In an era of ever-evolving financial licensing requirements and legislative shifts within the Self Managed Superannuation Fund (SMSF) landscape, it’s crucial to understand the boundaries of advice that unlicensed accountants can offer. As the intricacy of these changes continues, SMSF trustees are increasingly seeking guidance, while accountants exercise greater caution in their discussions.

This article provides both SMSF trustees and accountants an outline of what they can and can’t discuss towards some key topics, and when it’s time to seek the expertise of a licensed SMSF adviser.

All topics with SMSFs can be discussed with clients as long as it remains factual.

These may include:

• Establishment and Compliance

• Tax Planning

• Investment Structures Available

• General caps and concessions available

• Individual Vs Corporate Trustees

An SMSF Adviser will be required to continue the discussion if the client wishes to discuss:

• Investment recommendations

• Borrowing within a SMSF and;

• Tailored contribution and pension commencement strategies.

What accountants CAN do and discuss before referring trustees to an SMSF adviser or financial planner

Addressing trust deed deficiencies

Every five years, it’s important to review an SMSF trust deed. Over the last two decades, the superannuation industry has undergone significant legislative transformations. Outdated trust deeds may restrict the trustee's abilities to make decisions in line with modern-day regulations. Updating a trust deed guarantees that the trustees can adapt to the latest reforms and legislative adjustments effectively.

Furthermore, when considering your SMSF’s administrative structure, there are substantial benefits to choosing a corporate trustee over an individual trustee. Some of these include:

• Mitigation of potential ATO penalties

• Enhanced asset protection through limited liability

• The option for a sole director in a single-member fund

• Simplified administration when introducing new members or dealing with member transitions

Provide a generic investment strategy template (not tailored to the client)

Accountants are permitted to offer clients a generic investment strategy template, which assists in developing their SMSF strategy. However, a licensed adviser is necessary to discuss specific strategy details, such as fund goals, asset allocation, and insurance considerations. Crafting a tailored investment strategy in line with current assets and member objectives is a task for a licensed SMSF adviser.

Provision of Tax Advice on SMSF investments

The provision of advice in relation to taxation consequences of holding or disposing of an SMSF investment does not need to be provided from a licensed SMSF adviser. Advice may incorporate areas such as net CGT impact, taxation of income and contributions into the fund and taxation from the sale of a property and will be accompanied with a general taxation advice warning.

However, it is recommended an SMSF adviser is consulted prior to seeking taxation advice as the timing of a transaction during the year can impact the overall tax outcome of a fund maintaining a pension.

What accountants CANNOT do, and should instead refer trustees to an SMSF advisor or financial planner

Assessing the suitability of a financial product in an SMSF

By law, recommendations regarding the suitability of a financial product for an SMSF or an individual must come from a licensed financial adviser. Nevertheless, accountants can provide factual information about which assets an SMSF can acquire. With the growing interest in unconventional assets like cryptocurrencies and precious metals, it is strongly recommended to consult an SMSF adviser when considering such investments. Specialised advisers can help navigate the intricate regulatory obligations that can catch trustees off guard, potentially leading to costly compliance issues, especially in the relatively new realm of cryptocurrency investments within an SMSF.

Recommend the commencement of a pension

Initiating any form of pension within a super fund requires the expertise of a licensed adviser. While factual information regarding the eligibility criteria for pension commencement and associated tax implications can be provided, the actual recommendation falls under the purview of licensed professionals. Conditions of release and taxation of benefits are multifaceted aspects that demand specialised knowledge. If you’re contemplating a pension commencement or have questions regarding taxation, sustainability, or simply where to begin, a licensed advisor or SMSF specialist can guide you through this process. They can ensure that the current structure and cashflow of the SMSF incorporated in a total wealth aspect can provide for your goals towards retirement and estate planning.

Tailoring contribution strategies to the client

Tailored contribution strategies, such as re-contribution strategies and contribution advice, needs to be discussed with a licensed adviser. These strategies offer tax benefits in both the short and long term, making them popular choices for SMSF and superannuation members. Our SMSF and financial planning advisors have the expertise needed to create the strategies that align with individual client needs and future objectives.

Recommending a binding death benefit nomination

Estate planning is a complex field encompassing various financial and legal considerations. While accountants can provide factual information on the consequences of not having a death benefit nomination, including available types, they cannot offer opinions or advice on the type of nomination or beneficiaries. For guidance on asset distribution upon a member’s death and the creation of wills, it’s essential to consult with solicitors and consult financial planners for guidance on binding nominations.

Conclusion

While accountants can offer valuable insights into various aspects of the SMSF realm, engaging in a conversation with a licensed SMSF adviser or financial planner can significantly improve your financial strategies. These licensed experts provide tailored advice, comprehensive knowledge, and effective solutions to maximise the benefits of your SMSF while minimising its complexities.

With the SMSF landscape’s continuous legislative changes and evolving regulations, a licensed point of contact can proactively prepare you and your family’s future planning with confidence.

For help with your SMSF, navigating the landscape, and finding the peace of mind you need for your financial future, contact our team of experienced SMSF advisers today.

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