Effective 1st July 2010

FREE ! :  SUPER FUND LOAN ADVICE (see Special offers page.)

Based on our 16 years continuous experience, and advising on using loans to gear super. funds with Trevisan structures we have developed a step by step checklist.

A4Companies Super Fund Gearing Checklist

Do adequate research and due diligence on the intended investment you plan to acquire.

Investigate and compare lenders & costs

Check all other costs of implementation

Test a financial model of your proposed investment to ensure that it will work the way you want and expect, add 2% to anticipated interest costs and test for viability, rates may increase unless Fixed. Find your cash flow break even point, if you need help with financial modelling contact our office for tailored gearing backup service at  email info@a4companies.com.au

SMSF Trust Deed
Make sure your fund trust deed allows for the proposed arrangements and update where needed. You can get some FREE sample clauses by completing our enquiry form.

Investment Strategy
Update the Fund Investment Strategy (this is available as part of our special  offer packages) and call a meeting of all Members and ensure that each Member understands and then selects the strategy appropriate for his situation. Discuss the new investment and the loan and gearing arrangements and ensure members support and are agreeable to the intended investments. Call for a vote and have each Member sign off on the minutes of the meeting.

Now you can proceed to establish the Warrant Trust & Trustee Company.

Making the loan application:
The SMSF may make a direct application to a lender, while the actual loan funds are received, not by the SMSF, but by the Warrant Trust which holds the asset on trust for the SMSF. Having the SMSF borrow directly is totally new as it contradicts all previous cases in which SMSF's were connected to borrowing. It is critical that the  borrowing is established correctly so it does not breach the requirements of the new Instalment Warrant legislation in S67 (4A) of the SIS Act 1993.

Saving Interest Costs - A4Companies Strategy
You can follow the A4Companies setup system to finance at standard bank borrowing rates, this strategy should save 2% or more on current loan offers in the SMSF loan market. We will explain how this can be done as part of our FREE 20 minute consultancy packege included in our Special Offers page.

Buying the Asset
The contract for sale/purchase should be in the name of the trustee for the bare trust usually called the "Custodian". The full details would show as: "Custodian of Supadupe Property Trust in trust for: Supadupa Fund trustee for the Supadupa Super fund OR Nominee", as: "Supadupa Pty Ltd, as trustee for Supadupa Super, Fund, Or Nominee." (Check your State/Territory legislation regarding use of Nominees in contracts)

Note that title register documents will show only the trustee name and will not show the super. fund details.

Don't forget to pay stamp duty on time to avoid penalties.

Cash flows - Paying the loan interest and capital
Make super fund SGL contributions monthly and extra contributions quarterly. Monitor Super Fund and Warrant Trust cash flows monthly and quarterly
After making allowance for contributions tax and fund expenses, use the balance to make instalment payments to the Warrant Trust trustee. Paying regularly will reduce interest costs, increase super. fund equity and reduce the gearing more quickly.

If you want to pay off a large property investment quickly, use a Trevisan Trust to channel business income into your fund and add that cash flow to regular contributions.

SMSF Investment Strategy Review
Review the Investment Strategy each year, best done in the March quarter prior to financial year end.

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