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Getting started with an SMSF

Posted on August 9, 2016 by admin

Starting a self-managed super fund (SMSF) may be a good idea for those after more control over investment choices and fund running costs.

However, those considering an SMSF need to ask themselves some key questions such as:

An SMSF can have no more than four members. All members must be trustees of the SMSF or directors of the trustee company (if a corporate trustee is in place).

Those who are an undischarged bankrupt or have been convicted of an offence involving dishonesty are considered disqualified persons. Such people cannot become an SMSF trustee.

SMSFs are regulated by the ATO, so those in charge need to meet compliance obligations such as lodging annual returns, storing fund documents, preparing paperwork and signing an SMSF trustee declaration.

Before trustees can arrange for their employer (or themselves) to make super contributions to the SMSF, the fund needs to be established. This includes:

Those in charge will also need to draft an investment strategy and invest their super in accordance with that plan.

Those wanting their employer’s superannuation guarantee contributions to be paid to the SMSF need to check if they have fund choice.

Those who have fund choice must complete a standard choice form (SCF) outlining the SMSF’s details and give this to their employer.

The SMSF must have an electronic service address (ESA) which enables it to receive an electronic contribution data message from an employer. SMSF members who are self-employed do not need an ESA.

SMSF trustees also have to decide what happens to their super benefits from their previous super fund. Trustees can arrange to transfer those benefits to their SMSF via the ATO or arrange partial transfer using a form available from the previous fund. Before transferring existing super benefits, it is important to consider the implications the transfer may have on any life insurance cover from the previous fund.

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Avoiding mortgage default

Posted on August 26, 2020 by admin

As individuals struggle with cash flow through the coronavirus, the Australian Bankers Association records that repayments on almost 500,000 mortgages have been deferred for six months. While repayments can be delayed, they cannot be avoided altogether.

Lenders can send you a default notice the day your repayment is overdue. However, they could also wait until your repayment is overdue by 90 or more days. When you receive a default notice, you are given 30 days to repay the amounts you have missed in addition to the regular repayment on your loan. Individuals who are struggling with their home loan repayments can avoid mortgage default by considering the following.

Contact your lender
Lenders are generally willing to work with you through financial hardship. Don’t be afraid to contact your lender to discuss your situation and find out what options are available for you. Lenders are often willing to negotiate short-term variations to repayment schedules that both parties can agree to. However, make sure that you do not agree to unrealistic repayment conditions that cannot be met.

Many Australian banks are offering a six-month deferral on mortgage repayments (including interest) for customers who are experiencing financial hardship as a result of COVID-19. If this is you, contact your bank to see if this is an option.

Apply for a hardship variation
Mortgage holders may be able to change the terms of their loan or temporarily pause or reduce their repayments under a hardship variation. A hardship variation can still be requested after you receive a mortgage default. To apply for one, contact your lender’s “hardship officer” and tell them that you wish to change your loan repayments due to financial hardship. This will usually require you to explain why you are struggling to make payments and to estimate how long your financial problems will continue to determine how much you can afford to repay.

After submitting a hardship variation request, your lender must contact you within 21 days with the outcome of your request. They may ask you for more details regarding your request; in this case, they must contact you again within 21 days from when you provide the additional information.

Consider selling your home
Selling your home is a tough decision, but in some cases this may be the better option if your circumstances are unlikely to improve. If you get to the point where your lender takes possession of your home and sells it, it’s likely that you won’t make as much as if you sold it yourself. When you sell your house on your own terms, chances are you will get a better price and avoid having to pay the legal fees passed on by your lender. Inform your lender if you decide to sell your home; they may ask for proof, such as a copy of the contract with your real estate agent or property advertisements.

Renting out your home until you can afford to make repayments again may also be an option if you are able to live somewhere else during this period.

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