Yearly admin/accounting cost for SMSF with 1 property only.

Discussion in 'Accounting & Tax' started by Illusivedreams, 14th Aug, 2019.

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  1. Illusivedreams

    Illusivedreams Well-Known Member

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    Hello Accounting experts.

    What is a cost of Accounting+audit for a SMSF with 1 property managed by an agent. Only additionals is SMSF pays insurances for partner and I.

    Straight forward.
     
  2. Paul@PAS

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

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    Depends.

    Limited recourse borrowing ?, contributions ? Offset and moving $$$ a lot ? Depreciation schedule and QS report or just one of them ? Borrowing expenses ? How many bank accounts ? Which bank even. Human or corporate trustee ? Is the fund compliant or any past issues ?

    Do you have all the documents completed eg copies of ATO trustee declarations, investment strategy etc. Copies of the policies for insurances ? Do current records show member tax elements, service period dates etc ? Migration for old fashioned accounting to properly kept records may or may not be straight forward. eg What was the CGT acquisition date for the property ?
     
  3. Illusivedreams

    Illusivedreams Well-Known Member

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    1 Bank for account and Loan
    1 Account for Withdrawals (Contributions from partner and I go here every quarter and rental income fortnightly)
    1 Loan (Limited recourse borrowing)
    Policies for insurance are attached.
    Wife prepares a file which is handed to acc firm

    All documents up to date and complaint.
    Current accounting firm is really good up to date all is complaint.
    Dec 2016
     
  4. Paul@PAS

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

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    I would be estimating a fee in the range $1500-$1800 for the accounting & tax plus $484 for audit provided our preferred auditor was used and $990 if not. A lot of people query that difference in audit fees and it reflects the efficient way our preferred (independent / external) auditor works. The audit fee is a fixed fee. Where clients have nominated their own we have found it impacts costs and must reflect that. Personally I see no reason to nominate your own auditor as the audit is about the fund not about the work we do.

    The auditor will charge a extra search fee for title and this varies slightly depending on state where property is held. The title check confirms legal owner and any encumbrance etc Often $15-$24 as an example.

    ASIC company agent services may add $165 and we offer a fixed annual fee that includes company changes eg address changes etc and relevant docs etc.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Not questioning your fees, that's about what I'm paying myself. I am curious how this scales with additional properties or other assets in the overall SMSF structure?
     
  6. Illusivedreams

    Illusivedreams Well-Known Member

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    Thank you Paul,
    I will reach out to you within the next week.
     
  7. Paul@PAS

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

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    Its not incremental if thats what you mean. But with a second LRBF it means a new loan (maybe two if its variable / fixed) and another agent, more expenses, borrowing exp etc. Setup costs etc, depreciation and so on. Once its up and running its easier than year one. I will often reflect a one off extra cost for the extra time. Then hopefully next years its just a minor impact.

    Other assets ? Depends what they are. We use software with artificial intelligence (much like me) and it can auto process some transactions making life very easy. It can also be an absolute mess but thats rare. We use a broker data feed AND a registry data feed for best outcomes. It also means the auditor can go "tick"to verify holdings.

    No two smsfs are ever the same.

    I find myself telling people that all super funds have fees. They are generally a % of funds and that can scale down with larger balances but the more you have the more you pay. But SMSFs tend to have a "fixed" cost to operate. Whether you have one or two members cost wont double. $200K of funds may cost $1600 and $2m may cost $2K. But a $1m fund with 40 shares and six bank accounts and nine ETFs may cost $4K. Depends how. ETFs add a layer of complexity.

    Starting, stopping and refreshing a pension can be messy too but the right software and data can make it simple.
     
    Last edited: 14th Aug, 2019
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  8. Mike A

    Mike A Well-Known Member

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    fee range would be between $1,200 to $1,800 depending on the records.

    Nick Moustacas at Strategic Wealth provides audit services. Normal fees he charges for this type of SMSF (property with an LRBA) are around $550 including GST but think for PC members does it for $440 including GST. Extremely competent.
     
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  9. Paul@PAS

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

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    +1 Nick knows his stuff.
     
  10. Mark35

    Mark35 Member

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    My wife and I have a SMSF that holds one IP and a small amount of shares. The IP was an older house a on good size block, so we haven't bothered with depreciation reports to date. The SMSF pays for some of our personal insurances. In a year with no property property or share transactions the SMSF accountant's management fees were about $5200 and the audit $550 on top of that. We had a financial adviser review our personal insurances etc recently and they indicated they thought these fees were too high.

    Personal tax returns (PAYG government employees) cost the two of us combined about $1300 with two IPs owned in personal names.

    Service is generally ok in terms of processing times and follow up systems, but nothing to rave about outside of that.

    Based on above cost estimates our financial adviser is probably right. Thoughts?
     
  11. Mike A

    Mike A Well-Known Member

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    that does sound quite expensive. was there anything unusual like commencing a pension or something new ?

    the audit fee is reasonable and normal.
     
  12. Mark35

    Mark35 Member

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    Nothing unusual. SMSF tax return with no major transactions (no Property sales etc). 1 IP and 4 different shares owned. It’s small and relatively simple I would have thought.
     
  13. Mike A

    Mike A Well-Known Member

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    yes 5,200 for that is very expensive
     
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  14. MWI

    MWI Well-Known Member

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    What $5,200 for SMSF? in our SMSF we hold many more IPs all with depreciations, some via LRBAs, some cash purchases, some via commercial loans arrangements, offset cash, just liquidated some Reserves, pay Trustee LI, do provide reconciled MYOB files to accountant though. SMSF PAYGs are QTR installments so no fee there.
    I pay slightly more than you for SMSF fee...so it seems you are paying Excessive fee IMHO!
    Outside SMSF more complicated as many entities for tax purposes....
     

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  15. Paul@PAS

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

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    Actuarial issues
    Breaches
    Pensions started or reset
    Adding, changing mambers etc
    Using wrong software ?? Quality of information received can mean a accountant using"old fashioned" software is taking a lot of time to do things the old way.
     
  16. Mike A

    Mike A Well-Known Member

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    i think the old fashioned software would be very rare these days. every accounting firm i know uses either BGL or Class. both good products.
     
  17. Paul@PAS

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

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    I still find them. I do regularly mention there is a direct link between cost and old fashioned software. I now also find taking on Class clients easier as the good folk at BGL migrate it for free. But its $30 for non-class. Still a bargain.
     
  18. qak

    qak Well-Known Member

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    Is the accountant doing anything else beside accounting and tax, for the fund - we wouldn't normally call it "management fees".
     
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  19. Paul@PAS

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

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    Management fees are typically adviser and costs of managing investments. Accounting fees and audit fees may be allocated to those same descriptions.
     
  20. danielcannan

    danielcannan Well-Known Member

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    That does sound very expensive. Personal returns sound expensive, too. Not as bad as the SMSF fees, but still pricey.