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Self Managed Super Fund Overview

When it comes to superannuation funds, employers are legally obligated to pay superannuation for all workers once they’re 18.

There are a few other stipulations, but for the most part young Aussie kids working at McDonalds or the local supermarket will have a super fund chosen for them, and mostly forget all about it.

Fast forward 10 or 20 years, and people become more financially aware. That super fund your first job signed you up for doesn’t look so great anymore. It’s around this time of financial enlightenment, people start evaluating their options, and one that keeps rearing its head is the “Self Managed Super Fund”.

The ATO found that 86% of SMSF members are 45 years or older. So what is SMSF, and what’s to know about this form of super?

What is a self managed super fund?

A Self Managed Super Fund – known as SMSF – is exactly what it sounds like. It’s a super fund that you manage yourself privately.

If you’ve ever had a regular super fund (and taken 10 minutes to look around), you would have noticed they usually give you some flexibility around how much risk your super is exposed to. The ‘package’ you choose dictates what your money is invested in.

For people coming up on retirement, this will usually be a low risk option such as bonds, and for young people – who can afford to take on more risk – will likely involve shares.

However, most super funds don’t actually allow you to have input regarding specific companies you invest in. This is where SMSF is so beneficial, as it gives you total control over where your money is invested.

It’s worth noting that while you get total control, there is significantly more work involved in setting up and actively managing your SMSF, than just having your average industry fund take care of everything for you. 

Key Things To Know About SMSF

SMSFs take time (and money)

Like a business, the economic market has its ups and down. Traversing the deep dark cave of investing can be very time consuming and anxiety inducing. Finding the right things to invest in is tough, and getting it wrong can cause huge financial stress. ASIC recently stated a good benchmark for starting an SMSF is having at least $500,000.

You’re Accountable

All actions and activities your SMSF takes part in, holds you accountable. If a professional accountant, or your friend, or partner within your SMSF does something or influences a decision, all of the people involved in the SMSF are held responsible

There Are Fewer Safety Nets

Theft or fraud isn’t covered by any compensation schemes, and the Superannuation Complaints Tribunal won’t help you. 

You’re Allowed Six Members In Your SMSF

This has only just been brought to the senate (September 2020). Whilst it was previously four, you can now include six people in your fund. They can be family or friends. Children under 18 can join, but a parent or guardian is required to act as trustee/director on their behalf until they reach 18.

Costs Associated With SMSF

There are a few costs associated with operating an SMSF. Audits, reporting fees to prepare reports, broker and accountant fees, and insurance are some of the annual costs associated with running your SMSF that will eat into your return on investments.

SMSF Isn’t A Tool To Improve The Present

SMSFs cannot be used to provide individuals with any financial assistance. You cannot fund your own business, and you can’t live in or use any property within your SMSF. Everything you invest in with your self-managed fund must be for the purpose of improving your future retirement.

Your SMSF Can Borrow Money

Self Managed Super Funds (SMSF) are allowed to borrow to invest in property or shares as long as a Limited Recourse Borrowing Arrangement (LRBA) is used for the transaction. You can find more information on LRBA here.

Insurance Through Your SMSF

Fund members need to abide by superannuation law. This involves considering if the fund should hold life insurance for its members. There are a few conditions which must be met with SMSF and insurance, so it’s best to contact an SMSF expert.

What can SMSF Buy?

As mentioned above, investments and purchases made through your SMSF must never be used for personal benefits. SMSFs can be used to purchase investments both domestically and internationally, and common investments for SMSF accounts include:

• Direct (traditional) investments such as shares, bonds, ETFs, LICs, gold, and term deposits

• Currencies – both foreign exchange and crypto (this is often not encouraged however – speak to a professional before utilising your SMSF to invest in currency)
• Property (be aware fund members cannot personally live in the SMSF property)
• Rare goods seen as an investment (art, antiques, wine etc)
• Cars (they cannot be used personally by the fund member, or rented to an associate)

Difference Between APRA and SMSF

This is somewhat of a redundant question, as APRA refers to the superannuation regulatory body Australian Prudential Regulation Authority. “APRA funds” are referred to as SAF’s (Small APRA Fund) and include most major industry and retail super funds, who are regulated by APRA. SMSFs on the other hand are regulated by the ATO. If you’re considering changing to a self managed super fund, APRA is not something to concern yourself with.

Members Within Your SMSF

As previously discussed, you can now have up to 6 members in an SMSF. It’s common for SMSFs to be made up of family or friends, but what happens when disaster strikes? Common issues that will impact SMSF members include death, divorce, disagreement, and illness. If any of these situations affects your SMSF, you should get in contact with an expert immediately to help you throughout the process.

• Death: When a member dies, the SMSF typically pays a death benefit to the deceased dependants or beneficiaries.
• Divorce: In the event of divorce, there are two main options
  • Continue to operate the fund until a formal separation agreement is provided
  • Transfer your individual account balance into your own separate SMSFs
• Disagreement: The general rule with SMSFs is that members must unanimously agree on actions and decisions. It’s important that all members discuss what happens in the event of a disagreement when they are first starting the self managed fund.
• Illness: In the event that a member is declared terminally ill, it may be decided to withdraw funds.

Wrapping Up Our SMSF Guide

As you can see, there are a lot of things to be aware of when considering switching your super to a SMSF. If you’re ready to make the switch, we recommend talking to a professional to ensure you understand everything involved, and start out strong.

SMSF FAQs:

Phone calls are an opportunity to connect with prospects and solve client problems. How your team engages via the phone can make or break your reputation – and future sales. Define your phone communication procedure to get your team up to standard

Use the below steps when talking to customers over the phone to ensure every caller receives the same awesome experience:

1. Smile before you pick up the phone.
This helps to impart a positive, friendly tone and build rapport with the caller.

2. Answer the phone fast.
Ideally, after the first ring.

3. Greet the caller consistently, and on brand.
For example, “Kia Ora, you’re speaking with…” or “Welcome to the coolest online beauty store, my name is…”.

4. Listen attentively, provide acknowledgement and don’t interrogate.
Provide verbal cues to show you’re listening. Don’t interrupt while the caller is speaking, and reflect their words back to them to ensure you’ve understood.

5. Use question softeners.
For example, “Could I please ask?”, “Tell me…”, or “By the way…”.

6. Provide small pieces of information at a time.
If your answer requires a lot of information, ask if they would like you to follow up with an email.

7. Talk in language the caller will understand.
Don’t use technical or industry-specific terms that the customer won’t understand.

8. Check the caller’s temperature. Use ‘temperature checking questions’, such as:

How does that fit in with your schedule?
Does that fit with what you had in mind?
How does that sound?
How comfortable are you with that way of doing things?
How do you feel about that?
9. Confirm the details of the next steps.
For example, the time and date of an appointment or return phone call.

10. Confirm the caller’s best contact details.
Check your CRM and confirm the details you have, or ask for the caller’s phone number if you don’t already have it.

11. Re-assure the caller.
Ensure they’re happy that you’ve understood them and provided all the assistance you can, and leave them on a high.

12. Be the last to hang up.
This ensures you don’t hang up on them if they suddenly remember something else and start speaking again.

13. Return all telephone messages within four hours.
If this is not possible, return the call by the end of the day at the latest.

14. Ensure your hold music is on brand!
Try not to leave the caller on hold for long. If you need time to find the answer to their question, ask if you can call them back and give them a timeframe for doing so.

15. Record a brand worthy voicemail message.
Be that funny or informative, ensure it reflects your brand.

It’s super important to communicate your expectations to your team. This should be part of your induction process. Remember, marketing is always on.

Take this content and use it as the basis for creating your new Phone Communications Procedure!

Single Touch Payroll (STP) is a new system of reporting wages, tax and superannuation information to the ATO. Initially, large employers were required to report from 1 July 2018. Now, all employers must enter into the reporting system from 1 July 2019.

Small and micro employers have until 30 September to enter the system.

STP is a reporting obligation only—it does not change the way you pay employees.

How it works

Employers must submit payroll data to the ATO each time employees are paid. The ATO refers to this as a ‘pay event’.

All the major payroll software providers are compliant with the reporting requirements, allowing employers to lodge the information with the ATO directly from within the software.

All pay events must be lodged electronically.

Eligible micro employers with less than four employees will have simpler reporting options, such as being able to report quarterly through a registered tax or BAS agent.

There are some exemptions for certain employers or employees, such as closely held payees, employers without internet and some foreign workers.

What does it mean for employees?

STP does not change payments, entitlements or pay slips for employees.

Employees will be able to see all year-to-date payroll information online through their individual myGov account.

Instead of receiving a payment summary, employees will receive an ‘income statement’ in their myGov account once the payroll year is finalised by the employer.

What next?

If you do your own payroll and will be submitting the pay event information to the ATO yourself, check this link for all you need to know about reporting STP: ATO Report through Single Touch Payroll.

Get STP ready for your first pay run of the new financial year. If you do not already use payroll accounting software with STP reporting built in, talk to us about the best solutions for your business.

Are you ready for Single Touch Payroll?

For employers with 19 or fewer employees, single touch payroll (STP) legislation will be coming into effect on the 1st of July 2019. Are you ready? What is Single Touch Payroll and what do the changes mean for your business and who does it affect? What will you need to do to prepare, so that you will be compliant?

What is Single Touch Payroll?

For employers with 20 or more employees, you will already be familiar with STP, but if you are unaware, STP is the mechanism for sending tax and super information to the ATO directly from your payroll or accounting software every time you pay your employees. The legislation was passed in February this year to extend this to employers with 19 or fewer employees.

How to prepare your small business for STP and ensure compliance

Most popular payroll software companies will have the correct facilities ready to go, such as Xero and MYOB. If you are unsure, talk to us. There are a few things to be aware of you as you get ready to use STP reporting.

1. Check your software – you may need a software update or additional step added to your process
2. Ensure you have factored STP into your payroll process
3. Ensure your payroll compliance is up-to-date generally, including employee benefit, wage and super entitlements and maintaining accurate records

The first year of using STP reporting is a transition year and you will have assistance from the ATO, so penalties for errors will not generally apply. If you don’t think you will be ready by the 1st of July, you can apply for a deferral through the ATO. The ATO gives a list of possible reasons for deferring, including lack of internet coverage, or if further development of software is needed.

Start doing your preparation now to ensure you are ready by the 1st of July.

Do you understand the difference between profit and cash? Are you improving your profits but not seeing an improvement in your bank balance? We can help you increase both your profit and your cash!

There’s a massive difference between profit and cash. Let’s explore the differences to make a better plan to increase both.

1. Sales.
Profit increases when you increase sales; cash increases when you collect the money from customers. To increase both your profit and cash from sales:

• Delight your customers
• Generate more leads and referrals
• Convert a higher number of quotes or proposals
• Increase transaction frequency
• Increase transaction value

2. Invoicing.
Profit increases when you send an invoice to a customer; cash increases when you collect the invoiced amount. To increase both your profit and cash:

• Set clear Terms of Trade
• Offer a small discount for early payment
• Agree the price in advance
• Stick to your payment terms
• Don’t do work for people who have overdue payments

3. Margins.
Increasing your margins will increase your profit; collecting the increased margin will increase your cash. To increase both your profit and cash:

• Increase your prices
• Invoice faster
• Negotiate better payment terms with suppliers
• Reduce errors and rework
• Train and empower your team
• Increase your efficiency

4. Financing.
Reduce your finance costs to increase your profit; borrow money for assets to increase your cash. To increase your profit and cash through financing:

• Spread the costs of assets over 3-5 years instead of buying them outright (e.g. vehicles)
• Borrow from a bank instead of a finance company
• Secure the asset purchases over ‘bricks and mortar’ (if possible)

5. Overheads.
Reducing your overheads will increase both your profit and cash. To reduce your overheads:

• Negotiate with suppliers
• Measure your return on your spend (e.g. advertising, accounting fees, etc.)
• Review your subscriptions
• Go paperless

This is not an exhaustive list of ways to increase your profit and cash. We can help you identify specific areas of improvement in your business to increase both profit and cash.

“Never take your eyes off the cashflow because it’s the lifeblood of the business.” – Sir Richard Branson