of Members Please Enter Members worked in UK (Y/N) Have members made previous withdrawal (IF SO AMOUNTS AND WHEN) LUMP SUM Identified Beneficiary Names Beneficiary Nomination Type Adviser in Place (Y/N) Name of Adviser Enter Name/s of Beneficiery/ies Select Beneficiary Type Please Select Insurance Type or No insurance Investment Strategy / Risk Profile Investment Strategy Weightings (Defensive vs Growth) Main Cash Account Provider Shares Balance ($) Managed Fund Balance ($) Property Value ($) Please Select Please Select - Bank Account Provider Enter Amount ($) Enter Amount ($) Enter Amount ($) LRB Loan Balance or leave blank if none in place ($) Cash and Term Deposit Balance ($) Cash earmarked for short term goals (Y/N) SMSF Total Fund Balance ($) Individual member balances ($) Average/last-year concessional contribution levels ($) Enter Amount ($) Enter Amount ($) Total Fund Balance ($) Average/last-year non concessional contribution level ($) Taxable Component (%) Member Account (% Pension) Individual member balances ($) Average/last-year concessional contribution levels ($) Average/last-year non concessional contribution level ($) Taxable Component (%) Member Account (% Pension) Opportunity - Comments - 32 Copyright Unison Financial Group 2014 Unison will comment do not complete

3 Superannuation Matrix Solutions Report for Smith Family 33 Copyright Unison Financial Group 2014

4 Page 3 - Benefits of this report Page 4 - SMSF Matrix health check snapshot for the Smith Family Super Fund Page 5 - Are you certain you are doing all you can to create more wealth? Page 6 - Key strategies Page 7 - Your trust deed needs updating Page 8 - Corporate Trustee The better way to control your fund Page 9 - Your investment strategy Page 10 - Insurance Protection for your family Page 11 - Estate planning Page 12 - Qualifying Recognised Overseas Pension Scheme (QROPS) Page 13 - Access your super while you work Page 14 - SMSF Anti-Detriment Reserves Page 15 - SMSF recontribution strategy Page 16 - SMSF Contribution Reserves Page 17 - Limited recourse borrowing 34 Copyright Unison Financial Group 2014

5 Benefits of this report for Mr Smith Family Super Fund The benefits of a Self Managed Super Fund Take control of your wealth Create a real legacy for your children Minimise tax Leverage your growth options beyond the normal superannuation fund strategy This report will help you as trustees of your own Self Managed Superannuation Fund (SMSF) with these key objectives: Maximise every opportunity to make more money in your SMSF. Take advantage of all available strategies that may help reduce tax payable. Ensure your fund can protect, pass on and grow your wealth in the way you want, with professional advice to help avoid the hidden traps (because you don t know what you don t know). Be certain you are doing all you can with your SMSF to create more wealth. Not investment advice This document is solely for educational purposes. It in no way represents financial advice or the recommendation of a financial product and should not be relied upon for a decision regarding the acquisition or disposal of any investment. Before making a decision regarding the acquisition or disposal of a financial product, you should assess whether the advice is appropriate for your objectives, needs or financial situation. You may wish to make this assessment yourself or seek the help of an adviser. No responsibility is taken for anyone investing on the information provided in this education series. If you do choose to make an investment, you do so at your own risk. Before making a decision about acquiring a financial product you should always obtain a Product Disclosure Statement (PDS) and consider it carefully. Intellectual property and confidentiality By reading this document you accept that all information, intellectual property, and know-how contained in this document remains the exclusive property of Unison Wealth Management Pty Ltd It is to be used only for private noncommercial purposes and solely only in conjunction with the services provided to you by Unison Wealth Management Pty Ltd. 35 Copyright Unison Financial Group 2014

6 SMSF Matrix health check snapshot for the Smith Family Super Fund Recommendation Trustee structure Review Trust deed currency Review Insurance levels and costs Review Investment strategy and cash weighting Review Property Investment overview Review Tax health check Review Estate planning suitability Review Contribution maximisation strategies Review 36 Copyright Unison Financial Group 2014

7 Are you certain you are doing all you can to create more wealth? You have taken control of your financial future and decided that an SMSF is the right fit for your goals, your values and the way you want your money to be managed. You may not have realised at the time, but you have joined Australia s largest group of self-directed individual investors, controlling the largest pool of assets in the country. It is one of the largest investment clubs in the world. Thinking about your long-term objectives The first step in getting the most out of your SMSF is to think carefully about what you re trying to achieve. The key drivers for many trustees include: 1. Control of your fund and wealth. In the past the only connection you had with your superannuation fund was a quarterly investment report. You had limited control over strategy, investments and structure, with little understanding and explanation. Now you feel more connected to the running and control of the money and where and how it is invested. You want to make better financial decisions. 2. Leave a solid, lasting legacy for your children and family. By including your family in both the running of the fund and the legacy your fund leaves behind, you can be assured that your loved ones are cared for when it counts the most. So it s important that you can confidently articulate where your funds are to go, with the peace of mind that your wishes will be respected. 4. Minimise tax. Having your own fund gives you a range of options to improve the timing of tax payments and create effective strategies to reduce tax as much as possible, using all available deductions within the fund. You can also pay for your insurances through your fund, then make tax effective decisions on the use of any proceeds. 5. Accelerate the growth of your wealth. Many investors now actively build larger super portfolios by borrowing through their superannuation funds. While leverage is not for everyone, it can be powerful strategy, giving you enhanced access to sectors such as direct residential and commercial investment property. 37 Copyright Unison Financial Group 2014

8 Key strategies for Mr and Mrs Smith Self Managed Superannuation Fund Your Trust Deed needs updating Your SMSF Trust Deed is the rule book that determines what you can do and how you can do it, so it s essential to keep pace with legislative changes. Corporate Trustee The better way to control your fund By switching from individual Trustees to a Corporate Trustee, you can simplify administration, protect the fund members from creditors and gain greater flexibility and control in Estate Planning. Your investment strategy Your investment strategy provides the framework for every investment decision the fund makes, so it s essential to review your strategy and ensure it remains compliant and up-to-date. Insurance Protection for your family Insurance is valuable protection for your lifestyle and your family s financial security, ensuring that your fund will have sufficient money to pay you and your beneficiaries, even if you are incapacitated or pass away. Estate planning We can help you ensure that your hard-earned super savings go directly and tax effectively to your loved ones as you intended, without unforeseen regulatory or tax complications. Qualifying Recognised Overseas Pension Scheme (QROPS) Transferring overseas pension benefits to your Australian SMSF can be a rewarding strategy but it s important to adhere to the letter of the law and ensure your fund is a complying recognised overseas pension scheme. Access your Super while you work to help cashflow today A Transition to Retirement or Allocated Pension could help you access a tax-free income now, while still building your super savings. SMSF Anti-Detriment Reserves An Anti-Detriment Reserve could help you reduce or eliminate tax on the accumulated superannuation savings paid to your family if you pass away. SMSF Recontribution Strategy A re-contribution strategy helps ensure that any super you leave behind for your family isn t affected by a hefty tax bill. SMSF Contribution Reserves An SMSF Contribution Reserve could help you maximise tax deductions for personal contributions now, without breaching your contribution caps. Limited Recourse Borrowing Our analysis has shown that your SMSF may be able to diversify its investments by borrowing to invest in direct shares or direct property. 38 Copyright Unison Financial Group 2014

9 Your Trust Deed needs updating Benefits of a current relevant deed Keeping up with legislation that impacts your SMSF It will make a difference Ensure your deed provides power to your legal personal representative to carry out your wishes Be certain that all death benefits are paid to children, including children from a previous marriage Our analysis has shown that it has been some time since your SMSF Trust Deed has been reviewed. Your SMSF Trust Deed is the rule book that determines what you can do, how you can do it, and how current legislation impacts your family legacy, tax planning and wealth creation. Put simply, you might be playing with an outdated rulebook and that could have a big impact you and your family in the future. In fact, the SMSF trust deed can be decisive, even within the Superannuation Supervisory rules, when it comes to determining your SMSF benefits and what you can do with them. Since the Simple Super regime was introduced in 2006, there have been over 20 separate legislative changes that may affect your SMSF. For example, if you want to split super contributions with your spouse, start a transition to retirement pension or even buy vacant land, an outdated Trust Deed may make it hard to carry out your wishes. Your deed needs updating and reviewing regularly, a point emphasised the ATO in their guide for SMSF trustees. Why update your Trust Deed? A modern up to date deed will determine some important issues: If the trustee is empowered to make a choice in benefit payments to dependants and other nominated parties. Whether you can use advanced strategies such as running a business within your SMSF and remunerating trustees. The form in which your benefit can be paid, which is critical if you want to ensure you leave a specific asset in the SMSF to a specific beneficiary. Notes on aspects you would like to review with your adviser. 39 Copyright Unison Financial Group 2014

10 Corporate Trustee The better way to control your fund Benefits of a single purpose Corporate Trustee Makes administration easy when changes occur in fund membership or legislation Helps protect fund members against creditors Provides one trustee for ATO fines if applicable. Our analysis has shown that your SMSF currently has individual Trustees. You may benefit from establishing a company to be the Trustee of the SMSF, otherwise known as a Corporate Trustee. The current individual Trustees can retain control of the Fund by being named as the Directors of the company. Why choose a Corporate Trustee? There are some important benefits in having a corporate trustee, rather than individual trustees: Easier identification and administration of the assets legally owned by the SMSF. Individual trustees have to change, notify and amend all legal records if one trustee or member changes. This is especially costly if your fund owns property assets. Simpler and clearer segregation of SMSF assets now and during estate planning / management. Greater asset protection, limiting liability to the assets of the company, not those of the individual trustees. More secure will and estate planning, ensuring that your SMSF Trust Deed supports your will, so that even if you add new members or lose your ability to act as trustee, you retain power in your SMSF, and your wishes are respected. The ability to minimise any penalties for compliance breaches, by ensuring that the fund receives only one fine for a single, Corporate Trustee, rather than multiple fines for individual Trustees. Notes on aspects you would like to review with your adviser. 40 Copyright Unison Financial Group 2014

11 Your investment strategy Benefits of the right investment strategy Ensure your asset allocation lines up with your strategy Actively review your asset allocation and make sure you re taking full advantage of the options available to you today Ensure you review asset allocation for income and pension purposes Your investment strategy needs constant updating and cannot be left in isolation. Your strategy is more than just a compliance requirement it provides an essential framework for investment decisions to increase members benefits for retirement and ensure that their assets are securely and profitably invested once they retire. It articulates clearly your intention to all stakeholders so there is no confusion as to what you intend and where you intend your assets to be invested. Why review your investment strategy? There are some important reasons to review your investment strategy now: By law, when preparing your investment strategy you are required to consider whether to hold insurance cover for one or more members of the fund, and this consideration needs to be in writing. The ATO makes it clear you should review your written investment strategy regularly to cater for changing circumstances and legislation. A well considered investment strategy demonstrates a well considered plan for retirement, and clearly indicates the assets you deem appropriate. Your investment strategy is essential to optimising your asset allocation to achieve the best investment return for members. Even a small increase annually in your investment return will make a significant difference to your capital base in retirement. Notes on aspects you would like to review with your adviser. 41 Copyright Unison Financial Group 2014

12 Insurance Protection for your family Benefits of arranging adequate Insurance through your SMSF Claim the maximum tax deduction for insurance policies Ensure you either have all your insurances in superannuation or a good reason for not doing so Improve your personal cashflow by arranging insurance without dipping into your own pocket Insurance is critical to the financial security of both you and your family, providing essential cash and support in the event you become sick, disabled or pass away unexpectedly. Do you have the right insurance cover? Do you have adequate cover to: Replace your income if you are unable to work? Repay all debt and leave your loved ones with a capital base to build on if you pass away? Protect yourself against events like cancer, strokes or heart attacks, so you can recover without financial stress? By holding insurance through your SMSF, you can use your funds cashflow to pay the premiums while maximising tax effectiveness by paying for your cover from pre-tax superannuation contributions. Insurance protects your beneficiaries and makes certain that the fund can have enough to pay its liabilities. Insurance can be expensive but inadequate cover can be much more expensive in the longer term. That s why an insurance health check of all your cover both inside and outside super can help you save money now and protect your financial wellbeing in the future. Notes on aspects you would like to review with your adviser. 42 Copyright Unison Financial Group 2014

13 Estate planning Benefits of better estate planning Ensure your estate plan takes into account the important legal differences between SMSF s and other superannuation funds Ensure your SMSF strategies aligns with or differs from your will, as you prefer Effectively plan for the eventual succession of your assets among blended families SMSF estate planning offers opportunities to ensure that the money you leave in your super account goes directly and tax effectively to your loved ones as you intended. There are a number of important issues to consider, including your Trust Deed, the make up of your benefits, your beneficiary nominations, the manner in which you have written them and who will take over the running of your fund when can no longer do so. Why review your estate plan? To ensure your family is protected and your wishes are carried out, it s important to clearly think through these questions during your SMSF health check: Are you 100% certain your superannuation fund will end up in the hands of the correct beneficiaries? Does your Will acknowledge any aspect of your superannuation and vice-versa? Are your nominations legally binding or have they already lapsed? Are you certain your beneficiaries will not be left with a large inheritance tax bill? Estate planning can be very tricky, but done well can be very satisfying and ensure you leave a legacy your family will be proud of in the future. Notes on aspects you would like to review with your adviser. 43 Copyright Unison Financial Group 2014

14 Qualifying Recognised Overseas Pension Scheme (QROPS) Benefits of a QROPS accredited fund Consolidate your super to invest in areas you want today Transfer overseas pension assets to your SMSF for greater control Many people who have worked in other parts of the world, including the UK, are entitled to pensions and lump sums in that country. Transferring these benefits to your Australian SMSF can be a rewarding strategy but it s important to adhere to the letter of the law and ensure your fund is a complying recognized overseas pension scheme. It s also important to get the amount and timing of the funds transfer right, or you could be faced with unintended tax and regulatory consequences. Why transfer overseas pension benefits to a QROPS? Transferring your overseas pension to a QROPS could give you: Better tax rates for your pension benefits. The ability to ensure all your benefits are preserved. More control over how your savings are invested and transferred to your beneficiaries. If you believe you might have any entitlement in this area then please write down as much information you can remember about your working time and bring whatever documentation you may have to the interview with your adviser. Notes on aspects you would like to review with your adviser. 44 Copyright Unison Financial Group 2014

15 Access your super while you work Transition to Retirement Benefits of Transition to Retirement Potentially reduce all tax payable in your super fund Reduce your working hours while earning the same after-tax income Build your super savings faster without sacrificing your take-home pay You may benefit from a Transition to Retirement (TTR) or Allocated Pension within your SMSF today. Your age and circumstances indicate that you should consider this strategy to accelerate wealth creation and achieve your personal lifestyle goals. A TTR Pension and Allocated Pensions can be a very tax effective way to provide for your current lifestyle while devoting a higher proportion of your earnings to building your super. Many trustees are surprised to learn that they can have accumulation and pension strategies running side by side in the fund, which means that if you need to benefit from a flexible pension scheme your SMSF can deliver this to you and your family cost effectively. Why consider a TTR strategy? Potential benefits of a TTR strategy include: The ability to draw an income stream from your superannuation benefits while you work which if you are aged over 60 will be tax free. The ability to replace salary sacrificed income, allowing members of the SMSF to reduce their personal taxation while building their super savings. Potential tax benefits created by triggering the pension phase of your SMSF, with all earnings within the fund taxed at zero percent. If you are currently considering this strategy ensure you get advice on the best steps forward. Notes on aspects you would like to review with your adviser. 45 Copyright Unison Financial Group 2014

16 SMSF Anti-Detriment Reserves Benefits of SMSF Anti Detriment Reserves Recoup tax paid by the fund to the ATO on payment of benefit Our analysis shows that you may benefit from the establishment of an Anti-Detriment Reserve within your SMSF. This strategy is an effective method of reducing or eliminating the significant impact that the 15% tax has had on your accumulated superannuation savings. For example, if you have made contributions totaling $200,000 and have paid contribution tax of $30,000, your net benefit on death to your family is $170,000. An Anti Detriment Reserve can help make up that shortfall, by allowing the trustee to pay beneficiaries an amount equal to the death benefit payment they would have received if no contributions had been levied on contributions made on behalf of the member. Anti-Detriment payments made by the Trustee of an SMSF upon the death of a member will also be tax deductible to the Trustee. Importantly, these payments must be made from a reserve account. Why consider an Anti-Detriment Reserve? Creating an Anti-Detriment Reserve could help you to: Fund the shortfall created by contributions tax, so your family will not miss out. Generate significant tax deductions for the fund. For example, an SMSF that can pay an anti-detriment payment of $60,000 can make a tax deduction of $400,000. Notes on aspects you would like to review with your adviser. 46 Copyright Unison Financial Group 2014

17 SMSF recontribution strategy Benefits of recontribution strategy Save your beneficiaries significant tax on payment of benefits One of the most critical strategies that you can engage in planning for your retirement is recontribution. The aim of this strategy is simple: to help ensure that any super you leave behind for your family isn t affected by a hefty tax bill. Without recontribution, for every $500,000 of taxable component superannuation benefit in your fund, your adult and financially independent children might expect to pay $82,500 in death duties. Just as importantly for those under age 60 who would like an income stream while working, a higher tax free component will mean less tax when withdrawing superannuation before age 60. Why consider a recontribution strategy? The benefits of a recontribution strategy may include: Reducing the impact of death duties on your family. Reducing the tax you need to pay on superannuation withdrawals under the age of 60. The key challenge is to recycle your taxable superannuation balances into tax free balances using the right techniques for withdrawing and re-contributing money back into superannuation. There are clear rules that need to be adhered to in order for your superannuation balance to benefit from this strategy. If you have not already put a recontribution strategy into action, then make this a priority in your discussion with your adviser. Notes on aspects you would like to review with your adviser. 47 Copyright Unison Financial Group 2014

18 SMSF Contribution Reserves Benefits of SMSF Contribution Reserve Double your contributions in any one year to increase tax benefits You may benefit from a Contribution Reserve Strategy within your SMSF. Contribution Reserves allow those who can make personal deductible contributions to superannuation (i.e. selfemployed contributions) to make additional deductible contributions in one year and hold them in a reserve account within the SMSF to carry forward to the next financial year. This can allow you to claim the deduction for the contributions in one financial year, with the contributions being spread over multiple years to ensure contribution caps are not breached. For example, a self-employed person who has one-off excess profits of $50,000 could potentially contribute all the proceeds to their SMSF as a self-employed concessional contribution. Utilising a reserve, the contribution could be allocated over two financial years ($25,000 each financial year) while the total contribution of $50,000 would be deductible in the financial year it was contributed. This would lower the tax payable on profits to a maximum of 15%, so long as contribution caps were maintained. Why consider an SMSF Contribution Reserve? By using an SMSF Contribution Reserve strategy, you may be able to: Contribute more to your SMSF when it suits you, without breaching contribution caps. Gain tax benefits by claiming a higher level of deductions upfront. Notes on aspects you would like to review with your adviser. 48 Copyright Unison Financial Group 2014

19 Limited Recourse Borrowing Benefits of Limited Recourse Borrowing Borrow to invest in shares or property through your SMSF Use a Limited Recourse loan to buy more assets, sooner, without risking the other assets of the fund Use capital in super to part-fund a direct property Our analysis has shown that your SMSF may be able to diversify its investments by borrowing to invest in direct shares or direct property. Why borrow to invest in property? As a result of amendments to the Superannuation Industry (Supervision) (SIS) Act 1993, complying SMSFs are now permitted to borrow to acquire assets subject to certain conditions. The benefits of purchasing property in super will depend on the circumstances of each individual investor. In general, the key benefits can be outlined as follows: Tax deduction for capital payments, interest, and expenses via salary sacrifice Deductibility of interest, depreciation and other expenses in the SMSF Capital gains tax rate of 10% for assets held over 12 months, or zero percent when in pension phase Ongoing income stream of property taxed at 0% when in pension phase The ability to transfer wealth to your children by leaving them a property investment in the future For property investors, the ability to borrow-and-invest in super provides an avenue for purchasing investment property with increased tax effectiveness via salary sacrifice, taking advantage of the unique tax benefits provided by the superannuation structure. Tax Sheltering via Super Assessable Income via Salary Sacrifice The Outside World Assessable Income Lowered via Deducting Net Rental losses Accumulation: 15% Income Tax, 10% CGT Pension: 0% Income Tax, 0% CGT Asset Protection Tax Effective Income Stream: Transition to Retirement Pension/ Account Based Pension/Death Benefits Generational Wealth Transfer (In-Specie Transfer) Need to Consider Preservation and In-House Asset Rules Income Tax Rates 20.5%, 34%, 38.5% and 46.5% (inclusive of Medicare Levy) CGT on New Capital Gain at Marginal Tax Rate. Little to No Asset Protection Could your SMSF stand to benefit from the wealth creation and tax saving benefits that a limited recourse borrowing strategy can allow for? 49 Copyright Unison Financial Group 2014

20 Notes 50 Copyright Unison Financial Group 2014

21 Next steps Our review of your SMSF suggests that it has the potential to build significant wealth for you and your family. By investing the time to optimise your SMSF strategies today, you can create a valuable asset for the future, ensuring a comfortable retirement lifestyle and underpinning your family s long-term financial security. Initial consultation Unison helps you to plan meticulously and take proactive action via a structured 5-step process Clearly define your personal and business objectives. Identify key strategies that will add both immediate and long term value. Lifestyle journal Map out your current circumstances and opportunities. Build a complete picture of your current financial situation. Strategy brief & financial plan Conduct iterative what-if analysis and prepare a tailored financial model. Workshop alternative scenarios and strategy options to achieve your key objectives. Develop a plan with clear recommendations and a comprehensive action plan. Financial plan implementation The 5 Step Process Implement your plan with pragmatic advice and support from our service team. Apply your tailored financial model as an active decision framework in line with your wealth plan. Ongoing wealth coaching & investing Build a quality investment portfolio including direct shares and direct property. Engage ongoing advice to benefit from new opportunities and support for important financial decisions. Advice Investments Superannuation Insurance Property Finance Legal Strategic advice Wealth Creation Cash-flow, tax & debt structuring Retirement Planning Direct shares Actively managed portfolios Industry leading investment research Domestic & international investments Self Managed Establishment Administration Investment Compliance Group Superannuation Personal super Life and TPD Income Replacement Trauma Business Group Schemes General Professional Indemnity Residential Investment Off the Plan Commercial Buyer s advocacy Property Management Development Syndication Residential Commercial SMSF / Investment Development Plant & Equipment Vehicle Estate Planning Property & Conveyancing Matrimonial SMSF Advisory Commercial 51 Copyright Unison Financial Group 2014

22 Date 2014 Name of Superannuation Fund Name Address Address Dear Trustee (insert name), Re: Changes to your SMSF trust deed, documentation and Strategy Review Required We have recently undertaken a thorough review of all of our SMSF s as well as each of the funds respective documentation at no cost to our clients, for two important reasons. This has been undertaken in order to: minimise any financial penalties and costs in terms of non-consistent documents refer Appendix 1, and ensure each of our clients SMSF s are reviewed regularly to ensure they achieve three key things: Establishing a sound investment strategy which underpins the creation of a diversified and well considered investment portfolio of assets, Fully utilising key superannuation strategies designed to leverage SMSF and Tax Law, in order to place the fund in a solid position strategically, and Instigating appropriate Risk Management procedures to contain or reduce the impact of any unforseen or adverse activities impacting the fund, or its members. We have engaged the services of SMSF experts, Unison Financial Group to prepare a detailed report in relation to the above key items. This has been undertaken under strict confidentiality i.e. without disclosing any confidential information, including the fund name. Unison specialise in advising on SMSF s and working with accounting firms to deliver superior strategic advice with the objective of maximising the value of their client s SMSF. Potential Strategy Considerations The key areas of discussion which could improve your funds overall positon include <remove non relevant strategy>: 1. Reviewing the position of your current Deed 2. The current status of your Trustee 3. Your Investment Strategy 4. Your Insurance / Risk Management protection 52 Copyright Unison Financial Group 2014

23 5. Estate Planning considerations 6. Overseas Pension entitlements 7. Transition to Retirement Strategies 8. Anti-Detriment Reserves 9. Re-Contribution Strategies 10. Contribution Reserves I will shortly be contacting you to discuss our findings with the aim of scheduling a meeting with the Trustees, in order to review the documentation and key strategies, which could substantially improve the value and positioning of your Superannuation fund. Yours Sincerely <Accounting principal> 53 Copyright Unison Financial Group 2014

24 Appendix 1: UPGRADING YOUR TRUST DEED TO AVOID PENALTIIES As stated in our letter, in order to minimise any financial penalties and costs in terms of non-consistent documents, we have decided to use a comprehensive range of SMSF documents to assist our clients. These include trust deeds, pensions, SMSF Loan documents, SMSF loans, SMSF Wills, lump sum payments, minimum pension payments and much more. Currently having multiple source documents requires constant review of documents by the firm when undertaking transactions in the fund. For example it is not uncommon for Gadens lawyers, working for Westpac and St George bank to charge a $2,000 SMSF trust deed review fee when a Trustee of a SMSF borrows through them and the documents have not been vetted previously such as the trust deed we now utilise. There is no change to the cost of your service or documentation. We will be discussing the annual trust deed upgrade as the Commissioner of Taxation has stated in his important Guide to SMSF Trustees that as a trustee, you need to make sure the trust deed is regularly reviewed and updated so it complies with the super laws (including changes to the law) and the members needs. However we will now have in place a full suite of documents that specifically tie back in and are linked to the fund s governing rules. As an aside the trust deed to be used with all client SMSF s, is the most strategic deed in the market and some of the additional strategies allowed under this deed that you will be able to take advantage of include: Superannuation Change Blood line death benefits De-facto contributions Pension start up and commencement Strategy Opportunity This strategy now imported into the 2013 NowInfinity trust deed that we use allows the members of the fund to limit any superannuation death benefits payable to bloodline dependants and non-dependants only - either directly through the fund or indirectly via the estate of the deceased member or testamentary trust. A number of clients have already thought about and used this important strategy which prevents the passing of your superannuation benefits outside your bloodline. The Commissioner now allows a member or other party to meet an expense of the fund and treat it as a contribution. A final ruling issued recently has set down laws in relation to the tax exemption of pension assets and when it applies and more importantly where the tax exemption is lost. The NowInfinity trust deed ensures that the pension continues as does your membership to the fund even on death where your Executor continues it on in your absence an important mission. 54 Copyright Unison Financial Group 2014

25 Where a member loses their mental capacity to act as a trustee or director of a corporate trustee of the fund, Loss of Mental Capacity Family Law or De-Facto proceedings removal of member Insurance Strategy Requirements Abolition of the Excess Concessional Contributions Tax their legal personal representative is automatically appointed to take their place in the fund ensuring security, continuity and no legal fights over their superannuation benefits. The Trustee of the Fund can remove a member of the fund subject to Family Law or De-Facto legal proceedings if it is in the best interests of the Fund to do so. This allows parents to bring adult children into their Fund but still ensure that their SMSF assets are safe if the child divorces or is subject to a de-facto assets proceeding. The Trustee of a SMSF must review the Fund s investment strategy regularly and as part of that review the Trustee must consider the insurance needs of all of the Members of the Fund. From 1 July 2013 pre-tax contributions made on behalf of a member of a fund by an employer or self-employed is not subject to excess concessional contributions tax of 31.5% but taxed at a member s marginal tax rate less 15%. These new rules have been imported into the 2013 deed. Quite apart from the above a couple of the most important announcements made by the Commissioner that impact the majority of our clients and thus need urgent action, including a deed upgrade are: 1. SMSF Wills not Binding Death Benefit Nominations The Commissioner and the Courts have said that the superannuation fund trust deed not a binding death benefit nomination is all important in the destination of a deceased member s death benefits. A recent case has seen a sister take all of the father s superannuation benefits rather than share 50/50 with her brother as required under the father s will because the father s will had no validity in terms of his superannuation benefits and the binding death benefit nomination was subject to the remaining trustee his daughter s discretion. The NowInfinity trust deed that we use allows a binding SMSF Will which sits alongside the trust deed and binds the trust deed on what is to happen with a deceased member s superannuation benefits and in some cases the assets of the fund on the member s death. SMSF Wills are secure, safe, certain and compliant with the superannuation and death benefit laws. 55 Copyright Unison Financial Group 2014

26 2. Auto-Reversionary Pensions to prevent CGT on death The Commissioner has released a ruling that states on death a member s pension dies along with the member. As such the tax exempt pension assets must be transferred back to the deceased member s accumulation fund and any payment from the accumulation fund will attract 10% capital gains tax. However with a simple auto-reversionary pension a continuation of a member s current pension on death will see no CGT on death if a lump sum payment is made from the continuing pension member s account. Some of our clients with simple one member pensions have already gone about converting their pensions to auto-reversionary pensions to escape CGT on death for their family. 3. Appointing a Guardian on Death to secure your SMSF Will The new trust deed offered to clients was upgraded in January 2013 to introduce the ability to appoint a guardian to protect a deceased member s SMSF estate planning wishes through an auto-reversionary pension or SMSF Will. The Trustee of the Fund gives up their power in favour of the Guardian in relation to the deceased member s benefits only. 4. How to Upgrade The deed that we have chosen for our clients to ensure that they remain current and compliant has been written by Australia s leading SMSF expert and Chairman of the Australian SMSF Members Association - Grant Abbott the NowInfinity Trust Deed. We have reviewed it extensively and consider it to be the leading SMSF trust deed in the market as well as having access to the extensive technical resources of Grant Abbott and NowInfinity. Accordingly we will discuss this particular Deed during our meeting as a starting point for the further review of your SMSF. 56 Copyright Unison Financial Group 2014

27 Suggested Client Contact Script Accounting firm principal makes the client call at all times Principal is familiar with the SMSF details Objectives: to confirm the client will agree to meet with firm and Unison in order to discuss their SMSF confirm the meeting date and time. Script as follows: Hi <client> I m calling about that letter we sent you about your SMSF. Q: have you had a chance to read the letter? Gauge feedback as it could table a number of items which would be useful in any meeting / work required. Given the importance of your SMSF, and the need to make sure it s working for you the way it should I.e. to increase your wealth - we ve been working with a firm who specialises in SMSF s and assists accounting firms and their clients with a thorough review of the fund. We felt it s important to be on the front foot and do this for all funds including yours - at no cost to you or your fund. We ve also maintained confidentiality. We also wanted to make sure we are up to date with all regulatory requirements, and never have to worry about any ATO issues for you (i.e. penalties etc) and to make sure we re giving you the advice you need. I think it s important that we meet and review the report. I ll also have one of the Unison Directors attend, so we can cover the key aspects of the report with you, consider their expert thoughts on the how we can improve on any area, and if we need to make any changes. What day / time would you suit you to meet? Potential Objections: Do I really need to? Absolutely given the importance of the fund, the costs, etc we really need to make sure we help you maximise its value. I wouldn t suggest it if I didn t think so. Too Busy We re talking about 45 mins it s important enough to at least meet with and discuss one of your most important assets. Think the fund is doing OK It might be. But we want to make sure. It won t cost you anything and we will be able to discuss some possible strategies which could further benefit the fund results. What will it cost? The meeting will cost absolutely nothing. Who is Unison? Unison are one our business partners. We have been working with them now for several years. They ve assisted a number of clients improve their financial position and we have absolute faith in them. What is Unison trying to sell? Nothing. They are specialist in SMSF advice and work with many accountants in a similar way to us. 57 Copyright Unison Financial Group 2014

28 SMSF Matrix Unison Discovery Suggested Client Confirmation Hi <Client> As agreed, we have confirmed our meeting for: Date Time Location The purpose of the session is to review how we could assist you to gain greater long term value from your SMSF. I will also invite <adviser / Unison Director> to join us. <adviser / Unison Director> has worked with many clients in a similar situation and can discuss firsthand how he and Unison can help us. Optional - I have also attached some material for your review about the services Unison provides. I look forward to catching up. <Accounting Principal> 58 Copyright Unison Financial Group 2014