What is a Self-Managed Superannuation Fund – Leigh Barker Tangible Assets

Standard

A self-managed superannuation fund (SMSF) is a trust structure managed by its members to provide benefits to these same members upon retirement. An SMSF operates under similar rules and restrictions as ordinary super funds. An SMSF is designed for its members to have direct control over their retirement savings and investments.

An SMSF is a private superannuation fund regulated by the Australian Tax Office (ATO) who checks the compliance of the SMSF on an annual basis. An SMSF comprises no more than 4 members all of whom are trustees of the SMSF, all of whom are personally liable for all decisions made by the SMSF. All members must be trustees and all members are responsible for decision making and compliance with relevant laws.

An SMSF is established for the sole purpose of providing benefits to members in retirement. An SMSF is a vehicle to save for your retirement.

An SMSF may either have a corporate trustee or an individual trustee who is responsible for making investment decisions and implementing the investment strategy of the fund.

It is important that the assets of an SMSF are separated from those of the trustee. As such an SMSF is required to have its own tax file number (TFN), an Australian business number (ABN) and its own bank account into which all SMSF deposits and payments are made. In addition, all investments are to be made in the name of the SMSF. The failure to separate assets is a clear contravention of super legislation and associated regulations.

Please note: Prepared by Leigh Barker Tangible Assets , Accountant, Portfolio Finance, Gordon, West Pennant Hills and MWC Group. Note that all content of this blog is general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstance

Advertisements

What is an Electronic Funds Transfer – Leigh Barker Tangible Assets

Standard

When money is transferred from one bank account to another without the use
of paper documents and without the direct involvement of bank staff this is
referred to as an electronic funds transfer.

In contrast to traditional payment methods new payment systems have been
developed as the internet has evolved. Initially banks changed the method
that interbank payments were processed followed shortly thereafter at the
retail banking level whereby corporate and retail customers were offered
electronic banking platforms to process incoming and outgoing payments.

Electronic funds transfer systems have the effect of reducing administrative
costs as the direct involvement of bank staff is not required. Due to
potential cost saving benefits electronic funds transfer systems are
promoted by most financial institutions.

Electronic funds transfer systems have been applied to such transactions as
payroll related payments, debit or credit transfers, mortgage payments etc.

While there are many applications currently in place for an electronic the
most common services available comprise

* Automatic Teller Machine (ATM) is an electronic terminal that
permits banking any time. To withdraw cash, make deposits or transfer funds
using an ATM card & pin.
* Pay by Phone systems permit the user to contact the biller to pay or
transfer funds between accounts
* Payment transactions permits the user to make purchases with a debit
card. Transactions can take place in person, online or by telephone

Initially electronic funds transfer was driven by banks and aimed at
efficiency gains and cost savings whereas today the focus is on e-commerce
solutions to address how consumers access and pay for new services.

Please note: Prepared by Leigh Barker Tangible Assets, Accountant, Portfolio
Finance, Gordon, West Pennant Hills and MWC Group. Note that all
content of this blog is general in nature and anyone intending to apply the
information to practical circumstances should seek professional advice to
independently verify their interpretation and the information’s
applicability to their particular circumstance

What is an Electronic Signature – LEIGH BARKER TANGIBLE ASSETS

Standard

As technology has advanced so has the method in which documents are executed
through the use of electronic signatures.

An electronic signature is simply a signature used on an electronic document
or transmission comprising either a symbol or other data in a digital format
attached to an electronically transmitted document. Thus, an electronic
signature is a person’s electronic agreement to the terms of a document and
are recognised at law both internationally and in Australia as having the
same effect as hand written signatures.

The aim of the electronic signatures is to create an accurate and secure
method to identify the signatory. As such electronic signatures are subject
to increasing levels of security to prove the validity of the signatory such
as

* A private key to create the electronic signature
* A capability to determine if the data has been altered or amended
after the message was signed
* A unique identifier linked to the signatory
* The ability to invalidate the signature is data has been changed

While the system may vary amongst those who offer the ability to execute
documents with an electronic signature the general concept is the same
whereby a document is uploaded to an on-line service and tagged where
signatures are required. The uploaded document is then sent electronically
for execution which can occur through a few clicks, or the use of standard
fonts or through scribble using a mouse or electronic pen. When finished,
the executed document is returned.

Please note: Prepared by Leigh Barker Tangible Assets, Accountant, Portfolio
Finance, Gordon, West Pennant Hills and MWC Group. Note that all
content of this blog is general in nature and anyone intending to apply the
information to practical circumstances should seek professional advice to
independently verify their interpretation and the information’s
applicability to their particular circumstance

What is an Electronic Service Address – LEIGH BARKER TANGIBLE ASSETS

Standard

An electronic service address (ESA) is a unique identifier used by a Self-Managed Superannuation Fund to receive SuperStream data. An electronic service address is not an active email address it is an alias comprising a uniform resource locator (URL) or internet protocol (IP) of a message provider.

An electronic service address is akin to a digital post office established to receive data from employers through SuperStream. Employers only remit contribution remittance advice information via the electronic service address and all contributions money is remitted directly to the self-managed superannuation fund bank account.

An electronic service address can be obtained from either a Gateway Service, a bank, a tax agent, an accountant, or a self-managed superannuation fund administrator. The provider of an electronic service address will

* Issue an active electronic service address
* Receive contributions messages sent to a self-managed superannuation fund from employers
* Transfer employer contribution messages
* Ensure that all technical requirements for interacting electronically across the superannuation network in accordance with the ATO’s electronic data messaging requirements for gateways
* Once provided to an employer the service will deliver superannuation transaction messages via a secured electronic distribution network to a nominated email address

For a self-managed superannuation fund to receive contributions, the following information is to be provided to employers

* Australian Business Number (ABN)
* Bank account details (BSB, account number, account name)
* Electronic service address (ESA)

Thus providing the employer knows the self-managed superannuation funds Australian Business Number (ABN) and Electronic Service Address (ESA) the employer can send SuperStream data.

Please note: Prepared by Leigh Barker Tangible Assets, MWC Group, Accountant, Portfolio Finance, Gordon and West Pennant Hills. Note that all content of this blog is general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstance

What is a Discretionary Trust – Leigh Barker Tangible Assets

Standard

A discretionary trust is a structure established to hold property for the benefit of other persons commonly known as beneficiaries who have no fixed entitlement or interest in the trust funds. A discretionary trust is governed by the terms of the trust deed and the trustee is the legal owner of the trust property.

Discretionary trusts generally have the power to determine which beneficiary will receive payments from the trust. In addition, the trustee can select the amount of trust property that the beneficiary receives.

Discretionary trusts still serve a useful function

> Asset protection – as no one individual is the owner of the assets held in a discretionary trust then property held by a trustee cannot be taken by a creditor
> Estate Planning – to hold assets for future generations of the same family
> Tax Planning – under current laws beneficiaries pay income tax at their marginal rates and since the trustee has the power to choose which beneficiary should be paid they may select the beneficiary with the lowest marginal rate

A discretionary trust is required to a tax file number (TFN) and where relevant an Australian Business Number (ABN) or GST registration. The trust deed specifies the powers of the trustee which are generally sufficient to manage the trust in an orderly manner.

As the legislation that governs discretionary trusts is often subject to parliamentary review a regular review of trust deeds is warranted to ensure that the structure is adapted to changes that effect business and family circumstances.

Please note: Prepared by Leigh Barker Tangible Assets, MWC Group, Accountant, Portfolio Finance, Gordon and West Pennant Hills. Note that all content of this blog is general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstance.

What is a Trust – Leigh Barker MWC Group

Standard

A trust is a business structure whereby the trustee conducts a business on
behalf of the beneficiaries. As a trust is not a separate legal entity, a
trustee must be appointed.

A trustee can be an individual or a company whereas a beneficiary can be a
person, a company or the trustee of another trust. The trustee will manage
investments, maintain records, and manage assets and distributions. The
overriding duty of a trustee is to adhere to the terms of the trust deed and
to act in the best interests of the beneficiaries.

A trust is established by a formal deed that outlines how the trust is to
operate. The trust deed defines the relationships between the trustee and
the beneficiaries and sets out the duties and powers of the trustee.

A trust distributes on an annual basis all profits to the beneficiaries who
pay tax individually and provided that all profits are distributed a trust
does not pay tax.

A trust structure has both advantages and disadvantages and without
identifying any specific type of trust they are generally seen to be

  • Asset Protection
  • The ability to pass wealth from one generation to the next
  • A reduction in liability where a company acts as trustee
  • The expense of establishing and administering
  • The inability to distribute losses
  • The limited life of the trust deed

Prior to deciding on a business structure seek professional advice from an
accountant, solicitor or business advisor to ensure that the structure
selected meets your personal circumstances and business objectives.

Please note: Prepared by Leigh Barker MWC Group, Accountant, Portfolio
Finance, Gordon, West Pennant Hills and Tangible Assets,. Note that all
content of this blog is general in nature and anyone intending to apply the
information to practical circumstances should seek professional advice to
independently verify their interpretation and the information’s
applicability to their particular circumstance.

What is a Sole Trader – Leigh Barker MWC Group

Standard

Where an individual operates a business as the sole person they are
generally referred to as a sole trader.

Becoming a sole trader is the simple and relatively inexpensive. A sole
trader has full control of all assets, makes all business decisions, is a
low cost structure and has fewer reporting requirements.

A sole trader has many characteristics, some of which are listed below

  • Unless a business name is required, set up costs are negligible
  • Administration is generally limited to bookkeeping and accounting
  • A sole trader retains all the profits of their business
  • A sole traders financial information is kept private
  • A sole trader is legally responsible for all aspects of the business
  • A sole trader is personally liable with unlimited liability

A sole trader business model is most popular with tradesman and specialist
service providers prior to commencing business as a sole trader

  • determine if any form of authorisation or registrations are required
    from regulators or local authorities
  • consider managing the business separately by operating from a
    separate bank account
  • ascertain if business insurances are required or desirable
  • find suitable premises to operate from within

As a sole trader business grows it is relatively easy to change this form of
business structure or to close a business operating as a sole trader.

Prior to deciding on a business structure seek professional advice from an
accountant, solicitor or business advisor to ensure that the structure
selected meets your personal circumstances and business objectives.

Please note: Prepared by Leigh Barker MWC Group, Accountant, Portfolio
Finance, Gordon, West Pennant Hills and Tangible Assets,. Note that all
content of this blog is general in nature and anyone intending to apply the
information to practical circumstances should seek professional advice to
independently verify their interpretation and the information’s
applicability to their particular circumstance.