SMSF Trustee Services Guide An explanatory document for SMSF Trustees 1
Contents Table of Contents Introduction...1 About Us...1 Our People...1 SMSF Overview...2 What is a Self Managed Superannuation Fund (SMSF)?...2 The Main Participants...2 The Fund...2 The Trustees...2 What are the trustee responsibilities?...3 The Members...3 The Administrator...4 The Financial Adviser...4 The Auditor...4 The Regulator...4 SMSF Alliance Support...5 Fund Establishment...5 Transferring an Existing Fund...5 Your Fund Operating Account...6 Choosing Your Investments...6 Assets Generally Not Permitted in SMSFs...7 Administration & Compliance Service...8 SMSF Alliance Fees...10 Invitation...10 Competitive Fees...10 Fees and Services...11 ABN 71158712737 Reg Tax Agent No 28440009
Introduction About Us We provide comprehensive Self Managed Super annuation Fund services. We are an independent administration solution for trustees who want the choice and flexibility of a self managed super fund without the burden of running it day to day. All work is performed in Australia by Australians. We do not provide investment advice. Our focus is to provide a high quality service at an affordable price with the innovative combination of dedicated specialist staff and the latest technology. With ongoing administration fees generally from $564 to $1,860 per annum we disprove the adage that quality is inextricably linked to cost. We also provide regular newsletters, ongoing technical advice and specialist SMSF outsource support services for financial planners, stockbrokers and accountants who should refer to our Adviser Services Guide. Our People We care about the relationship we have with you. We are acutely aware that, in selecting us to administer your SMSF, you are depending on us to provide you with peace of mind and practical support. We regard this responsibility as the cornerstone of our business and of our commitment to you. Our General Manager, Amanda Miller, has over 10 years practical SMSF experience. She holds a Diploma of Financial Services from the Association of Superannuation Funds of Australia, the Certificate of Superannuation Management from Macquarie University and has completed the University of Adelaide SMSF course with distinction. Amanda is a member of Australia s peak SMSF body, the SMSF Professionals Association of Australia, and holds the respected SSA designation from that organisation. Amanda is a registered tax agent and an associate member of the Tax Institute. Our Head of Technical and Strategic Alliances, Debbie Thomas, has over 11 years practical experience in SMSFs with a particular focus on borrowing, deceased estates, pensions and associated trusts. Debbie holds a Bachelor of Laws from the Queensland University of Technology and is a member of the Small Independent Superannuation Funds Association (SISFA). She is also a member of Australia s peak SMSF body, the SMSF Professionals Association of Australia, and holds the respected SSA designation from that organisation. 1
SMSF Overview What is a Self Managed Superannuation Fund (SMSF)? An SMSF is simply a superannuation fund established by individuals who wish to control their own superannuation experience. They are flexible vehicles that give you the ability to invest your super directly into a wide variety of assets, including shares, managed funds and real estate. SMSFs also allow members more influence over the way their superannuation is managed and the benefits it provides but it comes with a number of obligations that need to be fulfilled including the primary obligation that the SMSF be operated for the sole purpose of providing retirement benefits to its members. Even though an SMSF can have up to four members approximately 98% of all SMSFs have only one or two members. The members may be individuals, families and business partners. The key things to remember are: the money in an SMSF is held in trust for the members of the fund (you) an SMSF and its assets are controlled by trustees (you) the fund must be run in accordance with the superannuation and tax legislation the SMSF receives contributions and rollovers and trustees decide how the money is invested when a member is allowed to access their super, the trustees can pay this money as a lump sum or as a pension or both. We recommend that you seek professional advice for further information on these obligations and what you need to do to fulfill them. Some information is available on our website including links to some useful ATO publications. We are also available to answer your SMSF enquiries. The Main Participants The Fund A self managed super fund must have the following characteristics: it can have up to four members all members of the Fund must be trustees of the Fund or directors of the corporate trustee and there are no other trustees or directors (certain exemptions are available for single member funds and where valid alternative appointments have been made) no member is an employee of another member unless they are related the trustees or directors are not paid for performing their duties as trustees or directors. Certain people may be disqualified from acting as a trustee under the law. Minors (under 18 years old) and other people who are under a legal disability cannot be fund trustees however their personal legal representative can act in their place. You should seek professional advice in this regard. You will need to establish a trust for your Fund that meets the SMSF rules under the law. We can assist in this regard. The Trustees As trustee, you have sole responsibility for the operation, management and compliance of your Fund, including the lodgement of tax and other regulatory returns and the preservation and payment of benefits. This is a complicated task, with serious implications if you get it wrong. As trustee of your Fund, you are required to understand your responsibilities and ensure that they are properly discharged. 2
The Main Participants There are a number of covenants contained in superannuation law that impose minimum requirements on trustees and are deemed to be included in the trust deed of every regulated fund. These covenants reflect the duties imposed on a trustee under trust law in general. The covenants bind trustees to: act honestly in all matters exercise the same degree of care, skill and diligence as an ordinary prudent person would exercise when dealing with the property of another ensure that powers and duties are exercised in the best interests of all the Fund members keep the assets of the Fund separate from other assets (e.g. the trustee s personal assets) retain control over the Fund so that the trustee s powers and functions are not hindered develop and implement an investment strategy that meets certain standards allow members access to certain information Each trustee of a SMSF is also required to complete a Trustee declaration form issued by the Australian Taxation Office (ATO). The declaration aims to ensure that new trustees (or directors of corporate trustees) are aware of their duties and responsibilities under superannuation law. What are the Trustee Responsibilities? Trustees normally have responsibility for all aspects of running the SMSF, including: maintaining all records of the SMSF establishing and implementing the SMSF s investment strategy complying with all regulations under the SIS Act lodging tax and regulatory returns, and keeping up to date with changes in the law to ensure the fund remains compliant. The penalties for not complying with all the laws and regulations can be severe. These include applying higher taxes on the SMSF, freezing fund assets, fines and criminal prosecution of trustees. We assist you in your role but you will still remain responsible at law for the performance of your duties as a trustee. We ll assist you in the following key areas to make your role as trustee much easier in the areas of: Fund establishment administration compliance reporting including preparation & lodgement of the financial and taxation returns assistance with your understanding of the regulations and your responsibilities generally. We will not provide investment advice but we recommend you contact us if you have any doubts as to the legal standing of your proposed investment. This is particularly so if it involves investing into, with or to an associated party. The Members You must operate in two capacities, one as trustee of your Fund (or the director of the trustee company if the trustee is a corporate entity) and the other as a member. We can help you to perform the trustee role. The key difference between SMSF s and other private superannuation funds is that all of the members of a SMSF must also be trustees, except in the case of single member funds. Special rules apply to single member funds as follows. 3
The Main Participants SMSF Overview The member of a single member Fund must be: the sole director of the trustee company or one of only two directors of that company where neither the member nor the other director are in an employer/employee relationship with each other unless they are related. If the single member SMSF does not have a corporate trustee it must have two individuals as trustees. The member must be the trustee with another person who is not an employee unless they are related. The Administrator SMSF Alliance is a specialist SMSF compliance and administration bureau. We ensure that your Fund s establishment and administration runs as smooth as possible which means we handle most of the paperwork associated with the administration of your Fund. SMSF Alliance does not provide investment advice or investment facilities however the service we provide has greater accuracy, immediacy and cost effectiveness if your investments can be found on our current download list available on request or from our website at http://www.smsfalliance.com.au. We do not receive commissions or fees of any description from the investment options on our download list. Our preference for them is simply to enhance your administration experience. We provide free assistance with technical matters and queries as required. We issue a regular educational newsletter which you are welcome to subscribe to. The Financial Adviser Your financial adviser will usually be actively involved with your Fund and, as such, our services can assist them in providing their service to you. Typically, unless we are notified to the contrary, our contact point for your Fund will be your financial adviser who will assist us with the flow of information we need. The Auditor All SMSF s are required to have their financial statements and compliance records audited each year by an approved auditor. The auditor must notify the SMSF trustee of any concerns regarding the SMSF s financial position or compliance with the law. If the auditor is not satisfied that the trustees have taken appropriate action to rectify any issues raised, the auditor must inform the ATO. Unless advised to the contrary we will engage our default auditor on your behalf. The Regulator As trustees of the SMSF, members maintain complete control over the SMSF investments and the benefits paid as well as being responsible for the ongoing compliance of the fund. The governing legislation for SMSFs is the Superannuation Industry (Supervision) Act 1993 (SIS), known as the SIS Act. Provisions of the Tax Act are also relevant as is the Corporations Law if a corporate trustee is used. The Australian Taxation Office (ATO) regulates SMSFs via the SIS Act and offers extensive advice on whether an SMSF may be suitable for you via their SMSF publications. Some of these are available from our web site. The ATO has the right to audit SMSFs for tax compliance and to ensure that the SMSFs are being used to effectively provide for retirement. 4
SMSF Alliance Support Fund Establishment Expert guidance and professional service are never more valuable than when you re first establishing an SMSF. Getting off to a great start is vital because it can make everything else easier in the long run. We provide a comprehensive Fund Establishment Kit and register the new SMSF with the ATO. The kit includes: our highly flexible & compliant Trust Deed trustee consent forms application for an Australian Business Number (ABN), Tax File Number (TFN) and GST if applicable investment strategy sample membership applications forms pro forma member Product Disclosure Statements binding death benefit beneficiary nomination forms third party authorities to allow SMSF Alliance access to bank and investment information We will assist you to rollover benefits from other superannuation funds if you wish. We will also search the Government s Lost Super website to see if you have any other super accounts you may have forgotten about and assist you to roll these into your SMSF as well. You can be confident that by using our service your SMSF will be correctly established with all required documentation and authorisations along with the answers to any questions you may have. To initiate our service an electronic order form is available from our web site. Once commenced it may be revisited for up to 28 days if you wish to add anything further. If you have not completed it within this time frame it will be automatically deleted. It s quite easy to complete but if you d prefer a paper copy or any other assistance please contact us. Transferring an Existing Fund We realise that the prospect of transferring the administration of an existing SMSF can be daunting. We take the stress away by working with you and any other parties concerned to transfer the fund records with the minimum of fuss. We will deal directly with your previous administrator/accountant if you wish to give us permission to do so. We will prepare all the documentation necessary for transferring the SMSF including: ethical letters checking to see if the current deed needs upgrading pro forma member Product Disclosure Statements binding death beneficiary nomination forms change of address and banking instructions documentation third party authorities to allow SMSF Alliance access to bank and investment information In addition we will complete the previous year s return for a special discount price of $1,132 though we do reserve the right to review this if the fund is unusually difficult or requires significant compliance rectification. We may also assist if the existing fund administrator is imposing leaving penalties or if nonrefundable payments for last year s services has already been made by absorbing these costs subject to discussion with you. To initiate the transfer process you merely need to complete the electronic order form available from our web site. Once commenced it may be revisited for up to 28 days if you wish to add anything further. If you have not completed it within this time frame it will be automatically deleted. It s quite easy to complete but if you d prefer a paper copy or any other assistance please contact us. 5
SMSF Alliance Support Your Fund Operating Account Your Fund Operating Account operates as the cash hub for your SMSF and is central to our ongoing monitoring and reporting. To assist us with processing your Fund as efficiently as possible we suggest you use an account from our downloadable menu. All contributions and rollovers are paid into the Fund Operating Account. All lump sum and pension payments to members are paid from the Fund Operating Account. All investment transactions are settled to the Fund Operating Account except where brokers require a specific trading account. We monitor the Fund Operating Account transactions and will request further information and/or supporting documentation for transactions as required. To ensure your SMSF records are current (and online reports accurate) you, or your adviser, will need to respond to these requests as soon as possible. You will be required to complete a Direct Debit Authority to allow us to deduct fees and other relevant expenses from your Fund Operating Account unless your adviser is funding our service for you. You will also need to complete a declaration to allow us to receive electronic transaction feeds for the transactions in your Fund Operating Account. Choosing Your Investments As Trustee you have the discretion to decide what your SMSF invests in. You will need to ensure that all investments are consistent with the SMSF s investment strategy and trust deed and do not breach the SIS Act or other laws. You are encouraged to ask us should you be unsure as to the legal status of a proposed investment. The following investments will generally be acceptable: Australian shares and other listed securities such as listed property trusts and exchange traded funds managed funds direct property and bank deposits Particular attention needs to be given when considering investment in the following: Collectables (for example, such as artworks, precious metals or gems) derivatives, warrants and other structured products We recommend that trustees seek professional investment advice and consider the potential income and growth as well as the risks, liquidity and diversification of the portfolio and whether it is consistent with the overall investment strategy before making any investment. Our online reports provide a snapshot of your investments at any time. 6
SMSF Alliance Support Assets Generally Not Permitted in SMSFs Superannuation law does not prescribe what an SMSF can invest in however trustees must ensure that all investments are made with the sole purpose of providing for the retirement of members. There are certain investments that would generally not be acceptable through an SMSF. These include: investments that deliver benefits to a person today rather than in retirement loans to SMSF members or their relatives assets with a charge over them a business to be operated by the SMSF or its members, and non-arm s length transactions. Your choice of investments will determine both the cost and immediacy of the ongoing administration we will provide. 7
SMSF Alliance Support Administration & Compliance Service Every SMSF is different though most share a broad range of investments which are often available from electronically downloadable sources. For these SMSFs we offer a service standard encompassing a high degree of automation and an associated reduction in cost. We input on a daily basis and provide access to comprehensive online reporting on both the investment portfolio and individual member entitlements. Investment portfolio reporting includes the features commonly expected and widely available but our member reports are designed to promote proactive planning by providing daily details on items that are generally only identifiable when the end of year accounts are completed. These include; Member accumulation and pension balances with Tax components Preservation components Insurance Reserves An ongoing record of Pensions paid versus the mandatory minimums or transition to retirement maximums Contributions made against the Caps Variations in investment strategy against your model portfolio 8
SMSF Alliance Support When you select investments that we can download we will receive most of the information we need to process the ongoing administration of your SMSF electronically though we will need you to retain all your transaction records in case they are required by the auditor. Where you have selected investments that are not on our download list then we generally need to be the mailing address for either original or duplicate information for input and audit purposes. We will return all original information to you on a regular basis. You will also need to let us know the details of any rollovers, contributions or withdrawals you make so that they may be processed. We will take care of all your financial year reporting requirements, including liaising with auditors and lodgement of the SMSF Tax and Annual Return with the ATO. 9
SMSF Alliance Fees Invitation We would be delighted to work with you as an integral part of your SMSF success. Should you wish to discuss our services further please feel free to email Debbie Thomas at - dthomas@smsfalliance.com.au or give us a call on 1300 809 933. Competitive Fees Our online super service is a complete SMSF administration solution. We do not provide investment advice. Neither do we receive any incentives from any investment source. Investments are on our downloadable menu only because we can receive electronic transactional information that can be downloaded to our systems. Fees are payable in monthly instalments on or shortly after the 7th day of each calendar month from the month in which the SMSF is registered with the ATO (for new fund establishments) or the beginning of the relevant financial year (for existing fund transfers). The fee is not pro-rated for part months but is for part years, e.g. a fund commencing on 15th May would be liable for 2 month s fees. The fee will be determined monthly based on the asset value and existing investments at the end of the previous month except in the first month of a new Fund or when there is a nil balance when it will be based on 1/12 th of the yearly minimum fee ($47). Where a Fund wishes to transfer to our service but is being subjected to non-refundable fees or leaving penalties from the previous administrator we may provide a special first year discount to assist (see Case study 5 on our website). Each such case should be referred to us for individual consideration. The audit fee is payable annually prior to the audit. Other fees are payable as incurred. 10
SMSF Alliance Fees Fees and Services New Fund Deed Establishment Description Corporate Trustee (Special Purpose) Existing Fund Establishment Completion of prior years accounts Corporate Trustee Maintenance Service Registered office, shareholding or director changes, prepare and lodge Annual Return Ongoing Administration & Compliance Full Service for accumulation and pension funds, 24/7 online access or yearly, financials, tax returns, etc. Additional Fees Real estate, borrowings, associated entities, in-house assets, collectables, derivative trading accounts, assets requiring currency conversion Other non-downloadable investments excluding managed funds Altering and resubmitting trustee approved audited accounts due to changes required by the trustees Ancillary Services 11 Fees $273 (optional if supplying own deed) $340 $613 $823 (optional) $0 $1,132 p.a unless excessive work required. Nil if non-refundable fees paid to previous administrator. We would rather perform this work at no charge than wait until the previous administrator completes it. $175 per annum excluding ASIC fees Min of $47/mth & max of lesser of 1.1% or $1,860 p.a paid monthly e.g. new fund in June pays $47 for the year unless balance over $51,000 $227 per annum per investment $113 per annum per investment $227 plus any additional audit fees Actuarial Certificates estimate (if required) $276 for account based pensions $583 for defined benefit pensions Audit Fee $250 - $600 but generally $412 Yearly BAS (Quarterly if mandatory) $227 per annum Limited Recourse Borrowing Documents $1,360 Direct Debit Dishonour Fee $11 per event plus bank charges Pension Commencement $340 per pension or $464 per couple Recontribution or Salary Sacrifice Pension Restart $113 if we commenced existing pension $340 if we did not commence existing pension Trust Deed Upgrade $340 Fund Wind Up $1,133
Phone 1300 809 933 Fax 07 3319 6434 Email customercare@smsfalliance.com.au PO Box 371, Stones Corner QLD 4120 433 Logan Road, Stones Corner QLD 4120 Providers of superior SMSF services Builders of enduring personal relationships www.smsfalliance.com.au 12