Can I open up a SMSF with TPD and draw income from it?

I posted a lengthy thread earlier that did not get replies - probably due to the length and complexity.

A few brief questions:

I was medically retired with Total Permanent Disability and am 51 yrs old. I cashed out my old Super account and later reopened a small Super account.

Can I create a SMSF and move my funds and investments into that and draw an income stream via a disability pension due to TPD? Can I still actively invest whilst drawing an income stream?

If I become a non-resident, will that affect my investments and income being created through my pension? (I would be in pension phase due to TPD).

Thanks.

 

I would suggest seeking advice from a tax agent.

In response to your last question, off the top of my head you have to be a resident to have a SMSF, or > 50% of SMSF funds have to be controlled by residents I believe. So the answer to that one is likely to be no. Maybe it’s different if you set up a SMSF as a resident and then become a non-resident, I don’t know. You’d need a good tax agent.

 

That's where I hit a wall. I have my tax done through HR Block but it's really just a basic service to do my tax returns.
I called my Super Fund and they put me onto an adviser a few days later who after chatting said I need a city comprehensive adviser. But he's attached to Host Plus and fees %2500-$3000. And I dare say there will be bias against external Super structures outside Hostplus.

I also got referred (via a forum) to a financial adviser. On talking, it seems I may end up being offered to sign up to financial investment services/funds.

So I am in a bind. Tax agent? Never used one. I only ever thought 'financial adviser's. So there's a difference? Who do I choose and how do I know if they specialise in this?

Just want unbiased advice with no ties to financial products that they get commission off me. So and hard to find anyone.

 

What about a lawyer experienced in super structures?

 

Thanks. So far been told, financial adviser, tax agent, lawyer. It seems an area that if there was someone who had all of these all bundled into one would be great - with no commission bias that financial advisers spruik.

 

Commissions were banned in 2014

 

Generally financial planners use a tax agent to do the tax aspect of the work. There are some financial advisers who have a tax background and can do the work themselves, but these are an exception rather than the norm.

Trailing commissions were banned under FOFA reforms.

There’s a lot of financial planners doing fee for service work these days, which is probably what Hostplus were referring to when they quoted $2,500 to $3,000.

I think it all depends exactly what you are wanting to achieve exactly whether you use a tax agent or a financial planner offering some product advice and investment strategies as well.

First session with a financial planner is generally free and if you think they are a suitable match and like what they are proposing, they will issue a Statement of Advice which will include their advice and recommendations in writing... and also set out the fees payable.

I got the impression you were wanting to look after your own investments, you were just wanting advice on injecting money into your super and looking at the most tax effective way to structure your super?

 

Thanks. Just trying to work out multiple issues.
Yes, advice relating to injecting money into Super and structuring.

Also, investments - have been investing DIY in shares but not coping with the stress of crashes and losing money - buy/hold strategy not easy. That's another thread.

 

I think you’re probably best off with a financial planner then.

Do you know anyone who’s used a financial planner and had a really good experience?

You could try looking for one on PIFA

I’m also happy to share experiences of friends and family members who have used financial planners.

 

A non-resdient probably wont want to have a SMSF. A SMSF must always have a Resident Director OR trustee who is also the member.
At age 51 you cant obtain a super pension as you dont fulfil a condition of release

 

Thanks re: SMSF. I knew an expat non-resident overseas and he said he has a SMSF but he is in pension phase, accumulated when he lived in Australia.

I am Total Permanent Disability (TPD), as per injury payout and previous full withdrawal from another Super fund, so according to ATO website and other unofficial advice I thought I qualified for it.

 

1. Dont beleive all a friend tells you. A non-resdient would need to surrendur almost ALL control under a enduring POA
2. Get "official advice". DBA Lawyers would be recommended and for the non-resident matter. Its not something most advisers will touch with a barge pole. If you withdraw a TPD lump sum and want to recontribute it that could be a concern.

 

Thanks. I had a review with a Superannuation advisor today who did not have the expertise to specifically answer legal details relating to SMSF that I wanted.

I have ascertained that since I with drew my funds from Super and wanted to deposit funds back into a public Super account, to draw a pension from, I need to go through the same process I did before where I see two doctors that the Superannuation fund would appoint likely and I need both to confirm again that I am TPD. Then I have 12 months to initiate a pension which is a minimum 4% per year ( i read that the government/funds wants to/has reduced that to 2%).

With a SMSF, I have spoken to an accountant and also have messaged DBA lawyers as you suggested. The accountant seems to believe that since I have so many connections with Australia in the form of a house that I rent out, bank accounts, shares, etc that I would still be deemed a resident. However, I would want a lot more confirmation as to any tipping points in residency status before I even considered the SMSF route. Of course each individual will have unique circumstances as I see there are different tests to determine residency status. I would need 100% confirmation to proceed.

 

You could consider applying for a private ruling on the residency, but changing circumstances may mean it might no longer apply.

 

SMSF requirements are very different to that of tax concepts for tax residency. Not being "ordinarily resident" can be the super concern. I would be seeking the views of DBA on this and the capacity of a TPD based pension. If you are not resident I dont quite understand why it needs to be in super at all. There could be ways to structure the monies so it is tax free in Australia AND not involved in super etc