FARUKI

Brett Marks, CEO of the Noah Group tells Trustees of Self-Managed Funds to beware, the tax office is escalating its focus on your activities.

Fortunately though the Noah Group and its licensed professionals can help clients set up their own SMSF and use it to leverage into property, while adhering to the recently-imposed new rules in the SMSF industry. For anyone disheartened by their under-performing super funds (and have approximately $120,000 in super), the Noah Group can assist you in entering the property market through your own property trust by leveraging your super. As a result of the September 2007 revisions to the SIS Act, the process of leveraging your super into property has been formally allowed in Australia and with it, the potential to yield great returns.

The Noah Group reports that as of the 1st of July, 2008, the tax office now requires fund auditors to report any of a long list of legal contraventions by trustees of funds.

Two of these contraventions include providing financial assistance to members or their relatives and the breaching of the sole purpose test (that requires funds to be maintained for the core purpose of providing retirement and death benefits for members).

Other reportable contraventions to the tax office by newly formed funds include failing to purchase assets on an arm’s length basis, borrowing from a SMSF (certain exceptions exist for short-term loans) and exceeding the in-house asset ratio (i.e. funds are not allowed to invest more than 5% of their assets, including fund assets, with related parties).

The tax office is becoming better equipped to concentrate more of its efforts on new trustees who are failing to comply with superannuation laws. And they are creating an opportunity to stamp out bad habits early.

The Noah Group says that findings by a recent tax office survey of new trustees and highlighted by Smart Investing on several occasions, showed that 30% of those surveyed could not explain the most fundamental of all SMSF rules, the sole-purpose test. And a quarter of new trustees surveyed were unaware of restrictions on the type of assets that their funds could acquire.

These survey findings have clearly disturbed the Minister for Superannuation, Nick Sherry, as well as senior tax officers.
Brett Marks points to another tax office initiative, new trustees have been required since July 2007 to sign a declaration that they understand their obligations and responsibilities.

Signing an official declaration that asserts that they fully understand their obligations and responsibilities, as Brett Marks would like to point out, has been a legal requirement since July 2007.
Under the current taxation acts, it could be detrimental not having your financial planner and accountant involved in your investment structure, the Noah Group says, as you may fall into the trap of not fulfilling your obligations and responsibilities when using a SMSF.