Popping my SMSF cherry

C

Caput Lupinum

Well-Known Member
Silver Stacker
I've decided to put on my big boy pants and take control of my super from my underperforming, fee gauging retail superfund. I've read up and down this forum and feel like I've got a jist of what to expect. I've just lodged my application to register a company through cleardocs/asic to establish a corporate trustee for my SMSF (esuper) as I will be the sole trustee.

The only Q's I have atm are whether the establishment costs of setting up the SMSF and the cost of setting up a safety deposit box for my super's assets are refundable to my personal bank account from when my esuper account is up and running so long as I keep all my receipts or do I have to wait until after 1st July next year when I lodge my personal tax return or is this considered a capital cost? If so will the receipts suffice an accountant/auditor at tax time or am I required to minute these transactions as well?

Cheers
 
This issue has been a contentious one for me for some time and still dont know the answer to this question myself however this may give you some guidence on it. But from my interpretation, technically no they are not reimbursable.

http://www.linkedin.com/groups/Setup-costs-SMSFs-3737451.S.206730834

I think there maybe some confusion as to what part of the setup costs can be reimbursed. I believe Eric and the reference to the ATO are referring to the trustee set up costs and not the super fund. Reimbursement for the super fund is no problem, but is the trustee part of the super fund?

Whether right or wrong the ATO have made the statement the corporate trustee ASIC fees are not deductible to the fund, and not payable by the fund. The logical extension from this is the setup of the corporate trustee is not an expense of the super fund.

Remember a super fund is just a trust, so requires a trustee, but that does not mean the trustee and the super fund are joined at the hip, both entities are separate under tax law.

Do I agree with the ATO, possibly! I think if the corporate trustee is a special company you have an argument to say they are linked. But if the corporate trustee is set up as an ordinary company then how do you treat the company with regard to the super fund? The ATO may be correct in its interpretation.

I hate to say it but again it may come back to the fund trust deed, sometimes we forget how important the wording of a trust deed can be. Whether the ATO or APRA say something is deductible or can be reimbursed may be immaterial if the deed does not allow it.
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Meh, it seems to be lost in the sea of bureaucracy. You can't operate a SMSF if there is only one trustee without registering a company to allow a corporate trustee to administrate it yet the ATO don't consider the ASIC establishment fees a deductible expense of the fund. Well played tax man

Thanks for that
 
Caput - if you put "ASIC annual fee" into the Esuper website search box you will get a little FAQ popup that specifically answers your question.

Simple answer is that setup fees for the company are not able to be reimbursed from the SMSF.

It does kinda make sense as the company can operate in its own right or act as trustee for other trusts so it cannot meet the sole purpose test for the SMSF. I have my trustee setup as a special purpose company so as to keep the annual fee low (currently $44 p.a) as it does not do anything else other than act as trustee.

The safety deposit box fee I am not sure about. I would think yes so long as no personal assets are stored in it. ie. it meets the sole purpose test. There should be others on here who could say for sure on this matter. It may even then not be deductible against income as there is no income generated by the PM's - it would be added to the cost base for CGT purposes instead.

Elemental is pretty good on this stuff - hopefully he will drop by and add his 2c.
 
The SMSF can refund the formation costs and the formation costs are held as an asset in the Balance Sheet.
 
Kawa said:
The SMSF can refund the formation costs and the formation costs are held as an asset in the Balance Sheet.
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But is this the formation costs just for the fund or does it include the formation cost of establishing a corporate trustee + company with the ASIC to manage the fund which is required if there is only one trustee for the fund? Given the above responses it would appear that it may be only be for the fund itself.
 
Using an accountant, I was able to defer some payments until the funds account had money in it. This way I could pay certain things using the funds. SDB was one I claim. As someone mentioned just keep a log of what is in and out.

With combined super funds and their various fees and with life insurance on some etc... I was around $5K + a year on fees, so paying an accountant to do all my work is still miles ahead and easier for me. Not the cheapest but it works for me, also all the Q's I have they answer.

Food for thought ?
 
Caput Lupinum said:
Kawa said:
The SMSF can refund the formation costs and the formation costs are held as an asset in the Balance Sheet.
Click to expand...

But is this the formation costs just for the fund or does it include the formation cost of establishing a corporate trustee + company with the ASIC to manage the fund which is required if there is only one trustee for the fund? Given the above responses it would appear that it may be only be for the fund itself.
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Both.
 
Live market data fee - $41 odd a month through Ebroking/CMC markets. Tax deduction for my SMSF, yay or nay?
 
Caput Lupinum said:
Live market data fee - $41 odd a month through Ebroking/CMC markets. Tax deduction for my SMSF, yay or nay?
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is the fee solely for your superannuation trading account?

I would have thought though you would be better off claiming that against your regular income - higher tax deduction.
 
It isn't however my personal trading account is through Commsec (which I don't intend on changing) who charges a higher fee, about $80 per month for the same thing. I'm thinking the difference in price would be enough to offset the difference in the tax deduction roughly $500 a year.

More generally is it acceptable and compliant to claim things like live market data fees for your SMSF at tax time?
 
If the data fees are for your SMSF trading purposes (and nothing else) then yes it is an acceptable deduction as far as I am aware.

Why have 2 live market data feeds though? You would only need one that you could use to get the live pricing info. Doesn't CMC refund their fees if you do a certain level of brokerage anyway? (Commsec too?)
 
How can the ATO tell if I'm using my CMC live market data to place trades for my personal Commsec account so long as I'm using it for my SMSF as well for completely different trades?

I don't currently have a Commsec live data feed for my personal account

Yes both do if you make enough trades throughout a month you get the live data feed free, but I doubt I'll be trading that often enough in every month to qualify for it.
 
Caput Lupinum said:
How can the ATO tell if I'm using my CMC live market data to place trades for my personal Commsec account so long as I'm using it for my SMSF as well for completely different trades?
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They couldn't except maybe if you were doing no trading on your SMSF account and only on your personal account.
 
I have another Q?

I enquired about getting a safety deposit box for my intended PM purchases for my SMSF at my local Westpac Bank. Now before anyone screams why I'm choosing a bank SDB instead of a private vault I wanted it a little closer to home as I live in Broken Hill I don't fancy travelling to Melbourne all the time.

Anywho I asked the accounts manager if I could get the SDB account in the corporate trustee name instead of my personal name to keep the accountant and ATO crowd happy. Apparently this can't be done and the account has to be in my personal name. Now I've read previously that the ATO doesn't really care where you keep your metals as you're ultimately responsible for them come audit time but I just wanted to make sure this isn't a problem so long as say I make a record of it at a trustee meeting and keep records of the SDB account.

Has anyone else run into this problem for storing SMSF PMs in a bank SDB?
 
Caput Lupinum said:
I have another Q?

I enquired about getting a safety deposit box for my intended PM purchases for my SMSF at my local Westpac Bank. Now before anyone screams why I'm choosing a bank SDB instead of a private vault I wanted it a little closer to home as I live in Broken Hill I don't fancy travelling to Melbourne all the time.

Anywho I asked the accounts manager if I could get the SDB account in the corporate trustee name instead of my personal name to keep the accountant and ATO crowd happy. Apparently this can't be done and the account has to be in my personal name. Now I've read previously that the ATO doesn't really care where you keep your metals as you're ultimately responsible for them come audit time but I just wanted to make sure this isn't a problem so long as say I make a record of it at a trustee meeting and keep records of the SDB account.

Has anyone else run into this problem for storing SMSF PMs in a bank SDB?
Click to expand...

Westpac opened a SDB for me in my SMSF's name. It still has my personal name e.g. "JOHN SMITH <ATF>SMITHS SMSF". I also had a SMSF bank account with Westpac.

I think the person you spoke to didn't know the correct procedure.
 
Do you want to keep your PMs in a box or do you think that you have to? What PMs do you have (I'm not asking for an inventory but do you have bars or coins)?

I think if the SMSF is paying a bill that is in your name you may have a problem from an audit point of view (it is essentially taking money out of the fund before a condition of release has been met and that is a SIS contravention). At the end of the day if you can get the bank to write a letter stating they wouldn't issue it to a corporate trustee (which I find odd - no reason for them not to) and you got it in your own name because of that - also taking into account the fact it will be a small cost as opposed to the value of the fund etc the auditor probably won't care that much about it. Then again, auditing comes down to the individual so who knows.
 
willrocks said:
Caput Lupinum said:
I have another Q?

I enquired about getting a safety deposit box for my intended PM purchases for my SMSF at my local Westpac Bank. Now before anyone screams why I'm choosing a bank SDB instead of a private vault I wanted it a little closer to home as I live in Broken Hill I don't fancy travelling to Melbourne all the time.

Anywho I asked the accounts manager if I could get the SDB account in the corporate trustee name instead of my personal name to keep the accountant and ATO crowd happy. Apparently this can't be done and the account has to be in my personal name. Now I've read previously that the ATO doesn't really care where you keep your metals as you're ultimately responsible for them come audit time but I just wanted to make sure this isn't a problem so long as say I make a record of it at a trustee meeting and keep records of the SDB account.

Has anyone else run into this problem for storing SMSF PMs in a bank SDB?
Click to expand...

Westpac opened a SDB for me in my SMSF's name. It still has my personal name e.g. "JOHN SMITH <ATF>SMITHS SMSF". I also had a SMSF bank account with Westpac.

I think the person you spoke to didn't know the correct procedure.
Click to expand...

Are you a personal trustee or do you have a corporate trustee?
 
Elemental said:
willrocks said:
Caput Lupinum said:
I have another Q?

I enquired about getting a safety deposit box for my intended PM purchases for my SMSF at my local Westpac Bank. Now before anyone screams why I'm choosing a bank SDB instead of a private vault I wanted it a little closer to home as I live in Broken Hill I don't fancy travelling to Melbourne all the time.

Anywho I asked the accounts manager if I could get the SDB account in the corporate trustee name instead of my personal name to keep the accountant and ATO crowd happy. Apparently this can't be done and the account has to be in my personal name. Now I've read previously that the ATO doesn't really care where you keep your metals as you're ultimately responsible for them come audit time but I just wanted to make sure this isn't a problem so long as say I make a record of it at a trustee meeting and keep records of the SDB account.

Has anyone else run into this problem for storing SMSF PMs in a bank SDB?
Click to expand...

Westpac opened a SDB for me in my SMSF's name. It still has my personal name e.g. "JOHN SMITH <ATF>SMITHS SMSF". I also had a SMSF bank account with Westpac.

I think the person you spoke to didn't know the correct procedure.
Click to expand...

Are you a personal trustee or do you have a corporate trustee?
Click to expand...

Personal
 
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