Comments for 'thedunnthing' - Aaron Dunn's blog

Comment on How does a SMSF limited recourse borrowing arrangement work? by rayna

rayna — Thu, 23 Feb 2012 10:58:58 +0000

Hi Aaron
I am trying to get my technical knowledge up. could you please lead me in the right direction

• X Unit Trust (a related unit trust) is owned 100% by the Y Superannuation Fund. Trust was established in 1990.
• The members of the Y Superannuation Fund run a farming business in their personal names.
• X Unit Trust holds farming land and wants to spend $500,000 to construct a solar grid.
• The intention is that the Unit Trust will sell the electricity generated by the solar grids back to the local electricity grid, at $50,000 pa.
• X Unit Trust will need to borrow approximately $250,000 in order to establish the grid on the farming land it holds.
• In addition, the trustee’s have enquired if they will be able to use some of the electricity generated in their personal farming business.

Is the client able to make the investment? would the rental to members of the fund be breach of related party? I am not sure if this is a limited recourse borrowing arrangement but feel that the pre 99 status may mean this is possible. Your guidance would be greatly appreciate.

Comment on My Services by rayna

rayna — Thu, 23 Feb 2012 09:52:52 +0000

Hi Aaron I have a very curly case study (not real). I was wondering if you could lead me in the right direction.

• X Unit Trust (a related unit trust) is owned 100% by the Y Superannuation Fund.
• X Unit Trust was established in 1990.
• The members of the Y Superannuation Fund run a farming business in their personal names.
• X Unit Trust holds farming land and wants to spend $500,000 to construct a solar grid.
• The intention is that the Unit Trust will sell the electricity generated by the solar grids back to the local electricity grid, at $50,000 pa.
• X Unit Trust will need to borrow approximately $250,000 in order to establish the grid on the farming land it holds.
• In addition, the trustee’s have enquired if they will be able to use some of the electricity generated in their personal farming business.

What are the issues to be considered here, is the client able to make the investment? Can the individuals use any of the electricity generated in the farming business?

My initial thought was it may be LRBA but then thought otherwise. You assistance would be appreciated.

Comment on How to effectively wind up a SMSF by thedunnthing

thedunnthing — Thu, 23 Feb 2012 01:02:06 +0000

Hi Rayna,

The issue of stamp duty will depend on the relevant state. I refer you to TR2011/D3 that shows how you could reduce the impact of CGT on the transfer of the property from the SMSF by partial commutation.

Regards,
Aaron

Comment on How to effectively wind up a SMSF by rayna

rayna — Wed, 22 Feb 2012 10:16:57 +0000

Hi Aaron,
Great article! I have a scenario I would like to run by you. If the member has a commercial property in the fund rented to a third party and they do not wish to sell the property but would prefer to transfer it to themselves personally. What is the simplest way in doing this. The fund is in pension phase and I believe their would be stamp duty implications on the sale. Along with it having to be at arms length i.e. market value. Is there anything else that I may be missing. Can you direct me to the right direction or legislation?

Comment on Financial year-end planning for your SMSF by Jason Burrows

Jason Burrows — Wed, 08 Feb 2012 08:32:35 +0000

Hello thedunnthing,
Nice to meet you.This site is really great. No doubt this will grow bigger and better. Goodluck! Wish you all the best. SMSFs are the most flexible option for taking your benefits in retirement.It can use for the benefit of members or their beneficiaries on retirement, disablement or death.

Comment on Meeting minimum pensions as lump sums by Anne

Anne — Sun, 05 Feb 2012 18:11:37 +0000

I ueasrntdnd re the buckets.I guess what I was trying to get at, is if you want to go with cash and index funds, then is it that hard to do a SMSF? while these options are available in superfunds, you may be able to do it youself just as easily and possibly with lower fees (ie Ubank and vanguard)… I ueasrntdnd that there are SMSF support structures out there that can audit etc a SMSF for around $700 per year… So depending on your funds, that doesn’t necessarily equate to significant costs (ie to warrant someone needing a $1,000,000 before setting up a SMSF).I agree with you, re superfunds offering a fast variety of products and can manage for very low fees and probably mean that a SMSF isn’t necessary. But I think that SMSF isn’t necessarily that hard or expensive…. It is an interesting and complicated debate and I guess depends on what people want to achieve.

Comment on Financial year-end planning for your SMSF by thedunnthing

thedunnthing — Wed, 01 Feb 2012 11:47:30 +0000

Hi Jason,

It is always great to hear feedback about the blog and the ideas, issues and strategies that can be used within SMSFs.

Regards,
Aaron

Comment on Financial year-end planning for your SMSF by Jason Burrows

Jason Burrows — Wed, 01 Feb 2012 11:14:20 +0000

Thanks for sharing your ideas.I really like it.The SMSF are useful tools that helps people to accurately manage their investment money.

Comment on 12 things NOT to do with your SMSF by thedunnthing

thedunnthing — Wed, 18 Jan 2012 22:29:18 +0000

Hi Des,

Independence is one of the most topical discussions within self managed super funds. This issue isn’t black and white as it requires professional judgement to determine both independence of mind and in appearance.

The following are examples of where independence is or is likely to be impaired (for your fund’s auditor):

• Auditing their own fund
• Auditing the SMSF of a relative
• Auditing the SMSF of a partner within your own firm
• Auditing an SMSF where your firm provides financial planning advice to the SMSF
• Auditing the SMSF where you have prepared the financial statements
• Having at least 2 partners in a firm sign off each other’s work, where there are not appropriate safeguards in place such as totally separate accounting and audit reporting lines and teams
• Two firms swapping clients to conduct audits – factors such as relying on each other for revenue, a need to ensure an ongoing relationship, pressure for unqualified audit opinions or other factors may result in independence being impaired
• Outsourcing arrangements where a significant portion of the auditor’s fees come from the one referral source
• Auditing the SMSF of a significant client of the firm
• Auditing an SMSF where the firm has invested the Trustee’s money in entities related to the firm

An auditor has an obligation to conform with APES 110, which is the current standard for independence for SMSF audit engagements.

I conducted a free webinar for SMSF professionals on this topic late last year, which is available on my website, http://www.thesmsfacademy.com.au.

The more relevant question to you and your fund moving forward (and for many trustees) will be to find an auditor who will register to become an approved auditor under the new ASIC requirements to be imposed from 1 July 2012. It is anticipated that half of the 11,500 auditors will drop out of the system due to either competency and/or cost.

I will state that I’m not an auditor myself, however this is the guidance taken from many of the country’s leading SMSF audit professionals.

I’ll leave this post open to encourage discussion from other SMSF auditors to make comment in the situation.

Regards,
Aaron

Comment on 12 things NOT to do with your SMSF by Des Hewitt

Des Hewitt — Wed, 18 Jan 2012 08:12:35 +0000

I was particularly concerned with Item Number 9, however this is the response I received from my Accountant:

Hi Des
No I don’t agree. I have had a visit from the ATO to my office to discuss the audit of a particular file. Their stance was that I was able to be the auditor because I was not involved in any decision making of the trustees, nor do I provide financial advice of any kind, nor provide financial products. On that basis my independence was intact, in their view.

Regards

(Accountant’s name removed)

Regards

Des Hewitt