- How do I set up a Self-Managed Superannuation Fund (SMSF)?
- What are the benefits of a Self-Managed Superannuation Fund?
- What kind of investments can I hold in a Superannuation Fund?
- What is the sole purpose of a Superannuation Fund?
CORPORATE AFFAIRS
| 1. | When is my annual review required? |
From 1 January 2003 companies no longer complete an annual return. Instead they are required to complete and lodge an annual review and pass a resolution of solvency within 2 months of their anniversary date. The annual review filing fee is $212 per company.
You are able to align the anniversary dates of companies with a common officer. There is a lodgment fee of $33 per company.
The annual review form requires a review of the company's addresses, officers and members. When reviewing the form please ensure that the member's details are correct.
Any changes must be notified to ASIC within 28 days and late penalty fees will apply.
We will notify you of your annual review requirements and request that you attend to them as soon as they are received.
| 2. | When can I deregister a company? |
You can apply to deregister a company if:
- all members of the company agree to deregister;
- the company is not carrying on business;
- the company's assets are worth less than $1000;
- the company has paid all fees and penalties payable under the Corporations Act 2001;
- the company has no outstanding liabilities; and
- the company is not a party to any legal proceedings.
| 3. | How does a company deregister? |
- Ensure that all outstanding documents (including annual returns) have been lodged with ASIC.
- Ensure All outstanding charges against the company have been satisfied. You should make sure of this before applying for deregistration.
- Complete Form 6010 and include $33 application fee.
| 4. | What is a solvency resolution? |
Company directors must pass a solvency resolution within 2 months of their review date. There are two types of solvency resolution:
- Positive solvency resolution - this is passed when the directors have reason to believe that the company will be able to pay its debts as and when they occur.
- Negative solvency resolution - this is passed when the directors have reason to believe the company will not be able to pay its debts as and when they occur.
- Negative solvency resolutions must be lodged with ASIC on a form 485 within 7 days of the resolution.
A positive solvency resolution is assumed if the directors of the company have:
- Paid their review fee;
- Not lodged a Form 485 within 2 months and 7 days after the company's review date;
- Not lodged a financial report in the previous 12 months.
| 5. | Do I need to have the company’s accounts audited? |
Proprietary companies are exempt from audit unless one of the following applies:
- They are classified as large;
- They are owned by a foreign company;
- More than 5% of the shareholders direct the company to be audited; or
- ASIC requests the company be audited.
Large proprietary companies have at least 2 of the 3 following criteria:
- Gross operating revenue of $10 million or more
- Gross assets of $5 million or more
- 50 or more employees
Audit relief is available to large proprietary companies only if the company is "well managed in a sound financial position". There are minimum requirements to meet this test.
SUPERANNUATION FUNDS
| 1. | How do I set up a Self-Managed Superannuation Fund (SMSF)? |
There are a number of trust laws and legislative requirements relating to setting up a self managed superannuation fund (SMSF). If you wish to set up your own fund please contact us for further information
Obtain a Trust Deed
The first thing you need to do is to have a trust deed.
The deed must be dated and properly executed. Content contained in the deed is important in determining the structure and operation of the fund.
Appoint Trustees
All superannuation funds are required to appoint trustees. Trustees are responsible for ensuring the fund is properly managed and that it complies with the Superannuation Industry Supervisory Act and other legal obligations. To be a SMSF all fund members must be appointed as trustees of the fund. A SMSF can not have more than four members.
To be a single member fund the trustee of the fund must be a body corporate and the member is one of only two directors of a single member body corporate. A SMSF can also be created if the member is one of only two trustees, of whom one is the member and the other is a relative of the member.
Other Considerations
Trustees should open the fund’s bank account (or other appropriate investments) in the name of the fund.
The assets of the fund should be kept separate from any assets owned personally by any of the trustees or from those belonging to a business (where partners in a business set up the SMSF).
Trustees need to establish an appropriate investment strategy for the fund.
Trustees need to be aware that there are numerous administrative obligations that must be met throughout the life of the fund.
| 2. | What are the benefits of a Self-Managed Superannuation Fund? |
The following are some of the advantages of a SMSF.
· They can have greater investment freedom;
· Members feel their monies are safer being invested by them as trustee;
· Members can actively participate in the management of the fund;
· There are reduced formal reporting requirements; and
· They can be an advantageous investment vehicle for individuals considering tax and estate planning.
Setting up a SMSF is not for everyone. People considering a SMSF must familiarize themselves with the requirements and obligations of running a fund. We are able to provide you with basic fact sheets released by the ATO.
If you wish to set up your own SMSF please contact us for further information.
| 3. | What kind of investments can I hold in a Superannuation Fund? |
A key area of responsibility for trustees of SMSFs is investment management. SISA places certain duties and responsibilities on trustees when making investment decisions. They aim to protect and increase member benefits over time for retirement purposes.
Investment Strategy
Trustees are required to prepare and implement an investment strategy for the SMSF. The strategy must reflect the purpose and circumstances of the fund.
An appropriate investment strategy will set out the investment objectives of the fund and detail the investment methods the fund will adopt to achieve these objectives.
Trustees must make sure all investment decisions are made in accordance with the documented investment strategy of the fund and should seek investment advice or appoint an investment manager in writing if in any doubt.
Investment rules are one of the most important requirements of SISA and failure to comply with the rules could result in trustees being fined and/or the fund losing its compliance status.
Prohibition of loans/financial assistance to members or a member’s relative
Trustees are prohibited from lending money or providing financial assistance from the fund to a member.
Prohibition of Borrowings
SMSFs are prohibited from borrowing money except in some limited circumstances.
Limitations on Acquisition of Assets From a Related Party
Trustees are prohibited from acquiring assets for the superannuation fund from a related party of the fund. Limited exceptions to this rule exist, if:
· The asset is an in-house assets and would not result in the level of in-house assets of the fund exceeding 5% of the fund’s assets;
· The asset is a listed security (e.g. shares, units or bonds listed on an approved Stock Exchange); or
· The asset is business real property.
| 4. | What is the sole purpose of a Superannuation Fund? |
It was previously mentioned that a complying superannuation fund is essentially a regulated superannuation fund that meets the operational standards of SISA.
Complying superannuation funds are taxed concessionally (i.e. a complying fund is taxed at a rate of 15% while a non-complying superannuation fund is taxed at 47%).
The object of the sole purpose test is to ensure that regulated superannuation funds are maintained for the purpose of providing benefits to fund members upon their retirement or their dependents, in the case of a member’s death.
