Wednesday 5 December 2007

SMSF Update - New Trust Deed

ESuperFund (the administrator of our Self-Managed Superannuation Fund, or SMSF) has sent out a new Trust Deed for DW and I (the trustees and members of our SMSF) to sign. Apparently the recent changes to "Simpler Super" last June have made the original Trust Deed so out of date that there's a chance our SMSF could become "non-complying" and lose it's tax-benefited status if we don't update the Trust Deed. The new trust deed costs $199, which isn't a huge amount, but I would have expected it to be free since it's been less than a year since we setup our SMSF and signed the original Trust Deed. At least ESuperFund has promised to not make any additional charges if another Trust Deed update is required within the next five years.

Last year's SMSF tax return and member statements were very simple as I had only made a $200 undeducted contribution into the SMSF bank account before 30 June to check that everything was setup and working correctly. This year we have rolled over our most of our existing retirement savings from the BT fund (our employers fund) and have had our SGL and salary sacrifice "tax deducted" contributions paid into our SMSF bank account. Our employer sends these payments to BT "super choice" which then forwards them to our SMSF bank account. For some reason the SGL contributions for DW and myself get rolled together into a single monthly deposit, and the salary sacrifice amounts have also been sent through as a single transaction for both members. This means that I have to keep an accurate spreadsheet showing the breakdown of each transaction into member components, as ESuperFund will need this information at the end of the financial year in order to prepare the member statements and financial accounts.

Most of our SMSF balance has now been invested into the Vanguard High Growth Fund. By investing in a single Vanguard fund we will maximise the available fee rebate. Having only one cash account and one investment account for the SMSF also makes the record keeping much simpler. If we started directly investing in stocks or CFDs we would probably have to spend some extra money on SMSF specific accounting software. Since software such as MySF costs over $300 pa this would defeat the "low cost" rationale for setting up a SMSF in the first place.

The rollover statements for the money we transferred from BT to the SMSF are quite complicated, so I'll have to check the annual SMSF paperwork very carefully when it's produced by ESuperFund next August. It's important that all the information has been correctly transferred from BT to ESuperFund as there can be adverse tax consequences during retirement or when death benefits are paid to non-dependant beneficiaries.

Copyright Enough Wealth 2007

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