Investments Disallowed

Clients of ESUPERFUND are not allowed to invest in Private Companies or Private Trusts that are not listed on the ASX. The rationale for disallowing these Investments is that the underlying Company or Trust that the SMSF invests in must be "effectively audited" by ESUPERFUND to ensure that the SMSF has not indirectly breached Super Laws via these related entities. This is outside the scope of our offering.

Clients of ESUPERFUND are not allowed to invest in overseas property. The rationale for disallowing overseas property Investments is that overseas countries in most instances will not recognise the SMSF as the purchaser of the property. This means that the property is invariably purchased by clients in their personal names with SMSF monies. This is tantamount to a super withdrawal and using the monies to acquire the asset in the Trustees personal name. The ATO would not accept that the owner of the asset is the SMSF in this case and where the monies accessed were preserved, the SMSF would be severely penalised for illegal access of super benefits. Other reasons for disallowing overseas property is the difficulty in ascertaining who is tenanting the property as well as the additional complexity in converting rent and expenses from the overseas currency to Australian currency. This added level of complexity is outside the scope of our offering.

Clients of ESUPERFUND are not allowed to lend money from their SMSF to any person or entity irrespective of whether the loan is on commercial terms. In most cases lending money from an SMSF to an SMSF Member (or an associate of an SMSF Member by blood or marriage) or to an entity associated with an SMSF Member may result in the Fund being deemed non-complying. Determining if the loan is within or outside the Super laws, whether the Loan is to an SMSF Member or an associate of an SMSF member (which is complex to determine), whether loan agreements exist and if they do reviewing these loan agreements and determining if the terms are being adhered to and do not contravene Super laws is a difficult and time consuming process. This added level of complexity is outside the scope of our offering.

Clients of ESUPERFUND are not allowed to invest in WRAP Accounts or Separately Managed Accounts (SMAs). The rationale for disallowing these Investments is that these Accounts will typically have their own Bank and Broker. This means that we will be unable to receive share trading data and transaction data to attend to the SMSF Annual Compliance work. We understand that the WRAP or SMA Platform provides annual data however in many cases it must be checked, reconciled and inputted and this additional manual work is outside the scope of our offering.

Clients of ESUPERFUND are not allowed to invest in Collectables or Personal-use Assets unless the Collectables are Physical Metals. The definition of Collectables and Personal-use Assets includes jewellery, artwork, antiques, artefacts, wine or spirits, motor vehicles and motorcycles, coins and medallions etc. A full definition can be found on the ATO website here. The rationale for disallowing these Investments is that there are onerous rules accompanying investing in Collectables, including the assets cannot be stored in the private residence of the Member or an associate of the Member, must not be available for the private use or benefit of the Trustees or related parties and must be insured in the name of the SMSF within 7 days of the assets being acquired. Determining whether the asset is used by an SMSF Member or an associate of an SMSF member (which is complex to determine), whether the SMSF complies with all the other Investment rules and restrictions is a difficult and time consuming process. This added level of complexity is outside the scope of our offering.

Clients of ESUPERFUND are not allowed to carry on a business within their SMSFs. The rationale for disallowing carrying on a business is that the business in most instances may breach the Sole Purpose Test. There are also Investment rules and restrictions applying to SMSFs that carry on a business, for example, the SMSF’s business assets must not be available for the private use or benefit of the Trustees or related parties. If the SMSF carries on a business, it would be examined closely by the ATO. In the event of a breach, the SMSF may lose its complying status and the Trustees may face severe penalties. Determining if the business is within or outside the Super laws, whether the SMSF's business complies with Investment rules and restrictions applying to SMSFs is a difficult and time consuming process. This added level of complexity is outside the scope of our offering.

Clients of ESUPERFUND are not allowed to invest in any Investment that is not listed as an Allowable Investment.