Super for deposits

Do you mean for a country other than Australia?

My understanding is you can include super as an asset on your balance sheet for finance application but you cannot use it for a deposit.

If we are talking self managed super funds then my understanding is you have to meet certain tests to make any investments and cannot borrow to invest.

Hi guys,

The only catch is that the property, since it’s an asset of the super fund, cannot be mortgaged. That would be illegal.

You’ll need to set up a unit trust to buy the property. The super fund buys units to the value of the deposit. You borrow the rest from the bank and use that to buy units as well, so that the trust has sufficient money to buy the property.

Because you can’t put up the property as collateral to secure the loan from the bank, the bank will want some other security – ie another property.

This is what I know. Let me know if you have a better way of doing it.

Cheers
Elysium-M

Jas, what security are you using to borrow the other funds? This used to be the way around the super fund not borrowing, but they’ve changed the rules.

Picja, can you explain please?

Cheers
Mel

You need to set up a proper self-managed super fund.

For that, you need a lawyer to prepare all the documents (trust deed, trustee’s minutes, application for membership, notices to the member and employer, investment strategy, etc).

You also need an accountant to apply to the ATO for the necessary things (election to be regulated as an SMSF by ATO, ABN, TFN, etc).

The trustee can either be a single corporate trustee, or individuals (at least 2). There are specific rules that need to be followed. Go to the ATO website – I think there are some guidelines there.

And make sure you understand all your obligations regarding the use of the super money. Breaking the rules WILL land you in a lot of strife. for example, see my earlier post regarding mortgaging super assets. That is an absolute no-no! There are also strict rules about fund members selling their assets to the super fund.

The ATO has already said that it is focusing on investigating compliance by SMSF trustees. An example of the strife you could land in are fines, and also getting your super principal (not just the income!) taxed at 48.5%!!

Cheers
Elysium-M

Hi all,

Thanks for the multi responses, I do actually have a Hybrid trust set up which is much more flexable than bot a unit trust and a discretionary trust.
Who do I talk to about getting access to the super funds to invest in the trust? – I have no problem putting another property up for security as long as I can buy this security out later.

Any more support would Be great!
Cheers,
Kiwi[:p]

picjal,

What if you default and aren’t able to repay the loan? Does the super company have the right to take the money out of your super?

Also, where are the loan funds coming from? Is it the super company’s own funds, or is it actually coming out of your super fund?

Cheers
Elysium-M

DIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…

Picja1

This sounds like providing financial advice. Are you licensed (or are you an authorised representative of a license holder)?

Are there any risks associated with using your superannuation to invest in this manner?

Cheers

Stu

WARNING: There is some seriously incorrect information in this thread…anybody who is thinking of trying access their Superannualtion money should consult a large, well known, professional accounting company before entering into any of the sturctures mentioned here. As for setting up a unit trust…the Tax office stopped that about 3 years back. And a fund that invests its “profits” back into deposit bonds for members ….please look up pyramid scheme in the dictionary.

Hint: just about anybody can access their super money is a short time frame and invest it or spend it anywhere they like but that does not mean it is legal or legitimate.

I’m sorry if I have offended anybody but there are some pretty shoody ideas in this topic.

ASIC campaign to stamp out illegal access to super schemes

Tuesday 21 September 2004

The Australian Securities and Investments Commission (ASIC) is conducting a nationwide campaign against illegal early access to superannuation, working closely with the Australian Taxation Office (ATO) and the Australian Prudential Regulation Authority (APRA).

This campaign follows a joint warning issued by ASIC and the ATO in February to be wary of schemes that falsely claim that consumers can withdraw their super, or use a self-managed fund, to pay off all their debts, to meet everyday expenses or for purchases such as a family home. These schemes typically involve substantial payments to the scheme promoter to gain access to superannuation savings.

‘We are concerned that people’s hard-earned retirement savings could end up in the pockets of these promoters’, ASIC’s Executive Director of Financial Services Regulation, Mr Ian Johnston said.

‘ASIC is determined to stamp out these illegal schemes and has formulated a three-pronged approach, involving enforcement, compliance action and education to protect consumers and improve standards in this area’, Mr Johnston said.

In the last two months, ASIC has tested over 50 companies and individuals for compliance with relevant financial services laws. A number of these compliance checks are ongoing. The activities detected under ASIC’s campaign have raised concerns about:

misleading conduct or statements (including advertising and promotional material) inducing people to dispose of their existing superannuation interests and establish a self-managed superannuation fund (SMSF); and
unlicensed financial services, including advice and dealing in financial products.
Generally speaking, to comply with the law all members of a SMSF must also be the trustees of the fund (or the directors of a corporate trustee).

‘Promoters will often market SMSFs by saying that superannuation is ‘your money’ which can be transferred into ‘your bank account’. This may mislead people about their obligations as a trustee of a SMSF’, Mr Johnston said.

As a trustee of a SMSF, a person must keep the assets of the fund separate from other assets, manage the assets in accordance with strict investment rules and operate the fund for the sole purpose of providing retirement benefits.

To educate the community about these schemes, ASIC is working with the superannuation industry to develop up-to-date information for consumers, trustees, administrators, planners, accountants and other professionals who work in the area of superannuation.

‘I am delighted that a number of superannuation fund trustees have already agreed to distribute information published by ASIC warning against illegal access to superannuation’, Mr Johnston said.

‘It indicates the level of concern the superannuation industry has about the threat that this activity poses to their members’ retirement benefits’, Mr Johnston added.

In the past four years, ASIC has initiated 29 civil and eight criminal enforcement actions against promoters of illegal early access to superannuation schemes. These actions alone account for more than $20 million dollars in superannuation benefits illegally accessed. For more information about ASIC’s enforcement actions, go to the ASIC consumer protection website, FIDO at http://www.fido.asic.gov.au/super

http://www.asic.gov.au/asic/asic_pub.nsf/byheadline/04-302+ASIC+campaign+to+stamp+out+illegal+access+to+super+schemes?openDocument

Cheers

Stu