SMSF – Setting up the Fund


Financial Planning Advice

As more of these types of transactions occur, regulators such as ASIC are wary of consumers being pushed into inappropriate investments such as some rental properties by those selling the property itself. As a result, more stringent assessment processes are being applied by banks when loan applications are presented. This assessment will often include a requirement for the borrower to provide a copy of the Statement of Advice from their financial planner or at least a certificate that advises the transaction has been discussed.

The fact that you are setting up a ‘Self Managed’ Super Fund does not mean you shouldn’t be obtaining financial advice from an authorised financial planner. Having an SMSF provides you with the flexibility of investing in shares and other investments that you decide (in line with your trust deed) are worthwhile. It also allows you to buy property, and to borrow in order to do this. You should always consider having a dedicated financial planner to look after your best interests and provide you with advice on the investment direction you should take, to achieve your wealth goals.

You have a range of choices with respect having your fund set up for you. There are online options that appear cheaper and easier of course, however we recommend the following people to help with your setup and advice.

Acquire Strategic Advisers

Adrians Chartered Accountants

Private Wealth Group

These professionals can guide you through the process and talk to you about the costs involved in setting up a SMSF. The costs can be around $6,500 for the SMSF set up and if you want a property trust involved then you should budget approx. another $2,000. Of course many professionals charge differently so remember, cheaper doesn’t mean better.

Once you have set up your own SMSF, part of the process of borrowing to purchase a property involves the creation of a property trust. It is this property trust that will hold the title to the asset on behalf of the SMSF. You should talk with your financial adviser or accountant regarding the creation of a trust to ensure that it complies with the appropriate legislation. It could take up to 2 weeks to have your documentation in place so be aware that time-frames when borrowing in an SMSF are longer than a standard residential contract.

Once the trust is established and a contract signed to buy a property, these documents are usually provided to the bank at the time of the application. The bank will then ask either their own internal legal team or an external law firm to review your SMSF Trust Deed and the Property Trust Deed to ensure that they comply with the Superannuation Industry (Supervision) Act 1993 (SIS Act).

Note: In order to set up the property trust you will need to have the address of the property you are buying. This is critical to understanding the time-frames that these loans can take as the review of the deeds is often taking place within the finance clause period.

It is also critical that the contract is signed in the name of the Property Trustee as the legal owner of the property. The contract should not be in the name of the SMSF Trustee. If you have specific questions around this or are unsure if this is the case, please contact us and we will put you in touch with the solicitors used by most of the major financiers that have provided this advice.

On the next page, you can learn about applying for SMSF loan
and how bank assesses your loan




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