708 certificate for a SMSF

Discussion in 'Accounting & Tax' started by thesuperman, 16th Oct, 2021.

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  1. thesuperman

    thesuperman Well-Known Member

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    Is it possible for the Simpsons Super Fund to get a 708 certificate to qualify as a wholesale investor?

    Homer, Marge & Grandpa Simpson are directors of Simpsons Pty Ltd atf Simpsons Super Fund. Homer & Marge each have a 708 certificate issued by their accountant. Grandpa Simpson doesn't because he doesn't qualify.

    The SMSF does not have net assets over $2.5mil or gross income above $250k/year for 2 years. The SMSF is controlled by Homer.

    Homer has read the following info but is keen to see what other people's experiences has been:

     
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  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yes. However the test is the individual trustee and EACH and ALL must respectively all pass the test. eg Husband and wife each must have a share of net assets > $2.5m etc. The offer is to the individual in capacity as trustee or Director.

    Sophisticated investors: precisely what are they?

    It is likley that the consitution of the trustee company needs review to determine if Grandpa is required to have axcertificate if he is not included in the control and vote for the purchase. which according to Corps Act s127 needs just two Directors to be a valid act of the trustee company when signed and also a likley qurom of the Directors to vote. Legal advice may be needed.

    Its harder and harder to access these certificates with many insurers refusing to cover the work.
     
    Last edited: 18th Oct, 2021
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  3. ChrisP73

    ChrisP73 Well-Known Member

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    Not relevant to the specific question about SMSF trustees, but from the link you provided the application of the asset test to joint assets seems like it might be troublesome.

    Counting assets held as joint tenants
    This is perhaps more complicated because on its face each joint tenant has an interest in the entire asset. For example if a couple holds an asset worth $5million as joint tenants then they each own 100% of the asset. In this simplified example they would each satisfy the Assets test and would be capable of being sophisticated
    Ironically, the example provided doesn't actually catch the issue. If the couple held the asset as tennants in common they would also satisfy the asset test. If the joint asset held is worth 2.5M then the conversation is a little more 'interesting'....

     
    Last edited: 18th Oct, 2021
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    And this is why more and more PI insurers refuse to allow accountants to issue a certificate as the appraisal is tied to flinancial advice. So unless the advier is also a licensed financial adviser its a issue. Can be costly and many advisers dont have the elgal support. It needs a lawyer to be the accountant...who needs to be a financial adviser also. In do know of such professionals and they are rare and charge a lot. Does your head in. Then the appraisal of net assets also needs to consider liabilities and given guarantees etc then this also must count. So the accountant needs to consider present market values and also liabilities. Its a costly and time consuming process. (ie Net assets)

    TIC vs JT has no specific implication. It would be mutually exclusive to have a (individual) trustee own where hubby had 40% TIC and wife had 60% TIC if they are both trustees. Instead that interest is typically JT or TIC in equal interests as there is no beneficial interest.