Disruptor Debate · How to better understand the demographics and psychographics of your existing and future SMSF clients. GA WHAT SERVICES P DO YOU PROVIDE AND WHAT ARE THEY PROVIDING?

Disruptor Debate

Aaron Dunn, Managing Director,

The SMSF Academy

How different does it look today to 5 years ago?

Regulatory reforms, legislative change, technology are all redefining SMSF business models

DISRUPTOR

DISRUPTION

More information about SMSFs than ever before

How automation and integration through cloud technology is changing SMSFs forever!

2015 SMSF Association National Conference www.smsfassociation.com

To what extent do you use cloud

technology with your SMSF clients?

Use cloud technology in

business with SMSF clients

Online access for SMSF trustees

through delivery of web-based services

Use of cloud technology with SMSF clients


InnovatorsEarly

Adopters Early Majority Late Majority Laggards

Dev

elo

pm

ent

Renewal (b)

34% 34%13.5%2.5% 16%

Intr

od

uct

ion

Gro

wth

Mat

uri

ty

Decline (a)

Product life cycle

Product adoption curve

SMSF sector and the law of diffusion of innovation

TODAY

How to better understand the demographics and psychographics of your existing and future SMSF clients

GA PWHAT SERVICES

DO YOU

PROVIDE AND

WHAT

ARE THEY

PROVIDING?

Look deeper than just the surface of your SMSF business


Disclaimer

© Aaron Dunn, The SMSF Academy 2015

This presentation is for general information only. Every effort has been made to ensure

that it is accurate, however it is not intended to be a complete description of the matters

described. The presentation has been prepared without taking into account any personal

objectives, financial situation or needs. It does not contain and is not to be taken as

containing any securities advice or securities recommendation.

Furthermore, it is not intended that it be relied on by recipients for the purpose of making

investment decisions and is not a replacement of the requirement for individual research or

professional tax advice. This presentation was accompanied by an oral presentation, and

is not a complete record of the discussion held. No part of this presentation should be used

elsewhere without prior consent from the author.

SMSF legislative shocks to

prepare for now!

Bryce Figot, Director

DBA Lawyers

Introduction

In 2015 prepare for three big legislative shocks

• LRBAs

• Penalties

• Victorian property — stamp duty!

Each is a disruptor

However, advisers can take certain steps to mitigate

Disruptor #1 —

LRBAs


LRBAs

Q: What is the difference between:

• Magic dragons and

• LRBAs?

A: Dragons live forever but not so little boys

What does the future hold for LRBAs?

LRBAs

http://www.word-2010.com/wp-content/uploads/2011/03/word-quaver.gif

http://www.word-2010.com/wp-content/uploads/2011/03/word-quaver.gif

http://www.word-2010.com/wp-content/uploads/2011/03/word-beamed-quavers.gif

http://www.word-2010.com/wp-content/uploads/2011/03/word-beamed-quavers.gif


LRBAs

The Financial Systems Inquiry recommended:

Remove the exception to the general prohibition on direct borrowing for limited recourse borrowing arrangements by superannuation funds.

LRBAs might not live forever!

The Financial Systems Inquiry also recommended grandfathering:

… funds with existing borrowings should be permitted to maintain those borrowings.

When might this pose a big problem?


LRBAs (case study)

In September 2014:

• Purchase contract signed by SMSF to buy off-the-plan

• Pays 10% deposit

• Intends to settle using an LRBA

In February 2015, bare trust deed executed

When will bank sign loan contract with SMSF?

In January 2016 apartments built

What if…

Sep 14 Feb 15 Jan 16 Feb 16

Deed

Se

ttle

me

nt

DOES SMSF QUALIFY FOR

GRANDFATHERING?


LRBAs (case study)

What was the ‘line in the sand’ for grandfathering for 2010 IW/LRBA changes?

When the arrangement was ‘entered into’ (Superannuation Industry (Supervision) Amendment Act 2010 (Cth) item 14)

According to ATO, when is arrangement ‘entered into’?

Item 6.4 of the July 2010 Superannuation NTLG minutes:

the arrangement has been 'entered into' at a particular time if valuableproperty (such as a contractual right) has come into existence inrespect of the arrangement. This may occur at a time before therehas been any transfer of money.

Deed

Se

ttle

me

nt


LRBAs (case study)

Practical action to protect from legislative disruptor?

Implement — or at least advise clients to consider — a related party loan

ASAP

If LRBAs not banned, could just borrow from bank and agree to void related

party loan ab initio

If LRBAs banned, related party borrows from bank using non-SMSF security

and on-lends to SMSF

(Above of course involves conjecture)

Jan 16 Feb 16

Deed

Se

ttle

me

nt

Sep 14 Feb 15

RELATED

PARTY

Disruptor # 2 —

Penalties


Penalties

New legislation means ATO can now unilaterally imposes penalties

More important than ever to comply

What if something is a bit ‘line ball’?

Line ball examples:

• a reg 13.22C unit trust engages in real estate development: is this a business (in-

house asset rules)?

• a pre-99 unit trust now lends to a member: provision of financial assistance from

SMSF to member?

• did trustee exercise an independent mind when agreeing to terms (ie, is it arm’s

length)?

But advisers have a ‘secret weapon’

What can adviser do to legally PROVE (at first instance) something?


Penalties

Make proper resolutions!

Section 251A(6) of the Corporations Act 2001 (Cth):

A minute that is [properly] recorded and signed is evidence of the proceeding, resolution or declaration to which it relates, unless the contrary is proved.

Must have company as trustee for this to work

(Yet another reason why corporate trustees are superior)

In order to properly record and sign minutes, two key questions:

• How long after a meeting must you make an entry in the minute book (Corps Act

s 251A(1))?

• Who signs the minutes (Corps Act s 251A(3))?

(Different rules apply for resolutions without meetings)

Disruptor #3 —

stamp duty


Penalties

Does the following give rise to stamp duty in Victoria?

No, s 41A exempts the transfer

SMSF

member

lump sum (nil

consideration)


Penalties

What about the following?

Does, s 41A exempts the transfer?

Must be able to say ‘the beneficiary was a beneficiary when the property first became part

of the fund’

SMSF

member’s estate

Is an estate of member who hasn’t died yet a beneficiary?

There are two possible ways to try to address:

• Before SMSF acquires real estate, make BDBN in favour

of estate

• Have deed that expressly says estate of member who

hasn’t died yet is nevertheless a beneficiary

Conclusion


Conclusion

• Disruptors are coming

• But forewarned is forearmed

• Advisers can take steps to protect — and add value to — clients


Disclaimer

© Bryce Figot, DBA Lawyers Pty Ltd 2015

This presentation is for general information only. Every effort has been made to

ensure that it is accurate, however it is not intended to be a complete description of

the matters described. The presentation has been prepared without taking into

account any personal objectives, financial situation or needs. It does not contain and

is not to be taken as containing any securities advice or securities recommendation.

Furthermore, it is not intended that it be relied on by recipients for the purpose of

making investment decisions and is not a replacement of the requirement for

individual research or professional tax advice. This presentation was accompanied

by an oral presentation, and is not a complete record of the discussion held. No part

of this presentation should be used elsewhere without prior consent from the author.

SMSF Regulatory Disruption

Peter Burgess, Head of Policy & Technical

AMP SMSF


#1

White Paper

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=https://www.charteredaccountants.com.au/secure/myCommunity/blogs/551821/tax-blogs/517/will-our-political-leaders-be-at-the-starters-line-for-tax-reform&ei=EM7bVKGmIaahmgX8w4HQBA&bvm=bv.85761416,d.dGY&psig=AFQjCNEqSFlO0OSysPHmgZjuPzX8A5AW6A&ust=1423777657662300

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=https://www.charteredaccountants.com.au/secure/myCommunity/blogs/551821/tax-blogs/517/will-our-political-leaders-be-at-the-starters-line-for-tax-reform&ei=EM7bVKGmIaahmgX8w4HQBA&bvm=bv.85761416,d.dGY&psig=AFQjCNEqSFlO0OSysPHmgZjuPzX8A5AW6A&ust=1423777657662300

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://arts.gov.au/resources/logos&ei=0M7bVIS2N-HMmwX2goC4DA&bvm=bv.85761416,d.dGY&psig=AFQjCNF9_nZD_QC3bZE01HpdMKtkfLhXfA&ust=1423777861859308

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://arts.gov.au/resources/logos&ei=0M7bVIS2N-HMmwX2goC4DA&bvm=bv.85761416,d.dGY&psig=AFQjCNF9_nZD_QC3bZE01HpdMKtkfLhXfA&ust=1423777861859308


Source: Treasury, based on an analysis of 2011-12 ATO data

Share of total superannuation tax concessions by

income decile


Henry Review

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=https://cedarconsulting.wordpress.com/2009/09/30/blowing-the-dust-off-your-captives-business-plan/&ei=PuLOVPeOLaWwmwWSvYG4AQ&bvm=bv.85076809,d.dGY&psig=AFQjCNHRzL9KPn7g6KPn0mt0ujOj6WGBgQ&ust=1422930809117052

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=https://cedarconsulting.wordpress.com/2009/09/30/blowing-the-dust-off-your-captives-business-plan/&ei=PuLOVPeOLaWwmwWSvYG4AQ&bvm=bv.85076809,d.dGY&psig=AFQjCNHRzL9KPn7g6KPn0mt0ujOj6WGBgQ&ust=1422930809117052


True cost of the super tax concessions

In 2013/14 was it:

(A) $33b

(B) $25b

(C) $11b

(D) None of the above?

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://etec.ctlt.ubc.ca/510wiki/Writing_Formative_Objective_Assessments&ei=GgPPVMb9OcPcmgXllYGYBg&bvm=bv.85076809,d.dGY&psig=AFQjCNFkJiwvupehZdJWChy_35nJ0CFrqQ&ust=1422939241822623

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://etec.ctlt.ubc.ca/510wiki/Writing_Formative_Objective_Assessments&ei=GgPPVMb9OcPcmgXllYGYBg&bvm=bv.85076809,d.dGY&psig=AFQjCNFkJiwvupehZdJWChy_35nJ0CFrqQ&ust=1422939241822623


#2 Accountants’ exemption

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.jdsupra.com/legalnews/employee-benefits-alert-deadlines-loom-51803/&ei=ZNPbVJfqCuPXmAWnpIDIDA&bvm=bv.85761416,d.dGY&psig=AFQjCNGVikoausRsxRfvYAnD4EdKDRfMUA&ust=1423778997066503

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.jdsupra.com/legalnews/employee-benefits-alert-deadlines-loom-51803/&ei=ZNPbVJfqCuPXmAWnpIDIDA&bvm=bv.85761416,d.dGY&psig=AFQjCNGVikoausRsxRfvYAnD4EdKDRfMUA&ust=1423778997066503


#3 Financial advice reforms

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.lomaxfinancial.com.au/2013/07/fofa-future-of-financial-advice-impact-on-you/&ei=rtTbVNG2O-XSmAWHhYHgCw&bvm=bv.85761416,d.dGY&psig=AFQjCNFeR26WbR2zCnAaTXqaYnjWjZVTgQ&ust=1423779254973014

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.lomaxfinancial.com.au/2013/07/fofa-future-of-financial-advice-impact-on-you/&ei=rtTbVNG2O-XSmAWHhYHgCw&bvm=bv.85761416,d.dGY&psig=AFQjCNFeR26WbR2zCnAaTXqaYnjWjZVTgQ&ust=1423779254973014

Documents

Disruptor Debate · How to better understand the demographics and psychographics of your existing and future SMSF clients. GA WHAT SERVICES P DO YOU PROVIDE AND WHAT ARE THEY PROVIDING?