What are you doing with your SMSF ?

As a rough guide...

Setup fees...

• It depend on the fee being charged by the provider setting it up. Some charge insane amounts. However it can be done for a little over $2k.

Yearly fees...

• ASIC fee to keep corporate trustee alive is currently $46
• ASIC fee to keep any other pty ltds open (such as the security custodian needed for holding property under LRBA) is currently $246
• Bank fees for keeping a bank account open for the SMSF will likely be circa $8 per month
• No management fees if you look after things yourself... if you can use an excel spreadsheet and a scanner this shouldn't be a drama
• Accounting and audit fees depend on how tidy your records are and how much the SMSF accountant charges. Mine charges $1100 at the moment.

No, however depending on what the SMSF intends to do, it may not make sense until the SMSF has a certain amount of money to get started. (This may be total balance shared between members.) For instance, if the SMSF intends to acquire property, it may not really make much sense to setup until the members collectively have $115k+ (assuming purchase price of $300k). This would ensure it has a 30% deposit, enough money for stamp duty, legal fees, building and pest, to pay the bank their fees, and have circa $5k left over as emergency money. Lenders are changing their rules often, so depending on when the SMSF applies for its loan there may be additional funds it requires in order to comply with the lender's rules.

 

Remember that with resi property a SMSF cannot purchase property from a related party, so be careful not to breach the rules on this one.

 

Depending at what you are looking at purchasing, but 150-200k is the right starting point.

 

What if it is a trust?

 

Did you mean your SMSF to buy your finished development product? That is what @JacM is saying you can't do as its a related sale - and yes same if it's a trust as you are directors of that trust.

If you meant the smsf buying a site and doing a development on it then my advice stands. Only possible if you aren't borrowing money.

 

Thanks
I need to discuss further with my accountant, he was the one who suggested we do this.

MTR

 

A trust is a related party if the member of the SMSF controls it or is associated with it - actually it may be terms an associate. A SMSF cannot acquire property from a related party, but there is an exception for business real property.

A developer building residential units may be able to sell these units to a SMSF under certain circumstances because they are business property to the developer.

 

I've seen a couple of great examples in SMSFs where the SMSF had only enough money for one property with a tiny bit to spare, and would only be able to "save" at a slow pace due to low wages. Thus being able to buy another property was highly unlikely. The properties purchased had rents high enough to cover the holding costs of the property, and had enough space in the backyard for another dwelling or two. When the mortgage is cleared those SMSFs intend to construct in the backyard. Good examples of really making that small pile of money work very hard.

 

I wrapped mine up. All too difficult and time consuming. With laws changing almost annually wrt super and now it being targeted as the new cash cow for broke governments I can't see any incentive to invest at all.

 

I do dislike all the changes and risks but I'm hoping we have mitigated ours as much as possible. The other 2 members in our SMSF are my parents who are over 65 (in fact over 70) and therefore of age to take money out of the SMSF should rules change.

We have the 'opportunity' to do a small project in the SMSF, pay the 15% tax then have them take the money out tax free but it's not what I want to do at the moment - nor does it feel comfortable on my moral compass - I just like having the possibility there in case the rules change. I'd like to grow it as quickly as possible then diversify it more.

 

i;m the same i have a small super as i am more than 30+ years till i can access it. i think it might be right time to do something about now. i'm just signed up with e super fund so hopefully they are ok.

 

I think changes to super are inevitable and well due. Super's preferential tax treatment should be a means for someone to provide a modest retirement for themselves not a tax dodge for the wealthy, which it currently is.

Possible changes I see are:

• A progressive contributions tax similar to income tax.
• Some sort of return to RBL's.
• Tax changes to super in pension phase.
• A move to encourage/force pension withdrawl and not allowing/limiting lump sum withdrawl.
• Tax on withdrawl.
• An increase in preservation age.

Having said all that I believe that super will, for the medium term at least provide a tax favoured retirement vehicle. Save for retirment inside and outside super I say.

 

If you already have money that is quarantined in super anyhow, you might as well put it to good use. If change comes, so be it, but in the meantime, make hay while the sun shines The decision about whether to add additional money into super voluntarily is separate. But the money that is already in there, well.... why not make it work hard for you!

 

We did the Esuperfund thing about 12 months ago. Have bought 1x comm and 2x Resi. Cash that is left we put some into blue chip shares, the remainder in term deposit.

We salary sac the maximum amount and that along with rental income should pay off the cheaper of the two resis ($220k loan) in about 5 years.

The goal then is to have enough to buy a small-ish hobby farm with residence and living on it with me semi-retired working the farm whilst wife continues to work. This will free up current cash going into PPOR mortgage for another two IPs, unless all the rules change again.

 

@Jeah_ .. did you intend to buy the hobby farm within your SMSF or outside of super? You might strike trouble if intending to do so within super since you cannot live in your own SMSF property and any business the SMSF runs cannot employ you.

 

@JacM - Fin advice we obtained went along the lines of we could do it, but farm cannot be a 'hobby farm' per se, but had to be run as a business, including financial and business plans etc. Essentially, it's the same as owning your business where the 'farm business' rents the 'farm' off the SMSF, or at least that's how I understood it. The big problem will be making it lucrative enough to pay for itself without tipping any of our own money in, as the ATO see that as extra super contributions.

Like I said, we're talking 7-10 years down the road and I think the writing is already on the wall for super reforms, so I imagine it will all have changed by then.

It's something we'd like to do, but we don't have our hearts set on it. If we get there and our accountant says nay, we have some other back up ideas.

 

It is possible to live in a farm owned by a SMSF of which you are a member - many restrictions

 

nah - i sold all the assets on the open market and let it die.

i put the money back into my standard superannuation setup and took control of how it was invested.

not much point in an SMSF any more - its just a different investment vehicle for the sake of being different and doesn't provide any more permanency than a Pty Ltd ATF a Unit Trust.

one stroke of the pen, tax law changes and now not only can you not access your funds, but it's tied up and/or losing more in tax than you budgeted for.

 

We've bought 4 ip's in super . Nice properties in nice areas . Low maintenance .

Aim will be to try and pay them down and live on income , though we might need to sell one at some stage depending on how we go with paying them down .

Cliff

 

Is that esuper fund? what was your experience with them? i see you have to call them leave a message then only will they get back to you.