Peter Johnson – The SMSF Expert

LEGAL DEFINITION OF AN SMSF Deed has pensions or corporations power All trustees are members and vice versa Can’t be employer of member unless related Limited exceptions Single member funds Legal Personal Representative of member 6 month rule Disqualified Persons

ACCOUNTING rULES Must be Audited Not a reporting entity Assets at Market Value Minutes & Resolutions kept for 10 years!!

Trustees’ covenants? To act honestly & diligently Act in the best interests of beneficiaries Conflict of Interest Situations Investment Strategy, Insurance Strategy & Risk Management Strategy

Investment Strategy Includes: Composition of investments incl. diversification Liquidity having regard to cash flow How reliable information is available Ability to discharge liabilities when due Tax consequences of strategy Costs incurred in relation to implementing strategy

InSURANCE COVENANTS Formulate Insurance Strategy including: Kinds of insurance offered Level of cover offered Basis of decision to offer insurance Method used to determine insurance providers Plus a Risk Management Strategy

Sole Purpose Test

No Financial Benefits To Members Or Related Parties Cannot Lend to a Member or a Relative

Can’t acquire an asset from a member Except Listed Shares Business Real Property Certain in-house assets

No borrowing!! Except in limited circumstance To pay a benefit To Settle Securities Or to borrow to buy an asset Limited recourse loan Asset held on trust Single Acquirable Asset Can borrow off members

IN HOUSE ASSETS LIMITED TO 5% Definition What happens if you breach?

QUESTIONS