1. Self-drive your super is an Authorised Representative of RI Advice Group Pty Ltd

2. Self-drive your super is an Authorised Representative of RI Advice Group Pty Ltd

3. is an Authorised Representative of RI Advice Group Pty Ltd Self-drive your super

4. is an Authorised Representative of RI Advice Group Pty Ltd My Name Financial Self-drive your super

5. is an Authorised Representative of RI Advice Group Pty Ltd JV logo Self-drive your super

6. 5 Disclaimer Important Notice RI Advice Group Pty Ltd, ABN 23 001 774 125, holds Australian Financial Services Licence Number 238429 and is licensed to provide financial product advice and deal in financial products such as: deposit and payment products, derivatives, life products, managed investment schemes including investor directed portfolio services, securities, superannuation, Retirement Savings Accounts. The information presented in this seminar is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. RI Advice Group strongly suggests that no person should act specifically on the basis of the information contained herein but should obtain appropriate professional advice based on their own circumstances.

7. 6 Agenda SMSF facts SMSF considerations Trustee obligations Our service solutions

8. 7 The self-drive revolution Statistics indicate that a rapidly increasing number of Australians are taking up this option... Over 30,000 new self managed super funds were launched in the year July 2012 – June 2013 There are now over 500,000 self managed funds representing more than 960,000 individuals Self managed funds have over $540 billion in assets According to average figures from the Australian Tax Office. 2014 Running your own fund means there is a lot to consider AND with greater freedom comes greater responsibility.

9. 8 What is a Self Managed Superannuation Fund? The facts... Up to 4 members All members are trustees If using a corporate trustee, all members must be directors of the corporate trustee No member can be an employee of another member unless they are related Can have ‘single member’ funds Regulated by the ATO

10. 9 Self Managed Super tends to suit… People who: Operate small or family businesses Like to have hands-on control over investment decisions Like to have their superannuation customised to play a key role in family wealth and estate planning Wish to invest in alternative assets

11. Why Self Managed? Control Structure of portfolio Timing of purchases and sales Greater discretion for estate planning purposes than public offer funds. Flexibility Greater range of investment opportunities unique to SMSFs (e.g. commercial property) Ability to transfer some personal investments Tax Savings Concessionally taxed Investments can be held in to pension phase and sold CGT free. Ability to structure related party loans to grow the fund and maximise personal deductions. Cost Most fees and charges are fixed costs which means the real cost of ownership falls as asset values rise.

12. SMSF considerations RI Advice - Working with you to achieve your goals

13. 12 Complete investment control? Sole Purpose Test Restricted acquisitions from related parties In-house Asset Limits Business Real Property Exemption Derivatives only for risk management Arm’s length dealings Limited ability to borrow via a limited recourse loan Trustee covenants

14. 13 Related parties SMSFs are prohibited from acquiring most assets from a related party Related parties include: –Members –Standard employer of the fund –‘Associate of the member’

15. 14 In-house assets In-house assets are: Investments in, loans to, and lease arrangements with related entities. Restricted to 5% of the value of the fund But there are some exceptions... Listed shares ‘Widely held’ unit trusts (managed funds) Investments in pooled superannuation trusts Business real property Property owned by the super fund and a related party as tenants-in-common Deposits with authorised deposit-taking institutions (ADI) and approved non-ADI Life insurance policy issued by a life company (not acquired from a member or relative)

16. 15 NO POSSIBLE NO YES In-House Assets? Smith Family Super Fund Assets: Macquarie CMT$ 15,000 BHP shares $ 30,000 Shares in Smith Pty Ltd$ 50,000 Perpetual Aust Share Fund$ 50,000 Shops 1-4, 52 Main St Adelaide$500,000 Loan to Smith Pty Ltd$ 5,000 $650,000

17. 16 Borrowing to invest – pre 2007 Prior to 2007 there were very few opportunities for funds to borrow directly. Indirect borrowing via trusts or companies was possible but there were a number of risks and limitations.

18. 17 From 2007 - The legislation now provides… The superannuation fund is permitted to borrow The loan must be applied to acquire an asset that the fund can ordinarily invest in The asset is held in trust for the superannuation fund The superannuation fund has a beneficial interest in the asset The superannuation fund must make one or more payments to acquire the asset If the superannuation fund defaults on the loan the lenders right to recoup is limited to the value of the asset.

19. 18 Borrowing to invest – Limited recourse loans A geared investment in a superannuation fund can be achieved via a structure known as a ‘limited recourse loan’ A limited recourse loan can enable a fund to utilise borrowing to purchase a range of investments including direct property. With the right advice and approach this can be a powerful way to boost your super and diversify your investment portfolio

20. 19 Borrowing to invest - A snapshot You can gear with your Superannuation Fund Borrowing can be for any investments as allowed by SIS Borrowing is limited to newly acquired assets (i.e. not for currently held assets) You can swap geared assets You can only do a limited recourse loan via a Debt Instalment Trust structure Lenders security is limited to the asset held in the debt trust

21. 20 Borrowing to invest There is no limit on the amount of the loan There is no restriction on who the fund can borrow from The loan must be on a limited-recourse basis Remember, the SMSF is responsible for the loan repayments, so it is important to consider the fund’s cashflow before entering into a borrowing arrangement.

22. 21 Borrowing to invest - Case Study Her SMSF has significant investments but she wishes to use $100,000 in the SMSF to purchase the property. The property can be purchased by using a limited recourse loan Sandra wishes to purchase a property which is currently valued at $500,000

23. 22 Super Fund Trust Lender Commercial Property Security Bank Institution $400,000 $100,000 $500,000 Assets Cash $100,000 Shares $200,000 Property $500,000 Borrowing to invest- Let’s look at a limited recourse loan structure

24. 23 Gearing investments via super including property, shares and exotics Those who have met the concessional and non-concessional contribution caps Negative gearing by lending to the fund at a premium rate Those who wish to put money in super but can’t contribute – over 65 who don’t meet work tests Younger members who wish to bring forward the purchase of investments via super Borrowing to invest - Who can benefit most?

25. SMSF obligations RI Advice - Working with you to achieve your goals

26. 25 Obligations? What obligations? Responsibilities of Trustees Investment Strategy Investment Selection Administration Compliance –SIS Act –ATO

27. 26 A Trustee must be appointed, either a corporate trustee, or all members must be trustees and vice versa. Restrictions on who can be a trustee: Cannot be: Minors (person under 18) Individuals under a legal disability (eg. has lost mental capacity) Bankrupts Anyone disqualified from being a company director Anyone convicted of fraud or dishonesty. Trustees

28. 27 Trustee obligation - Administration Being acquainted with and carrying out the terms of the trust Ensuring that title of all fund assets is in the names of the trustees Accurate bookkeeping Annual lodging of tax return Annual audit Timely and efficient

29. 28 Trustee obligation - Compliance Act impartially in the interests of all beneficiaries Ensure that all vesting and preservation rules are adhered to Keep informed & up to date with any changes. Ignorance is no excuse Adhere to lodgement timelines & bureaucratic requirements Legislative requirements e.g. investment activities & maintenance of fund documentation. Severe penalties for becoming non-compliant SIS Act over-rides trust deed

30. 29 It must have regard to: The investment objectives Diversification Risk & return Liquidity (cash reserve) Ability to meet liabilities Asset allocation Insurance needs for members Trustee obligation - Investment Strategy Trustees must formulate, implement and regularly review their Investment Strategy. An Investment Strategy is a plan for making, holding and realising fund investments.

31. SMSF Obligations – Fund Establishment Legal requirementUltimate Responsibility Outsource Solutions available to you Financial AdviserAccountantAdministrator Suitability of SMSF Structure You Develop Investment Strategy for the fund You Provide Strategic advice to members (E.g. contributions) You Obtain a trust deedYou Obtain a tax file number & ABN You Elect to become a regulated fund You Open a bank account in the name of the fund You Prepare minutes & documentation to admit members to the fund You 30

32. SMSF Obligations – Ongoing requirements Legal requirementUltimate Responsibility Outsource Solutions available to you Financial AdviserAccountantAdministrator Review Investment Strategy of the fund & its continued suitability given changes to individual members circumstances and legislative changes. You Review strategic advice to members (E.g. contributions) You Advice on tax deductibility of contributions YouGeneral advice only Prepare SMSF annual return (includes member contribution details) You 31

33. SMSF Obligations – Ongoing requirements Legal requirementUltimate Responsibility Outsource Solutions available to you Financial AdviserAccountantAdministrator If paying taxable lump sum payments or income streams: register for PAYG withholding Obtain a TFN from member Issue PAYG payment summary forms You Prepare Income Stream documentation when required Arrange valuation of assets to determine market value Prepare PDS Document all details of pension Prepare centrelink schedule You Act as a mailbox for the fund and record all paperwork You 32

34. SMSF Obligations – Ongoing requirements Legal requirementUltimate Responsibility Outsource Solutions available to you Financial AdviserAccountantAdministrator Maintain transaction records such as: contributions/benefit payments rollovers asset sales and purchases You Prepare member statements, including details of: Opening & closing balances Transaction & contribution details Investment return Termination value You Maintain fund records and compliance paperwork You 33

35. SMSF – Our service solutions RI Advice - Working with you to achieve your goals

36. 35 Self Managed Super Funds Do it yourself Advantages –Tailored to suit you: –More control Disadvantages –Only for retirement income –Must formulate and implement an investment strategy –Must have a trust deed and trustees –Must comply with SIS rules –Severe penalties for non-compliance. –Responsibility and accountability rests solely with the trustees

37. 36 Is Self Managed Super for you? Are all the members (trustees) skilled in investing? Will business or other real property be purchased? When will members reach preservation age? How would the withdrawal of a member affect the fund’s assets? Does the investment strategy take into account the liquidity requirements for the payment of pensions? Do members require insurance cover? What are the Member assets outside the SMSF?

38. 37 Is Self Managed Super for you? What is your fund going to be used for? What is the level of involvement you are willing to commit? Do you want to out-source? –investment strategy? –investment selection? –administration? –compliance requirements? If you like the sound of control and flexibility, but the compliance & administration seems like a burden, we can design an out-source solution which is tailored to you.

39. 38 Investment Strategy Investment Selection Administration Compliance Investment Advice Direct Share advice Managed Funds Ongoing Investment and Strategic Advice – trustee and member level Trust deed & other document services Annual accounts Audit Tax return preparation Outsourcing - Our Service package solutions Option 1: Comprehensive service offer Fee range: $X - $X depending on number of members & complexity of personal circumstances.

40. 39 Investment Strategy Investment Selection Administration Compliance Financial Adviser Investment Advice Direct Share advice Managed Funds Ongoing Investment and Strategic Advice – trustee and member level. Lawyer / Accountant / Super specialists Trust deed & other document services Annual accounts Audit Tax return preparation Outsourcing - Our Service package solutions Option 2 – Limited service offer: Work with your existing professional advisers Fee range: $X - $X depending on number of members & complexity of personal circumstances.

41. 40 The way forward Take advantage of this opportunity and get the right advice! We can save you time, frustration, and work as your strategic coach in providing a complete SMSF solution. Alternatively, we can take a collaborative approach with your existing accountant and legal advisers. The result is a self managed super investment that is: professionally set up carefully managed creates the freedom for you to take a real hands-on approach to your investment minimises risk and administrative time for you. The personal control, potential tax and cost savings can be substantial, so it's worth considering whether a SMSF may be right for you.

42. Thank you for attending Any questions?