Howto SMSF?

Discussion in 'Superannuation, SMSF & Personal Insurance' started by d01, 19th Oct, 2020.

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  1. d01

    d01 Member

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    Hi guys,

    has anyone recently setup a SMSF? Do you have any tips? How long does it take? Is it straight forward? I am relatively new to all of this and it looks like this forum, not sure how I found it but I am glad I did, is full of people who know stuff so if there is anyone who could help I would be grateful. I think this could be the next step in taking some of the control back.

    thanks

    tomas
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Best tip I've got, get a professional to do it. SMSF strategies are incredibility complex and messing it up can have significant consequences.

    Many accountants will assist, but I'd go with a specialist. In my own case I got help from @Redwood.
     
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  3. Paul@PAS

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

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    I do them regularly. There are many complications and issues. The very first question is SHOULD you be considering a SMSF and what are all the impacts. A SMSF for low balances could be incredibly expensive and lead to enhanced risk (ie losses) and poor performance. A SMSF with $100K will largely cost just as much to operate and maintain as a $1m SMSF.

    Control doesnt mean better. Super funds pay some very experienced people to manage super assets and risks. And diversify.
     
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  4. thydzik

    thydzik Well-Known Member

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  5. Trainee

    Trainee Well-Known Member

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    Back up a bit. How much money will be in the smsf? Why do you want to create one and what will it invest in?
     
  6. d01

    d01 Member

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    I think by the time the SMSF could be setup there would be 200k. I am still not entirely sure if it is something for me. Yes it's easy to leave it up to the fund to do all the choices for you but maybe by being able to do some choices yourself you could be better off. I am currently with Australian super and there are some choices so it's not entirely rigid but there no option for what I wanted to do hence I am trying to find out if it's worth it and how long the process would take. (still tossing between IP, Shares or bullion)

    thanks

    tomas
     
  7. Paul@PAS

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

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    The...or.,.comment is a concern. Is bullion an investment or a one off punt?
     
  8. d01

    d01 Member

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    Hi Paul,

    I would probably want to allocation some percentage to precious metals accepting the risk that there is potential no growth. Is that a problem with an SMSF?

    thanks

    tomas
     
  9. Paul@PAS

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

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    Yes. Not in acquisition but in custody and securing this. I would recommend a bullion dealer that safeguards and stores and can certify title and existence. Its an audit matter. If you take physical custody they cant prove its the SMSF investment, if its fake, if its at risk of loss in your home and more. They will likley qualify the opinion and advise the ATO of the concern. I recently had this with a client with gold who phsically had the gold bars in a safe at home and this was merely commented on by the auditor and not reported as he planned to dispose it anyway. BUT if he had bought gold coin he would have breached the rules and the ATO would have been notified. Why ? One is a commodity (bars) but the coin is a collectable and its price is not solely dictated by weight. It cannot be stored uninsured at home. The trustee (not homeowner) must insure it within 7 days.
    Collectables and personal use assets

    The fund would also need to ensure its deed allows the investment category / class (Is metal a commodity ? No....The deed may need to mention precious metal) and the investment startegy is updated for the investmnet and its expected limits and outcomes.

    Bear in mind too that metals are generally priced in USD terms for the spot price. Hence there is a exchange rate risk and risk management statements may be involved. If you track and monitor the Aud spot price it could be all you need in the investment strategy.

    I just looked at our preferred deed and it appears to permit metal in several ways

    1. A clause which permits any asset which is traded or exchanged on any market directly or indirectly
    2. Any investment that meets the sole purpose Test and sections 66, 67, 84,85 and
    109 of the Superannuation Industry Supervision Act 1993;
    3. A general permissive clause which is limited to the investment strategy and super laws (eg s66 SISA and others)

    Any other investment including a prudent investment under Trust Law;
    provided that the acquisition, investment and holding of the Asset is in accordance
    with the Fund’s or Superannuation Interest’s Investment Strategy whichever is
    relevant and in addition, the acquisition, investment and holding of the Asset does
    not breach the Superannuation Laws
     
    Last edited: 21st Oct, 2020
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  10. d01

    d01 Member

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    Thanks Paul,

    for the bullion i was considering was pool allocation so it would be stored at the bullion dealer so in theory this could be possible.

    But this whole idea seems like a long and costly process. I was hoping for something super simple, like opening a bank account or something like that.

    There must be a reason why they make it so convoluted unfortunately.

    Thanks for the info though I will keep it in mind.

    tomas
     
  11. Paul@PAS

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

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    To stop people doing stupid things. Waking up and going all in to a specific risk is not wise. Thats why these obstacles exist. A one off punt is fine ....and then?
     
  12. GoldCoastBound

    GoldCoastBound Well-Known Member

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    hello, i have a 1 off 500k from a business exit i have to invest in super, is the SMSF you mention suitable for me?

    I am just investing the 500k into VAS...don't plan on doing anything else

    thanks
     
  13. Paul@PAS

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

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    Seek tax and financial advice. If a small business super issue is involved it will need to meet the tests incl timing. Doesnt need yo be a smsf
     
  14. thydzik

    thydzik Well-Known Member

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    probably a low fee managed super fund would be a better choice.