1 personal superannuation solutions. Disclosure Document for Self-Managed Superannuation Fund Services Updated 14 April 2011.
2 Contents. PART A: BELL POTTER PERSONAL SUPERANNUATION SOLUTIONS WHO IS INVOLVED 4 FEES AND OTHER COSTS 11 WHAT IS SUPERANNUATION? 17 PART B: your SELF MANAGED SUPERANNUATION FUND WHO LOOKS AFTER THE FUND? 18 ABOUT YOUR FUND 20 WORKING TO YOUR RETIREMENT 29 APPLICATION FORMS 41 Important information This disclosure document provides information about Bell Potter Personal Superannuation Solutions. It will help you to: decide whether a self managed superannuation Fund (SMSF), and the securities advisory and administrative services to be provided to the Trustees of the Fund by Bell Potter Securities Limited (Bell Potter), will meet your needs; and compare the SMSF and related services offered through Bell Potter Personal Superannuation Solutions with others you may be considering. Please note: 1. The offer contained in this disclosure document is made in Australia and is only offered to persons that receive it in Australia. 2. This disclosure document includes the Application Forms attached to it. 3. If you have received this disclosure document in electronic format, you can obtain a paper copy of it (including the attached Application Forms) on request from Bell Potter at any time at no charge. 4. Application can only be made on the Application Forms attached to this disclosure document. The Trustees are responsible for ensuring that the Fund is maintained for the purpose of providing benefits to Members upon their retirement, or their dependants. The Trustees must also ensure that the Fund is properly managed and that it complies with Superannuation Law and other legal obligations. Whilst the Trustees can engage other people to do certain acts or things on their behalf (e.g. engaging the services of a superannuation Fund administrator, tax agent, investment adviser, etc), they are bound to retain control over the Fund and remain responsible for all its operations. Bell Potter Securities Limited (Bell Potter) provides a range of functions under the Bell Potter Personal Superannuation Solutions service. Importantly, the service is structured in such a way that the Trustees, who are responsible for managing the investments of the Fund, can obtain investment advice from suitably licensed investment advisers, including a Bell Potter Adviser in relation to the securities markets. Ongoing comprehensive monitoring and reporting in respect of the Fund s investment portfolio is part of the Bell Potter Personal Superannuation Solutions service. smartsuper pty limited (smartsuper) is an outsourced superannuation administration and accounting services provider who will be the Fund administrator and will be responsible for the administration of superannuation matters in relation to the Fund. Disclaimer smartsuper pty ltd (Administrator) Neither smartsuper pty limited ABN AFS Licence No (smartsuper) nor any of its subsidiaries nor its respective officers guarantees any particular rate of return, the capital invested nor the repayments of capital, nor the performance of any specific investment. Disclaimer Bell Potter Securities Limited This disclosure document has been prepared by Bell Potter Securities Limited (Bell Potter) (ABN ). Neither Bell Potter, nor any of its associates or officers guarantee the capital invested by the Fund Trustees, the performance of any specific investment or your Fund generally. The information contained in this disclosure document is factual information only. This disclosure document does not and is not intended to contain any recommendations, statement of opinion or advice. To the extent that this disclosure document does contain any advice, that advice does not consider any person s objectives, financial situation or particular needs and you should consider the appropriateness of the advice to your own objectives, financial situation and needs before acting on it. Before you make an investment decision, you should obtain professional independent financial advice from a licensed financial adviser. Accuracy of disclosure document after preparation date Any statements contained in this disclosure document are based on legislation current as at the date of issue of this disclosure document. No responsibility is accepted for any loss created as a result of changes in legislation after the date of preparation of this disclosure document. For reasons of simplicity, any references to legislation only refer to material matters that may apply. You should check with your financial and/or taxation advisers as to whether there are any other issues or any changes to legislation since the date of preparation of this disclosure document that may apply to your circumstances. 2
3 Bell Potter Personal Superannuation Solutions Bell Potter recognises that no two people are alike; everyone has unique financial needs and our purpose is to provide personalised solutions that best address those needs. Our superannuation and retirement solutions allow you to establish your own self-managed superannuation Fund, and to simplify what might otherwise be onerous and timeconsuming Trustee responsibilities, like ongoing administration and statutory reporting, through the appointment of Fund administration specialists. Our approach to investment advice is based on the recognition that each individual s financial needs will vary and no single investment strategy is right for every client. Within the Trustee-approved investment strategy, we draw on our resources and services to advise you on important investment considerations and decisions to assist you to preserve and build your wealth. As your retirement needs change, we will work with you to ensure your Fund continues to meet your requirements. Among other uses, an SMSF can be used by persons who wish to : make superannuation contributions; rollover superannuation from other Funds or consolidate all of their superannuation within one vehicle; receive a lump sum retirement benefit; or receive a pension upon retirement (and in certain circumstances even prior to retirement see page 29). Generally, you will have access to your capital once you retire, subject to legislative requirements. This disclosure document is in two parts: Part A - explains the services offered by Bell Potter Personal Superannuation Solutions; and Part B - explains your self managed superannuation Fund. Each Fund established through the Bell Potter Personal Superannuation Solutions service is a self-managed superannuation Fund (Fund) with up to 4 Members. The Trustees of each Fund are those specified in the relevant Application Forms. A Member of the Fund is required by law to be a Trustee or a director of a company that acts as Trustee. super solutions. 3
4 PART A. bell potter personal superannuation solutions who is involved? Who s involved SMSFs require administration and monitoring to ensure that their daily operations are conducted appropriately. By completing the Application Forms, the Trustees can agree to appoint certain service providers to the Fund. Upon appointment, Bell Potter will assist with administering the Fund s investments and smartsuper with administration of your Fund s superannuation and accounting-related matters. Experienced portfolio and specialist superannuation administrators look after the day-to-day operations of your Fund. While the aim is to assist the Trustees attend to all their duties, the responsibilities of the Trustees are not diminished because of the assistance that Bell Potter and smartsuper provide. Fund administration is important The Bell Potter Personal Superannuation Solutions service is designed to provide a personalised and flexible means to allow individuals to take more control over their retirement savings by: establishing and administering a new SMSF; or transferring the administration of an existing SMSF to Bell Potter and smartsuper. Once you have lodged your application, your SMSF will be established (if you do not already have one) or the administration of your existing SMSF will be transferred to Bell Potter and smartsuper. Bell Potter and smartsuper will continue to provide administration services to your SMSF unless and until the Trustees terminate their appointment. The table following explains the features of Bell Potter Personal Superannuation Solutions, and lists various services provided by Bell Potter, both itself, and through smartsuper. The table also indicates various tasks which the Trustee must perform. The table should not be interpreted as a complete statement of the tasks which are required of the Trustee. 4
5 Overview of our service and Trustees obligations FeatureS Fund establishment and administration services for the investment portfolio and Fund bell potter personal super solutions trustees obligations Flexibility to tailor and amend the Fund s Investment Strategy as required by the Trustee Provision of securities advice through your Bell Potter Adviser Investments are registered in the Trustee s name Ability to in specie transfer eligible investments; e.g. listed securities, managed funds, business real property Multiple members (maximum 4) Members can have multiple accounts; e.g. accumulation account and pension accounts Member benefits form part of the underlying Fund investment portfolio Pension options include account based pension, transition to retirement pension, complying pension; includes revisionary pension option Member Binding or Non-Binding beneficiary nomination options Insurance cover for Members and Fund assets if desired establishment Establishment of a Corporate Trustee, where requested Preparing a new Trust Deed or arranging a Trust Deed amendment for an existing Fund (where applicable) refer to Trust Deeds section below Provision of Trust Deeds (for Deeds sourced from smartsuper s preferred legal supplier) Lodge an Australian Taxation Office (ATO) application to become a Regulated Fund Lodge applications for an Australian Business Number (ABN) and Tax File Number (TFN) Lodge application for Goods and Services Tax (GST) registration Process Member application documentation Preparation of Trustees Minutes, includes: Trusteeship Member acceptance Investment Strategy Review and completion of Trustees Minutes Arrange the transfer of Member benefits super solutions. 5
6 PART A. bell potter personal superannuation solutions Overview of our service and Trustees obligations continued audit Preparation of comprehensive work papers at year end to simplify the audit process Appointment of an Approved Auditor to the Fund Provide resources as required to the Auditor Actuarial Arranging for lump sum and pension actuarial calculations as required Taxation Preparation of annual statutory financial accounts and Members statements Preparation of Goods and Services Tax (GST), Business Activity Statement (BAS) and Instalment Activity Statement (IAS) returns, as applicable Preparation of the ATO statutory returns Lodgement of all statutory reporting and returns to the ATO Determining the correct taxation payments for the Fund and its Members and arranging payment Preparation of all Minutes for the Trustees to sign Review and completion of Trustee minutes Investing Completion of the Investment Strategy Proposal Form, requiring Trustees approval Provision of securities advice Preparation and implementation of the Fund s Investment Strategy Obtain qualified investment advice from an appropriately licensed adviser for each Fund investment being considered or undertaken Investment portfolio administration account openings; attending to settlements, corporate actions, account reconciliation (e.g. cost history, rights issues, bonus shares, Initial Public Offering (IPOs), takeovers, etc) Responsibility for the Fund s investments, including Trustee controlled assets e.g. direct property, non securitised investments Review and amend (where required) the Fund s Investment Strategy Review and completion of Trustee Minutes as required bell potter personal super solutions trustees obligations Member 6
7 PORTFOLIO ADMINISTRATION Use of either the Bell Potter Cash Management Service or the Bell Potter Cash Account as the financial hub of the Fund s portfolio to enable reconciliation of all cash movements Investment cost history construction and maintenance to accurately identify realised and unrealised capital gains tax positions Reporting of Trustee controlled assets e.g. direct property, non securitised investments Applications for units in managed funds Dividends and income directed to Cash Account Arranging in specie and Off Market Transfer of investments Corporate actions defined and the Trustees instructions acted upon via your Adviser Recording of all investments transactions, including: Purchases, sales and asset transfers Income and dividends received Reinvestment of dividends or distributions Corporate actions e.g. rights issues, bonus issues, term deposit maturities Transactions relating to Superannuation Loan Arrangements Central point of contact for investment administrative and superannuation issues Reconciliation and provision of portfolio data to the Fund Administrator Payment of Member benefits, Fund taxes and expenses as directed by the Fund Administrator FUND ADMINISTRATION Responsible for the administration of superannuation matters in relation to the Fund, including: bell potter personal super solutions bell potter personal super solutions trustees obligations trustees obligations Member contributions, benefit entitlements and tax components, preservation position, verification and authorisation of the payment of benefits Fund statutory records and reporting to the ATO, review of ongoing Fund compliance and advising Trustees of upcoming obligations Reporting refer page 8 Involvement in the Fund s establishment, meeting tax obligations, audit, actuarial, Trustee reporting on movements of assets outside of the stated Investment Strategy and provision of Trustees Minutes super solutions. 7
8 PART A. bell potter personal superannuation solutions Overview of our service and Fund Administration continued Keeping Trustees advised of movements of assets outside of the investment strategy Privacy of Fund / Member records Retention of records in digital format for the mandatory 10 year period reporting Reporting to Members, Trustees and your Adviser: Quarterly Statement detailing: bell potter personal super solutions trustees obligations The investment position of the Fund at the end of the quarter and any transactions that have occurred during the period Deviations from the Investment Strategy asset allocation ranges, requiring the Trustees resolution to ensure on-going compliance Reconciliation of corporate actions associated with the Fund s investments Capital gains tax (CGT) reconciliation An Annual Report: A complete set of financial statements and an income tax return detailing the operations of the Fund over the financial period An Annual Member Statement: This will show the current balance in each Member account and any movements that have taken place over the year Advising Trustees of material or statutory upcoming obligations and deadlines Preparation of Minutes for the Trustees to review and complete; as outlined above Daily investment reporting, where requested, via Bell Potter website (www. bellpotter.com.au) Transactions relating to Superannuation Loan Arrangements, and including the market value and the loan value of the facility Superannuation Loan Arrangement Documents to establish Superannuation Loan Arrangements* Update of Investment Strategy Payments under loan agreement Loan Reporting Rental agreement & insurance (Real Property) bell potter personal super solutions trustees obligations *Some of the documents required to establish the Superannuation Loan Arrangements may require execution by other parties. 8
9 Trust Deeds It is recommended that all deeds be prepared and reviewed by smartsuper s preferred legal supplier to ensure easy update and monitoring as legislation changes. A standard deed is sourced from smartsuper s preferred legal supplier for new Funds. For an existing Fund, the Trustees can either: - Provide legal sign-off that the current trust deed is a standard deed providing Members with all entitlement options allowed by Superannuation Law at the time of transfer to the Bell Potter Personal Superannuation Solutions service; or - Request at the transfer stage, the Deed be amended by smartsuper s preferred legal supplier. - Note: smartsuper assumes no responsibility for ongoing Deed updates until such time as the Trustees request that the Deed be amended by smartsuper s preferred legal supplier. Once the deed has been amended to the standard, smartsuper s preferred legal supplier will continue to provide updates to the Trustees when changes are needed. Neither smartsuper, nor Bell Potter, assumes responsibility for the content of the Trust Deeds, nor whether they are complying or not. Your investment advisers As Trustees of the Fund, one of your key areas of responsibility is to manage the Fund s investments. Trustees can obtain investment advice from suitably licensed investment advisers, including a Bell Potter Adviser in relation to the securities markets. Bell Potter holds Australian Financial Services licence issued by ASIC, authorising Bell Potter to advise on a range of financial products, including: Securities, including domestic and international equities, fixed interest and income-yielding securities; Derivatives including exchange traded options and warrants; Australian and international managed Funds; Bonds and debentures; Deposit and payment products; and Superannuation Loan Arrangements. The Fund administrator will facilitate all other investment transactions as requested by the Trustees. The Trustees must ensure that these transactions are allowed under Superannuation Law, the Trust Deed and the Fund s Investment Strategy. Trustees are recommended to obtain qualified investment advice from an appropriately licensed adviser for each Fund investment being considered or undertaken. Trustees are required to prepare and implement an Investment Strategy for the Fund, which should be reviewed regularly and updated as required. Refer to Part B Investment Strategy for further information regarding Trustee responsibilities. super solutions. 9
10 PART A. bell potter personal superannuation solutions What is the Trustee responsible for? The Bell Potter Personal Superannuation Solutions service provides access to investment advice and comprehensive administration services to the Trustees as outlined above. Whilst the Trustee can engage other people to do certain acts or things on their behalf, Trustee responsibilities include: determining each Member s contribution status; setting, monitoring and reviewing the Fund s Investment Strategy and complying with Superannuation Law; making all investment decisions (see below); administering and accounting for non-securitised investments; review, approval and execution of annual Fund accounts and statutory returns; managing all Member and Fund insurance requirements and policies (e.g. life, total and permanent disability, salary continuance, general insurance); review, approval and execution of minutes; retention of some original documents (e.g. trust deed) as directed by the Fund Administrator; and provision of information and directions to the Fund administrator, as required. Notwithstanding that the Trustees obtain investment advice (whether from a Bell Potter Adviser or otherwise), they retain responsibility for investment decisions, and must take care to consider the suitability of each investment in the circumstances of the Fund. This may include, but is not limited to, considering the liquidity of investments, the extent to which an investment might involve gearing and the exposure of the Fund to magnified losses as well as gains, and the extent to which an investment meets the Trustees requirements regarding diversification. 10
11 FEES AND OTHER COSTS The tables below show fees and other costs charged by Bell Potter and smartsuper for various services provided by them. Fees quoted in this table (excluding ATO levy) include the Goods and Services Tax (GST) and will be liable to change if the rate of GST changes in the future. NEW SMSF ESTABLISHMENT COSTS Type of fee or cost Amount How and when paid Establishment fee for new SMSF $660 Payable upon Fund establishment. Trust Deed Preparation Fee $550 Payable upon Fund establishment. Subsequent amendments $220 Payable upon request for the service. Termination fee to close your investment existing SMSF ESTABLISHMENT COSTS Nil (See page 12 Note 1 regarding charges if you terminate your Fund within 12 months of commencement). Generally not applicable. Type of fee or cost Amount How and when paid Previous Financial Year accounts If you are transferring an existing SMSF to our Bell Potter SMSF service and your existing SMSF s accounts and tax returns need to be prepared for previous years, you will be charged this fee for each year the accounts and tax returns need to be prepared by smartsuper pty limited. $1,650 Payable upon transfer of your SMSF to our Bell Potter SMSF service. Reconciliation fee Bell Potter will disclose any additional fee, if applicable, to reconcile investment history onto our administration service upon the transfer of your existing Fund. If applicable, a fee will be advised. Payable on request for the service. Trust deed amendments Amend an existing trust deed to smartsuper s preferred legal supplier s standard as a result of the written review $660 Payable on request for the service. Subsequent amendments $220 Payable on request for the service. Termination fee to close your investment Nil (See page 12 Note 1 regarding charges if you terminate your Fund within 12 months of commencement). Generally not applicable. 11
12 PART A. bell potter personal superannuation solutions ONGOING MANAGEMENT COSTS OPTION 1 Type of fee or cost Amount How and when paid Fund administration fees 2 Investment costs/brokerage and commissions Managed Investments Annual Fee 1 On the first $500, % plus, on the next $500, % plus, on the next $1,500, % plus, on the balance over $2,500, % Subject to a minimum monthly fee of $325 As agreed with your Bell Potter Adviser Refer to the current Product Disclosure Statement (PDS) of each investment or contact the investment manager themselves for details of these fees. Buy-sell spread 3 - refer to Additional explanation of fees and costs below. Payable monthly in arrears from your Fund s assets. Payable as applicable from your Fund s assets. Deducted from your investment by the Fund manager of the managed investment scheme. ONGOING MANAGEMENT COSTS OPTION 2 (BROKERAGE INCLUDED - UP TO 20 ASX Listed TRADES PER FINANCIAL YEAR) Type of fee or cost Amount How and when paid Fund administration fees 2 Investment costs: Brokerage and commissions Annual Fee 1 On the first $500, % plus, on the next $500, % plus, on the next $1,500, % plus, on the balance over $2,500, % Subject to a minimum monthly fee of $450 Brokerage for 20 ASX listed trades is included as part of the Fund administration fees per financial year 4. Beyond this, fees apply as agreed with your Bell Potter Adviser Payable upon transfer of your SMSF to our Bell Potter SMSF service. Payable as applicable from your Fund s assets after free trade limit has been exceeded. 12 Managed Investments Refer to the current Product Disclosure Statement (PDS) of each investment or contact the investment manager themselves for details of these fees. Buy-sell spread 3 - refer to Additional explanation of fees and costs below. Deducted from your investment by the Fund manager of the managed investment scheme. 1 The fee is charged monthly and is calculated as a percentage of the Fund value as at the end of each month. If the Fund is administered for less than 12 months, the balance of 12 months fees will apply. 2 This fee includes an amount payable to an adviser (see Adviser remuneration under the heading Additional explanation of fees and costs on page 15). 3 The buy-sell spread is the difference between the price an investor buys units in a managed fund and the price an investor sells (redeems) units in a managed fund to the fund manager, at any particular point in time. The difference is typically 0.4% and represents the cost to the fund manager of issuing and redeeming units and recouping these costs from the investor Trades are included regardless of the value of each trade, or at which point the fund administration transfer occurs during the financial year.
13 Worked examples of administrator fee If the Fund value is $200,000, the Administration Fee for a 12 month period is $3,900 under the standard fee structure, or $5,400 under the brokerage-included management fee structure. These are the minimum fees applicable. If the Fund value is $750,000, the Administration Fee for a 12 month period is $9,250 under the standard fee structure, being 1.3% of $500,000 ($6,500) plus 1.1% of $250,000 ($2,750). Alternatively, under the brokerageincluded fee structure, the Administration Fee for a 12 month period is $12,250, being 1.70% of $500,000 ($8,500) plus 1.50% of $250,000 ($3,750). This example highlights the administration fees only and does not include total fees that would be incurred. Other fees apply as set out in the tables given. Additional explanation of fees and costs Buy-sell spread In the event that you invest part of your Fund in managed funds, a buysell spread may apply. This fee is not charged to you separately, rather it is reflected in the unit price of the relevant managed fund. Information relating to the buysell spread is included in the PDS document(s) of any relevant managed funds held by the Fund. Transaction costs Other fees such as stamp duty, government charges on monetary transactions and managed fund entry fees might also be incurred by your Fund as a result of investment decisions. This will depend on the nature of the underlying investments and the arrangements with your adviser. Superannuation loan arrangement If your Fund enters into a Superannuation Loan Arrangement, it will in most cases be required to pay ongoing borrowing fees and costs (and interest) to the lender (and may also be required to pay fees and costs to the security trustee which holds the asset acquired under the Superannuation Loan Arrangement). Please refer to the disclosure documents relating to the Superannuation Loan Arrangement entered into by the Fund for an understanding of the applicable interest, fees and costs. Death and disability insurance charges If you elect for the Trustees to arrange for an appropriate policy of insurance to be provided, the Trustees will deduct the required insurance premiums from your Member account at the end of each month or such other period as directed. The amount of insurance premiums deducted will depend on factors such as your age, level of cover chosen, smoker status and any loading put in place by the arranged insurer. Asset valuations Auditors will generally require valuations to be supplied for assets that cannot be readily valued, such as real estate, shares in private companies or units in unlisted trusts. The extent of these valuations will be determined by the auditor and may incur additional costs. Incomplete applications In accordance with the provisions of the Corporations Act, the Administrator deposits money it receives relating to incomplete or out of date applications into a Bell Potter Cash Management Service (CMS) or Bell Potter Cash Account (CA), pending receipt of a completed Application Form. Where the Administrator places deposits in relation to incomplete applications in the CMS or CA pending completion, the interest credited on the deposit will be the interest rate payable by the CMS or CA, as applicable. A management fee may be deducted, and you.should refer to the PDS or Prospectus for the CMS or CA for full details of applicable fees. super solutions. 13
14 PART A. bell potter personal superannuation solutions There are other costs associated with the provision of services to the Fund. These are set out below: Service Costs Amount How and when paid Audit fee This is the cost for the annual audit of your Fund 5 $550 per Fund p.a. Note: non-complying Funds or Funds with special circumstances may be charged an additional fee. Payable annually from your Fund s assets, to the Fund s auditor. ATO levy This is the cost for prudential regulation of your Fund. $150 per Fund p.a. Payable annually from your Fund s assets to the Australian Taxation Office Actuarial service fee This is the cost for preparation of your Fund s actuarial certificates ADVISER SERVICE FEE This is the fee for additional ongoing investment advice provided by your Adviser and is in addition to brokerage. Other services Pension Type type Transition to Retirement Pension, Allocated Pension and Term Allocated Pension Annual certificate $275 Defined benefit pension initial certificate (per pension) $ Additional annual certificates per additional pension $165 Residual capital value pension Additional charge per pension if any pension has a residual capital value on maturity $165 Up to 1.35% p.a. calculated as a percentage of the Fund value as at the end of each quarter. From time to time you may require other services not specifically covered in this table. These will generally be negotiated with you based on the level of service required but will be charged at a minimum of $110 per hour Payable upon pension commencement, and then as required, from your Fund s assets to the Actuary. As agreed between you and your Adviser. Payable on request for the service. 5 These fees only apply where Ure Lynam is the chosen Auditor. Ure Lynam is the independent accountant which supplies audit services to BPPSS as the default auditor. The Trustees must negotiate their own fee with any other auditor. 14
15 Preparation of prior year financial accounts If your prior financial year accounts are incomplete, we will prepare these accounts for you. The preparation of prior year financial accounts is charged at a minimum of $1,650 per each year and is payable to the Administrator. Additionally, for each year s accounts we prepare, the Fund may also pay an audit fee of $550 p.a. and an annual ATO levy. Bell Potter will disclose any additional fee, if applicable, to reconcile investment history onto our administration service upon the transfer of your existing Fund. Variation of fees We reserve the right to change the administration fee structure and/or rates at any time. When any changes need to be made we will provide you with at least 30 days prior written notice. The fees for external parties (auditor, actuary etc) are outside our control and may change at any time. Additional or new fees may be levied at any time by any of the third parties or regulatory bodies. Where possible we will endeavour to advise you of any such changes as they occur. Adviser remuneration Your Adviser may receive ongoing commissions for the sale of this service and the ongoing financial services being provided to your Fund. The fees are deducted from your Fund s operating cash account and are payable monthly in arrears. Advisers may receive a salary, salary and a discretionary bonus, or a proportion of the brokerage/fees charged by Bell Potter. Advisers may receive 45 50% of all fees and charges generated from their clients, depending on the level of salary and the aggregate revenue that they earn for Bell Potter. This will not impact on the cost to you. Example: If the fees payable to Bell Potter pursuant to this Disclosure Document are $1,100, after deducting GST of $100, your adviser would receive $450, or $500 if the higher percentage is payable. Your Adviser s standard remuneration is paid out of the Administration Fees, after deducting service provider fees for Fund and Member administration of 0.22% p.a. of the balance of your Fund, with a minimum fee of $1,650 p.a. and a maximum fee of $5,500 p.a. The balance of the Administration Fees are retained by Bell Potter. Example: Option 1 (Brokerage excluded): If the Fund value is $200,000, the Administration Fee for a 12 month period is $3,900, being the minimum fee. From this fee, Bell Potter pays the service provider $1,650 p.a. and retains $2,250 p.a. Example: Option 2 (Brokerage Included): If the Fund value is $200,000, the Administration Fee for a 12 month period is $5,400, being the minimum fee. From this fee Bell Potter pays the service provider $1,650 p.a. and retains $3,750 p.a. In addition, an Adviser Service Fee may be negotiated between you and your Adviser. The Adviser Service Fee is agreed between you and your Adviser upon Fund establishment. This fee will be payable quarterly in arrears from your Fund s assets, up to a maximum of 1.35% p.a. of the value of the Funds assets p.a. Example: If the Fund value is $200,000 and the agreed Adviser Service Fee is 1.35% p.a. the cost to you is $2,700 p.a. This fee will be payable quarterly in arrears from your Fund s assets. Note: Examples above highlight administration fees payable only. Other fees apply. Where you decide to invest in managed funds, remuneration payable to Bell Potter may also be reflected in the unit price or net investment returns of that investment. You should refer to the PDS for the specific managed fund(s) for full details of the fund s fees and whether and how they may be negotiated. Where a Bell Potter Cash Management Service (CMS) account is used as the Fund s working cash account, a commission of 0.275% p.a. of the Fund s cash balance will be paid to Bell Potter. This is not an additional charge paid by the Fund. Example: If the value of the Fund s CMS account is $20,000, then 0.275% p.a. or $55.00 p.a. is paid by the manager of the CMS to Bell Potter. This is not an additional charge paid by the Fund. Bell Potter then pays your Adviser according to the 45% - 50% formula above i.e. $22.50 p.a. (adjusted for GST). Where a Bell Potter Cash Account (CA) is used as the Fund s working cash account, a commission of up to 0.25% p.a. of the Fund s cash balance will be paid to Bell Potter. This is not an additional charge paid by the Fund. Example: If the value of the Fund s CA is $20,000 then 0.25% p.a. or $50.00 p.a. is paid by the manager of the CA to Bell Potter. This is not an additional charge paid by the Fund. Bell Potter then pays your Adviser according 15 super solutions.
17 PART B. bell potter self managed superannuation Fund WHAT IS SUPERANNUATION? Superannuation is a long-term savings arrangement that operates primarily to provide income for retirement. Superannuation generally involves employers, the selfemployed and/or employees making contributions on a regular basis over a long period to a superannuation Fund. Generally, individuals under the age of 65 years are eligible to contribute to Superannuation. Unsupported persons may also be eligible to contribute to superannuation and claim a tax deduction up to the relevant limits. An unsupported person is classified as an individual whose employment income is less than 10% of their adjusted total income *. The Fund holds the contributions in trust for the Member and invests the contributions with the aim of generating an investment return to supplement the contributions made to the Fund. These assets are then used to provide benefits to Members, usually when they retire or suffer a serious disability, or to a Member s family or estate if the Member dies. The Government taxes superannuation savings at concessional rates if the Fund complies with certain conditions. What is a Self-Managed Superannuation Fund (SMSF)? Australians can choose to contribute their personal superannuation contributions to an independently managed superannuation Fund or to an SMSF. SMSFs (also known as DIY Funds) perform the same role as other Funds, by investing contributions and making them available to Members on retirement. The difference is, generally, that the Members (maximum 4 Members) of selfmanaged super Funds are also the Trustees of the Fund they control the investment of their contributions and the payment of their benefits. With all Members being Trustees, they are in a position to ensure their interests as Members are protected. For an SMSF to be considered a complying superannuation Fund for the purposes of the Tax Law - and thereby receive concessional taxation treatment - it must first be a regulated superannuation Fund, having complied with Superannuation Law requirements (discussed on page 18). * taxable income, adjusted fringe benefits, tax-free pension or benefits, target foreign income, reportable employer superannuation contributions, total net investment losses less deductible child maintenance expenditure. 17
18 PART B. bell potter self managed superannuation Fund WHO LOOKS AFTER THE FUND? THE TRUSTEE All superannuation Funds are required to appoint Trustees. Trustees are responsible for ensuring the Fund is properly managed and that it complies with Superannuation Law and other legal obligations. A Trustee of an SMSF must act in accordance with: the superannuation Fund Trust Deed; Superannuation Law; and other general laws, for example those imposed under Tax Law and trust law. Superannuation Law contains covenants that impose minimum requirements on Trustees, and are deemed to be included in the Trust Deed of every Regulated Fund. These covenants reflect the duties imposed on Trustees under trust law in general. Superannuation Law covenants bind Trustees to: act honestly in all matters; exercise the same degree of care, skill and diligence as an ordinary prudent person would exercise when acting on behalf of others; act in the best interest of the Fund Members; keep the assets of the Fund separate from other assets (e.g. the Trustee s personal assets); retain control over the Fund so that the Trustee s powers and functions are not hindered; develop and implement an investment strategy that meets certain standards; develop and implement a management strategy that meets certain requirements for reserves maintained in the Fund; and allow Members access to certain information. Delegating certain responsibilities to service providers Whilst Trustees can engage other people to do certain acts or things on their behalf (e.g. engaging the services of an accountant, superannuation fund administrator, tax agent, investment planner, auditor, etc), they are bound to remain responsible for the Fund. Ultimate responsibility and accountability for running the Fund in a prudent manner and complying with legal requirements lies with the Trustees. Who can be a Trustee? Essentially, anyone over the age of 18 can be a Trustee of a superannuation fund except if they are a disqualified person. An individual is a disqualified person if: at any time, the person has been convicted of an offence involving dishonesty, or at any time, the person has been subject to a civil penalty order under Superannuation Law, or the person is an insolvent under administration (e.g. an undischarged bankrupt); or the regulator has disqualified the person from acting as Trustee. There is a general requirement that each member of a Fund must also be a trustee of the Fund. Additionally, for sole-member Funds an additional trustee can be appointed to meet legal requirements, or the Fund can appoint a corporate trustee of which the member is a Director. Minors Minors (Members under 18 years of age) are considered to be under a legal disability and are unable to act as Trustees of a superannuation fund. Where a minor is to be a Member of an SMSF, the minor s legal personal representative, or parent or guardian if the minor does not have a legal personal representative, can be a Trustee in place of the minor. Legal personal representative A legal personal representative can be a Trustee (or director of a Corporate Trustee) in place of a Member who is under a legal disability or if the representative holds an enduring power of attorney in respect of the Member. Death of a Member A legal personal representative can be a Trustee (or director of a Corporate Trustee) in place of a deceased Member, up until the time that death benefits are paid from the SMSF. Following the death of a member, the SIS Act specifies circumstances in which an entity that does not satisfy basic conditions will still remain a self managed superannuation fund. A fund does not cease to be a SMSF until the earlier of the following times: a. The time an RSE licensee of the fund is appointed; b. Six months after it would so cease to be a self managed superannuation fund. 18
19 A company would not be permitted to act as Trustee if: a responsible officer of that company is a disqualified person (a responsible officer includes a director, secretary or executive officer); or a receiver, official manager, or provisional liquidator has been appointed to the company; or action has commenced to wind up the company. Who looks after the fund? An SMSF can have either individual Trustees or a Corporate Trustee and must ensure: each Member of the Fund is a Trustee or a director of the trustee company (i.e. Corporate Trustee); no Member of the Fund is an employee of another Member of the Fund, unless those Members are related; and no Trustee, or director of a trustee company, of the Fund receives remuneration for his or her services as a Trustee. (Note: Trustees can receive remuneration for non-trustee services they provide to the Fund in a separate professional capacity). Single Member Fund It is possible to have an SMSF with only one member. If the Single Member Fund has a Corporate Trustee, the Member must: be the sole director of the Trustee company; or be related to the other director of the trustee company and the Member is one of only two directors of that company; or not be an employee of the other director of the trustee company and the Member is one of only two directors of that company. If the single member Fund does not have a Corporate Trustee, the Fund must have two individuals as Trustees. The Member must be the Trustee with: another person who is a relative of the Member; or any other person, provided the Member is not an employee of that person. The sole purpose test Trustees must ensure that the Fund is maintained for the purpose of providing benefits to Members upon their retirement or attainment of age 65, or their dependants or legal personal representative in the case of a Member s death. Certain additional benefits, such as benefits paid on disability or in circumstances of illhealth, are also allowed to be provided. Accepting contributions It is important that Trustees are aware of the standards relating to the acceptance of contributions under Superannuation Law. Please refer to the Contributions section on page 20 for more information. Managing investments A key area of responsibility for Trustees is investment management. The Superannuation Law places certain duties and responsibilities on Trustees when making investment decisions. Core obligations of the Trustees are to protect and increase Member benefits over time for retirement purposes. Paying benefits In contrast to lump sum withdrawals, a Member s pension income withdrawals from a Fund may only be paid in the form of cash (rather than Fund assets), in accordance with the requirements of the Superannuation Law. The payment standards of the Superannuation Law work with the sole purpose test and the legislated preservation rules (regulations regarding the release of Fund assets) to ensure monies in the Fund are only paid to Members in appropriate circumstances. Administrative obligations There are a range of administrative obligations imposed on an SMSF. Trustees are responsible for ensuring these obligations are met. Failure to do so may result in the Trustees being fined and may also jeopardise the Fund s eligibility for tax concessions. Involvement All Members/Trustees are obligated to be involved in the decisionmaking processes of the Fund and share responsibility with the other Members/Trustees for the protection and appropriate investment of the Fund assets. THE AUDITOR The Fund is required to have the financial accounts and statements audited each year by an approved auditor (financial audit). In addition, the Approved Auditor is required to assess the Fund s overall compliance with Superannuation Law (compliance audit). The audit report is required to be completed the day before the Fund is required to lodge its combined income tax and regulatory return and Auditors must provide a certificate to the Trustees stating that the Fund has been audited. Auditors are obliged to bring to the attention of Trustees any concerns about the Fund s financial position or the Fund s compliance with Superannuation Law. In some circumstances auditors may be required to inform the Australian Taxation Office of the issue. The Trustees can appoint any Approved Auditor to perform the audits. An Approved Auditor may be a registered company auditor under the Corporations Law or be a member of one of the following bodies: CPA Australia Limited Member. The Institute of Chartered Accountants in Australia Member. National Institute of Accountants Member. Association of Taxation and Management Accountants - Member or Fellow. National Tax and Accountants Association Ltd Fellow. super solutions. 19
20 PART B. bell potter self managed superannuation Fund ABOUT YOUR FUND TYPES OF MEMBER ACCOUNTS Member accounts can be either: Accumulation accounts where contributions are made to accumulate superannuation benefits for retirement; or Pension accounts where benefits are paid from the Fund as income streams. Please see the section entitled Your Benefits on page 26 for more information. RESERVES The Fund may, from time to time, establish reserve accounts for any purpose permitted under Superannuation Law. Any income earned on amounts retained in these reserves will be taxed at the standard superannuation tax rate of 15% irrespective of whether all the Members are in pension phase or not. These reserve accounts must be reviewed annually to determine whether any amounts should be re-distributed from these reserves. Providing the amount allocated for the year is less than 5% of the member s interest in the fund, then the transfer will not be treated as a concessional contribution. This is the 5% fair and reasonable rule. The Trustee must develop and implement a strategy to manage those reserves in accordance with Superannuation Law. NOMINATION OF DEPENDANTS When applying to join the Fund, or at any time, you may make a death benefit nomination. The two available nominations are: A non-binding nomination In the event of your death, the balance of your Member account will be paid to one or more of your Dependants and/or your legal personal representative, in such proportions and such manner (if paying to more than one) as the Trustees determine. In exercising their discretion, the Trustees will have regard to your death benefit nomination, but are not bound by it. Please note that Fund Trustees are not bound by any instructions contained in a will but can take them into account in determining a nonbinding Member nomination payout in the event of death. A binding nomination In the event of your death, the balance of your Member account will be paid to one or more of your Dependants and/ or your legal personal representative in such proportions (if paying to more than one) as you nominate. In order for your nomination to be valid, certain formalities must be met. Care should be taken to ensure that any binding nominations are reviewed regularly to ensure they continue to meet your needs. For example, benefits could be paid to a former spouse if a binding nomination specifying the former spouse was not cancelled at the time of divorce/ separation and he or she continued to qualify as your Dependant. Members can add or change any death benefit nomination at any time by notifying the Trustees in writing. A binding nomination needs to be refreshed every 3 years under superannuation legislation in order to maintain validity. TRUST DEED Member benefits can only be dealt with in accordance with the provisions of the Fund s Trust Deed (as restricted by Superannuation Law). From time to time it will be necessary to amend the Trust Deed to meet changed legislative requirements or Member needs to ensure the Fund remains compliant with Superannuation Law. Any costs to do this will be met by the Fund. Please refer to the section headed Fees and Other Costs on page 11 for details of the fees applicable as at the date of this Disclosure Document. CONTRIBUTIONS Contributions to your Fund can be made at any time by yourself, your spouse, or your employer, provided the contribution is permitted under Superannuation Law. Regular contributions can be made by periodic payments from your nominated bank account. Superannuation Law imposes maximum limits on contributions to your Fund. You may also transfer your existing superannuation entitlements into the Fund. This will enable you to consolidate your superannuation benefits in the one Fund. The following definitions apply for this section: 20