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SMSF Adviser Guide for Heffron & MLC Wrap

Your comprehensive guide

to working with Heffron

Heffron SMSF Guide

Contents About Heffron ............................................................................................................................................... 1

Award-winning service...................................................................................................................................... 2

Purpose of this guide ................................................................................................................................... 3

Overview ......................................................................................................................................................... 1

Getting Started ............................................................................................................................................. 1

What works best for you & your clients? ............................................................................................................ 1

Setting up a new fund .................................................................................................................................. 9

Up and running ........................................................................................................................................... 13

Getting money into the fund ........................................................................................................................... 13

Personal Cash contributions ............................................................................................................................ 14

Employers - cash contributions ........................................................................................................................ 15

Starting a pension .......................................................................................................................................... 16

Pension payments and making changes ........................................................................................................... 18

Adhoc benefit payments ................................................................................................................................. 19

Pension refresh .............................................................................................................................................. 20

Payment of fees, insurance and other expenses ................................................................................................ 21

Payment of tax .............................................................................................................................................. 22

Private assets ................................................................................................................................................ 23

Stay informed ............................................................................................................................................. 24

Some real examples ................................................................................................................................... 26

Published by Heffron 2015

© Heffron SMSF Solutions 2015

Important Information: The information provided in this guide is not personal advice. It does not take into account the

investment objectives, financial situation or needs of any particular person and should not be relied upon as advice. The

information in this booklet is based on interpretation of the income tax, superannuation and other laws current as at September

2014. While Heffron believes that the information contained herein is reliable, no warranty is given to the accuracy and persons

who rely on it do so at their own risk. We recommend that you seek professional advice before making a financial decision.

Heffron will not be liable for any losses arising from reliance on this information.

About Heffron

SMSF Adviser Guide for Heffron & MLC Wrap 1

About Heffron

Heffron has been at the forefront of providing innovative and reliable solutions for self managed superannuation

fund (SMSF) trustees and their advisers since 1998 and today is one of Australia's largest independently-owned

SMSF service providers. We have a strong reputation for technical excellence and service.

We’re experts at providing SMSF services and we can help you at every stage of the SMSF lifecycle. When you

partner with Heffron, you can be assured we’ll provide you and/or your financial adviser with everything you need to

set up and run your SMSF.

Financial statements

Tax return

Compliance review

Audit

Actuarial Certificates

Pension calculations

Pension documents

SMSF borrowing

documents

Documentation of

fund changes

Technical support

Education

Tax and

compliance

administration

Contribution

processing

Pension

payments

Storage of fund

documents

Online access to

fund reporting

and documents

Trust Deed and

minutes

Corporate trustee

setup

ATO registration

Investment strategy

documents

Death benefit

nomination documents

About Heffron


Award-winning service

Heffron’s quality of education and training to financial

planners and accountants was recently recognised

when we were awarded the 2013 SMSF Educator of the

Year Award from the SMSF Professionals’ Association of

Australia.

When you choose Heffron for the establishment and

ongoing administration of your SMSF, you can be

assured your fund will be looked after by a team of

experienced SMSF experts. By combining this

experience with state-of-the-art technology, Heffron

can provide you with the highest quality service at a

competitive price.

Contact us to find out more about how we can help you

get the most out of your SMSF:

Address: 1/27 Bulwer Street

Maitland NSW 2320

Postal address: PO Box 200

Maitland NSW 2320

Phone: 1300 792 778

Fax: (02) 4930 2199

Email: [email protected]

mailto:[email protected]

Purpose of this guide


set up a fund (or move an existing fund to Heffron)

have all annual returns and statutory reporting handled seamlessly on your behalf

chat to an expert for support on tax or compliance questions


MLC Wrap and Heffron can make SMSFs easy for you and your clients with a comprehensive and integrated

administration experience.

MLC Wrap

MLC Wrap Investments gives you a host of great

benefits around your clients’ investments such as the

ability to:

Heffron

Heffron gives you the comfort of knowing that your

fund’s tax and compliance work is in the safest possible

hands. Our comprehensive range of SMSF services

allows you to:

Heffron’s online reporting adds the SMSF layer to MLC

Wrap’s investment reporting, showing not just the value

of each member’s balance at any time but also:

the tax and preservation components

contributions relative to the contribution limits

pensions relative to the minimum and maximum

payments required for the year

how the fund’s investments align with its

investment strategy…and much more.

Our SMSF guide “The easy way to manager your SMSF” provides a broad

overview of the Heffron SMSF service for trustees.

This comprehensive SMSF Adviser Guide has been developed to help with the

actual mechanics of working with Heffron, MLC Wrap, NAB CMA and your

clients to make running SMSFs as simple as possible.

Access wholesale investments not available directly, including Separately Managed Accounts (SMAs)

Seamlessly buy and sell investments online

Enable online reporting for both you and your clients showing portfolio valuations, market exposure and individual transactions at the click of a button

Manage model portfolios

Have advice fees automatically calculated and collected



Overview

The first step is getting the structure right and what

we’ve found works best, is a combination of two things:

1. an MLC Wrap Investments account to handle all

transactions relating to a specific Wrap account.

This might include receiving dividends, interest,

buying and selling MLC Wrap assets, paying adviser

fees that relate to the assets in MLC Wrap; and

2. a NAB Cash Manager Account (the NAB CMA) as a

cash umbrella from which non-wrap investment

transactions, or transactions relating to the fund as

a whole rather than any individual Wrap account,

are managed. This would include paying tax (or

receiving tax refunds), buying and selling private

assets, receiving private asset income and paying

fees, paying Heffron, audit fees and many more.

As long as Heffron is the administrator of the

SMSF, you as the adviser can transfer money between

your clients’ MLC Wrap Investment accounts and NAB

CMA providing the accounts are set up to allow this.

You can even handle external transactions such as

paying the fund’s tax and other expenses on your

clients’ behalf (your clients will need to authorise you to

transact on their NAB CMA – explained further below).

The way everything works together is explained more in

this Guide. In particular, see Section Some real

examples for case studies on combining MLC Wrap

Investment accounts and NAB CMAs to make running

your clients’ SMSFs simpler and safer.

One thing to note as you read this Guide is that when

an SMSF invests in MLC Wrap, MLC Wrap itself is not a

‘superannuation’ account, it is a conventional

investment account that simply happens to be owned

by a superannuation fund. Remember this when you

need to complete forms for MLC – if particular sections

are to be completed for ‘superannuation accounts’, they

are not relevant for SMSFs that are investing in MLC

Wrap Investments accounts. This means that the

restrictions that normally apply to a super wrap account

won’t apply.

You also have the flexibility to choose how MLC Wrap

Investment accounts are allocated to member accounts

– eg you can have one Wrap per member account, per

member or per fund.

Ready to get started? Read on.

Getting Started


1

Getting Started

What works best for you & your clients?

Before you actually set up a new SMSF or move forward with a fund that has been transferred to Heffron, it pays to

give some thought to the way in which you and your clients will operate it in the future. There are five key decisions

to make.

One MLC Wrap account for the

whole fund or one for each

member/pension account?

SMSFs administered by Heffron can be operated on a

segregated or pooled basis (or a combination of the

two). In other words, if your client’s fund has multiple

member accounts, because there are several members

or even just a combination of pension and non-pension

accounts, you can choose whether you set up:

Just one MLC Wrap Investment account for the

whole fund; or

Multiple MLC Wrap Investment accounts – possibly

even one for each member account.

Which one is best for you and your clients will depend

on their circumstances. Some pros and cons for each

approach often identified by advisers are set out below.

One MLC Wrap

account for the fund?

Or one for each

member/pension

account?

Where will MLC Wrap

and non-MLC Wrap

investment income go? for

How will pooled

expenses / income

be handled?

Should the NAB CMA

be the nominated bank

account for MLC Wrap

Investment accounts?

Where will member

related transactions

such as

contributions &

pensions happen?

Go! 5 1 2 3 4

Getting Started


Why have just one MLC Wrap account?

simpler to transact - if you decide to sell a

particular investment, you would put that into

effect in one MLC Wrap account only, rather than

having to give the same instruction for multiple

accounts.

avoid the costs and effort of making

transactions which really only offset each other –

ie where you may be selling an investment within

the pension portfolio but buying exactly the same

thing in the non-pension portfolio. Minimum

brokerage applies to transactions so two small ones

are more expensive than one big one of the same

total.

sometimes, avoid transactions entirely by, for

example, using cash flow from contributions to

make pension payments.

minimise costs – while costs are aggregated

across all MLC Wrap accounts for funds

transitioning from the MLC Wrap SMSF service,

new funds will be charged on the normal basis. The

same applies for Heffron fees – an additional

charge for segregation will be charged for new

funds.

allows a single asset to be shared by multiple

members or member accounts.

avoid additional work in relation to dividing

shared payments such as tax, audit costs,

Heffron’s fees etc. Regardless of whether or not

the fund is segregated, these fees would be paid

from the NAB CMA in the first instance. But if the

fund is segregated, you could then need to make

appropriate withdrawals from each of the fund’s

various MLC Wrap accounts.

pensions can be set up quickly and without any

need to change the fund’s investments or create a

new MLC Wrap account. In fact, pensions can be

established instantly by you and your clients. While

Heffron will naturally prepare some paperwork to

document this, the paperwork can come later. The

only other thing you need to do is set up the

regular pension withdrawals from the relevant MLC

Wrap account.

you can take advantage of things like share

buy backs without needing to worry about

whether or not each MLC Wrap account meets the

minimum exposure requirements to participate

(since the whole fund’s exposure is in one MLC

Wrap account).

You can minimise the amount of cash

required to be held in the MLC Wrap account ie

combined accounts might allow you to reach the

minimum cash cap of $5,000.

Why have several MLC Wrap accounts?

allows you to easily manage several

investment profiles or tax profiles (pension v

non-pension) by keeping the investments

completely separate.

in a pension fund, isolating the pension assets

allows you to ensure that all of the income and

capital gains associated with a particular

asset is tax free. This is particularly useful if you

expect an asset with large accrued capital gains to

be sold soon after a pension starts and the fund

still has non pension accounts.

very easy for you and your clients to see

exactly how much is held in each member

account and where it is invested. (Although

note that Heffron’s online reporting will always be

able to show you how much is in each member

account as well as much more – such as the

preservation and tax components of each account.

This information is updated monthly.)

avoid the need for an actuarial certificate1 –

these are only needed for pension funds.

contributions and pension payments can be

arranged to / from the particular wrap

account to which they relate. This will be very

transparent to Heffron, you and your clients. In a

pooled fund, we will inevitably require additional

clarification from you from time to time as to how

we should classify particular transactions.

you can choose to take up corporate actions

in some MLC Wrap accounts and not others eg for

pension members but not accumulation.

1 Unless the fund has a defined benefit pension – actuarial

certificates are always needed for these funds.

Getting Started


HINTS

1 - Where the fund has both pension and super accounts,

collapsing the segregation is often best done at 1 July (or

shortly afterwards) rather than late in the financial year.

This is because the fund will need an actuarial certificate

from the time the segregation stops so delaying it until

the new financial year reduces cost.

2 - For funds transferring from the MLC Wrap SMSF

service, remember that one of the benefits of multiple

MLC Wrap accounts has historically been that you and the

client can easily identify how much is held in each

member account. While Heffron will be reporting this

information via its online portal in the future, there will be

a time lag in the first year – some funds won’t be up to

date until around September 2015. We suggest you defer

collapsing MLC Wrap accounts for those funds until they

are up to date.

3 - If an employer or member was making regular

contributions to an MLC Wrap account that is to be closed,

they will need to be advised of the new EFT and account

details. Note that the fund’s Electronic Service Address

(ESA)2 does not change.

2 ESAs are explained in the chapter “Getting money into the fund”

Key points for both

Regardless of the option you choose, there are probably

some important points to bear in mind:

If you wish to manage the investments for ‘pension

accounts’ and ‘accumulation accounts’ separately,

you could operate two MLC Wrap accounts (one for

pensions and one for accumulation accounts) even

if there are in fact multiple members and therefore

multiple account balances supported by each MLC

Wrap account.

This gives you some of the benefits of pooling

accounts (ie it is simpler to transact) without

compromising the tax benefits of being able to

manage pension and non-pension assets

separately.

Even though a single NAB CMA will be shared by all

MLC Wrap accounts, the fund can still be classified

as a ‘segregated’ fund for tax purposes.

This is because the CMA itself can be divided into

several ‘sub’ accounts – Heffron will automatically

keep track of this for you and our online portal will

show you the balance of each member account

including the NAB CMA component.

What does become important is that you watch the

balance for each member when making

withdrawals from the NAB CMA.

For example, if you pay the fund’s audit fee and

the share attributable to one member account

takes their share of the NAB CMA below $0, the

fund has actually stopped being segregated

(because effectively one member account has

made a notional ‘loan’ to another member

account).

The decision to segregate (or not) is not

necessarily permanent – trustees can change their

mind at any time.

Collapsing segregations

You can stop operating the fund on a segregated basis

and combine multiple MLC Wrap accounts into one at

any time.

If the trustee decides to stop segregating, simply

making that decision is enough to change the status of

the fund to ‘unsegregated’. From that point on, tax and

the allocation of investment earnings, can be worked

out on the assumption that the fund is no longer

segregated, even if it takes a little time to actually

combine the investments into a single MLC Wrap

account.

You won’t even need to change the members’ pensions

– ie they don’t need to be paid up-to-date first because

they are not actually stopping, the trustee is just

changing the way the fund’s investments are organised

behind the scenes. It means that Heffron can

implement the change immediately and the changes to

the investments can follow.

Of course, the logical next step is to combine the MLC

Wrap accounts. Complete the ‘SMSF Account

Consolidation form’ to do this and email it to

[email protected] and [email protected] and

let Heffron know the effective date for the change.

This form will allow you to carry any regular

withdrawals across to the ‘pooled’ MLC Wrap account

and choose the right bank account to be the nominated

bank account (generally the new NAB CMA)



Getting Started


2

3

4

Where will member related

transactions such as contributions

and pensions happen?

Where will MLC Wrap and non-MLC

Wrap investment income go?

What about pooled income /

expenses?

It is in answering these questions that you will settle on

a role for the NAB CMA.

MLC Wrap Investment accounts already have cash

accounts and this isn’t replaced by the NAB CMA (your

client will still be required to hold 1% of the MLC Wrap’s

investments in its cash account, up to a maximum value

of $5,000). So why add the NAB CMA? The NAB CMA

gives you a number of extra tools that help you run

your clients’ SMSFs.

Why add the NAB CMA?

So why add the NAB CMA? The NAB CMA gives you a

number of extra tools that help you run your clients’

SMSFs.

A common transaction account for

segregated funds. If there are multiple MLC

Wrap accounts in the fund (ie you run ‘segregated’

funds), it provides an ‘umbrella’ or ‘shared’ account

to handle transactions that might relate to several

individual MLC Wrap accounts. For example, fees

that relate to the fund as a whole can be paid from

the NAB CMA. Similarly, a shared bank account is

essential for the payment of tax when you run

segregated funds. Tax is always paid as a single

refund or payment as the ATO only recognises one

taxpayer (the SMSF), not the individual accounts.

However, a single tax payment might actually be

made up of (say) payments from some MLC Wrap

accounts and refunds to others. The NAB CMA

allows the fund to quickly and easily meet its tax

obligations.

Great traditional banking features. It provides

a range of standard banking features that are

useful in the day-to-day running of the SMSF. For

example, the NAB CMA allows:

o Direct debit arrangements for regular

contractual fees such as fund

administration, audit etc

o Traditional online banking facilities such

as electronic transfers without the

requirement for signed forms etc. In

fact, as long as Heffron is the

administrator, the CMA is the NAB

CMA and the fund has at least one

MLC Investment Wrap - you can

even transact on the client’s behalf

using NAB Connect (discussed below).

This allows you to pay tax, fees and

expenses such as private asset

expenses on the client’s behalf

efficiently

o Cheque books, debit cards etc – while

not all of these will be appropriate for

all clients, they are an option for those

who want it. A client in their 70s whose

sole source of income is their SMSF

pension may well value these features

o On line access to view balance and

transaction histories

As long as Heffron is the

administrator, the CMA

is the NAB CMA and the

fund has at least one

MLC Investment Wrap

Getting Started


o Urgent same day domestic payments.

In contrast, the Wrap can only pay

adhoc costs by cheque and withdrawals

for pensions etc must be in accordance

with strict protocols and supported by

the relevant paperwork. The difference

in approach makes perfect sense – MLC

Wrap accounts must cater to a variety

of situations for a large number of

individual accounts where controls are

important. The NAB CMA is specifically

dedicated to just one client’s SMSF and

can literally be ‘self managed’. Of

course it will be vital that the client

always complies with the law.

o The ability to add a ‘narration’ to any

online transaction which is passed

directly to Heffron via a daily data feed.

This allows you to tell us (for example)

exactly what a particular transaction is

without having to advise us separately.

This is not just about saving Heffron

time – it’s about making the whole

process quicker and more efficient. If

we know everything we need to know

from the data we receive automatically,

we ask you fewer questions and our on

line reporting is accurate and timely.

Combining MLC Wrap Investment accounts with NAB CMAs gives your clients the best of both worlds – an excellent

investment hub coupled with transaction account for the SMSF as a whole. This puts you and your clients in the

driving seat when it comes to managing all the fund’s transactions, not just the ones related to investments.

The exact role that the NAB CMA will play for your clients’ funds will depend on a number of other decisions you

make.

For example, some funds may well have all contributions and pension payments facilitated via MLC Wrap Investment

accounts and will simply use the NAB CMA to pay expenses that relate to the fund as a whole (or which are required

to be paid via a direct debit arrangement), income and expenses relating to private assets and tax.

In fact if the fund has only one MLC Wrap Investments account, even some of these could be facilitated directly via

the MLC Wrap Investments account, leaving only a very small role for the NAB CMA.

The exact role that the NAB CMA will play for your clients’ funds will

depend on a number of other decisions you make

Getting Started


Other funds might adopt a different approach and instead position the NAB CMA as a central cash ‘hub’ through

which all transactions flow:

Getting Started


In fact, in the extreme, even the investment income

earned by MLC Wrap could be paid directly into the

CMA rather than the MLC Wrap’s cash account.

How will you generally decide? We have set out some

case studies in Section Some real examples. But

some common themes are that the NAB CMA will

typically play a more prominent role as a central cash

hub if the fund has substantial private assets and/or

operates segregated accounts. A fund with a single MLC

Wrap Investment account may well find that the NAB

CMA is used very little.

A related question – will you transact on the NAB CMA

for your clients?

You don’t have to transact for your clients but the fact

that you can is a significant benefit to both your

practice and your clients. It means that:

Clients can leave the administrative work of their

SMSF to Heffron and you – although obviously this

creates some additional work and responsibility for

you;

You can ensure they don’t make mistakes like

underpaying their pension, making payments from

their SMSF that should be personal expenses etc;

You and Heffron are completely in control and

aware of all transactions occurring within the SMSF

– creating efficiencies for both businesses and

comfort and security for clients.

This is the practical reality that encouraged the MLC

Advice and Licensees Boards to allow advisers to

transact on the SMSF’s cash management account

providing that:

1. The cash management account is a NAB CMA (so

while clients can set up alternative CMAs if they

wish, if you operate under any of the licensees in

the NAB group, you will not be able to transact on

it);

2. The SMSF has a MLC Wrap Investments account;

and

3. Heffron is the administrator of the SMSF.

Transacting is simple.

1. Set up NAB Connect

If you haven’t already done so you should register

for NAB Connect. (Note that if you had funds

transferring from the MLC Wrap SMSF service, this

will have happened automatically).

NAB Connect is essentially internet banking for

businesses and is accessed from exactly the same

place as NAB’s conventional internet banking

(www.nab.com.au select NAB Connect from the

drop-down menu on the right).

A few points about NAB Connect:

Security You will receive a user name and RAS

token – the token is used to generate a

password in real time when you use the

system.

Just one user name and RAS token is

required for your entire client base, you

don’t need one for each client account but

you may have a separate one for each

adviser in your practice.

Visibility All your clients’ NAB CMAs will be linked to

a single profile. Hence when you login,

you can see all your clients’ NAB CMAs in

one portal.

Sharing If you have others in your office that need

to (say) prepare transactions for your

approval, they can apply for their own

RAS token.

The system has several levels of security

so that you can assign different

permissions and capabilities to different

people.

Software There is no need to install new software

to access NAB Connect – it’s a web

application. It’s also accessible via mobile

devices

http://www.nab.com.au/

Getting Started


5

2. Client authority

You’ll need client authority to transact on their

behalf. For funds transferring from the MLC Wrap

SMSF service, a NAB CMA Authority form was

provided to clients in late March 2015.

For new funds and those transferring from another

administrator, it will be completed as part of

setting up the new NAB CMA. If there is an

existing NAB CMA in place, client authority will be

provided using NAB CMA authority forms.

3. Login and transact

From NAB Connect you can:

o Transfer money to MLC Wrap accounts. To

make sure it goes directly to the right MLC

Wrap account, you should obtain individual

EFT details for each MLC Wrap account

(see Section Up and Running – Getting

money into the fund, for more details);

o Transfer money to your clients’ bank

accounts. This is perfect for making top-up

pension payments, adhoc withdrawals etc.

Of course, you may also need to transfer

money from MLC Wrap to their NAB CMA

first to do this – discussed further below.

o Pay third parties.

o Set up direct debit arrangements.

Should the NAB CMA be the

nominated bank account for MLC

Wrap Investment accounts?

While MLC Wrap Investment accounts can make regular

payments to any number of bank accounts, only one

may be the ‘nominated’ bank account.

The nominated bank account is unique in that MLC

Wrap can use straight-through processing (STP) to

make payments from MLC Wrap to that nominated

account. In other words, the transaction can be

arranged via n-link with no requirement for you to send

form to MLC Operations. Please note that STP partial

cash withdrawals can only be made to a nominated

bank account where the client is also set up for e-

reporting on their MLC Wrap accounts (discussed

below). We expect that many clients will select the

NAB CMA as the nominated bank account for each MLC

Wrap account.

Why?

Given that the NAB CMA will often be used to make

payments that relate to several MLC Wrap accounts (eg

tax), the straight-through processing will be extremely

useful to be able to move money from MLC Wrap to the

NAB CMA seamlessly in anticipation of the combined

payment.

What are the downsides?

Making the NAB CMA the nominated bank account will

mean that your clients’ personal bank accounts cannot

also fill this role. This is relevant for clients with

pensions who might otherwise make additional

payments directly from MLC Wrap to their personal

(nominated) bank account. If their NAB CMA becomes

the nominated bank account there will be two ways to

potentially make these top-up payments:

1. Make the extra payment directly from MLC Wrap

by completing a withdrawal form on n-link (which

your clients must sign before the money will be

released); OR

2. Transfer funds from MLC Wrap to NAB CMA

(carried out via n-link, as it is the nominated bank

account, no forms are required) and then to your

clients bank account (via NAB Connect).

Remember that making the NAB CMA the nominated

bank account for a pension client will not have any

impact on the regular payments they have set up to

facilitate the pension payments – each MLC Wrap

account can provide an unlimited number of these to

any bank account.

One other step is required for straight-through

processing –MLC Wrap must be set up as eReporting.

This will mean that neither you nor your clients will

receive paper statements – they will only be provided

by email. While eReporting is the default setting for

new MLC Wrap Investment accounts, existing clients

who wish to change to eReporting can amend their

preferences by calling 132 652 or logging into Investor

Online and selecting ‘Reduce Paper waste’ from the

home page.

Setting up a new fund


Call us on 1300 792 778

the first time you use the

form and we can register

you for our online services

as well as guide you

through the process.


The simplest way to set up a fund is to use our online

services.

Call us on 1300 792 778 the first time you use the form

and we can register you for our online services as well

as guide you through the process to capture all the

information we need to do the legal documentation and

also start the process of setting up the MLC Wrap and

NAB CMA.

5 steps to set up a new fund

Log into our online

services and select

‘Fund Establishment’

Review the Fund

Establishment pack,

sign and return it

Heffron registers the

fund with the ATO

and apply for an

ABN and TFN

Heffron reviews the

signed Fund

Establishment pack

Heffron sends you the

Fund Establishment

pack

Fund Established

and ready for rollover!

5

Log into our online

services and select

‘Fund Establishment’

and follow the easy

instructions

Review the Fund Establishment pack, sign and return it

Heffron returns the original documents to you for your clients’ records

Heffron reviews the signed Fund Establishment pack and registers the fund with the ATO

4 3 2 1



HINT

If you would like us to set up one

or more MLC Wrap Investment

accounts and the NAB CMA at the

same time as establishing the

fund, just say so in the ‘notes’

section of the fund establishment

form

1 Log into our online services, select

‘Fund Establishment’ and follow the

easy instructions

Log into our online services, select ‘Fund Establishment’

and follow the easy instructions to enter the information

needed to set up the fund.

We check your responses along the way, looking for

common errors that potentially hold up the

establishment process. Some of our many checks and

balances include identifying invalid addresses, incorrect

TFNs, invalid trustee companies (such as a company

that has been deregistered according to the ASIC

database) or trustee arrangements where the

combination of trustees and members doesn’t match

the superannuation rules.

We can even highlight situations where the data

entered may well be right but would be unusual (such

as two members with the same date of birth). All of this

is provided in real time as you complete the form.

We also deal with a range of compliance matters like

documenting the investment strategy, death benefit

nominations, whether or not the fund should be

registered for GST etc to minimise the chance that

these are neglected later on. The full list of issues

clients and their advisers should consider before

starting this form are set out in our SMSF Guide.



HINT

We expect that many clients will

want to flag the NAB CMA is the

‘nominated bank account’ for each

MLC Wrap Investment account.

This will allow you to move money

from MLC Wrap to NAB CMA

without requiring paper forms or

client signatures. We will provide

the form needed for this (‘Update

account details’) as part of the

establishment pack or you can

make the change on n-link at any

time (Portfolio Facilities > Bank

accounts, and have the client sign

the Account Alteration form).

HINT

Make sure Section G of the NAB

CMA application form is

completed, making you an

‘Authorised User’ for NAB Connect

– this will be essential in allowing

you to move money from NAB

CMA to MLC Wrap Investment

accounts for investment purposes

and also for making external EFT

or BPay payments such as tax on

your client’s behalf

HINT

All the fund’s MLC Wrap

Investment accounts also need to

be set up for eReporting to allow

you to move money seamlessly

between the MLC Wrap and NAB

CMA. This is the default option for

all new accounts but you can

check any time by viewing the

‘Electronic Reporting’ option within

the ‘Account Details’ tab in n-link.

If the client isn’t opted in to

eReporting, they will need to

amend their preferences by calling

132 652 or logging into Investor

Online and selecting ‘Reduce

Paper waste’ from the home page.

2

3

Heffron sends you the Fund

Establishment pack

We send you a package of documents ready for signing

by your client (generally the next day). We can also

email copies if preferred but we generally find that thef

quickest and simplest process for both you and your

clients is if the package is sent by post. This gives us an

opportunity to clearly identify what your client needs to

sign so that the documents are executed correctly first

time every time.

With our service, you can set up both a fund and a

corporate trustee at the same time – we attend to both

and send you a single set of documents for your clients

to sign. We also pre-populate the MLC Wrap and NAB

CMA application forms as well as the relevant FSC AML

forms for your clients and these are included as part of

the document pack.

Return the pack to us



4

5

Fund Established

and ready for rollover!

Heffron reviews the signed Fund

Establishment pack and registers

the fund

We check the document execution, make sure

witnessing requirements have been dealt with correctly

and then register the fund with the ATO. We also

handle the remaining liaison with both MLC and NAB on

your behalf to ensure they have everything they need

to open the fund’s MLC Wrap accounts and NAB CMA.

This includes, for example, sending them the fund’s

TFN and ABN when these are issued by the ATO and

providing a certified copy of the fund’s trust deed. We

don’t ask you or your client to deal with these

yourselves.

MLC and NAB will advis e both Heffron and you of your

clients’ account numbers as soon as the accounts are

opened.

The original documents are

returned to you (for your clients’

records) in a professional leather

folder

What are the timeframes?

Receipt of

initial

documents

Within 2 business days

We will post the initial documentation to set up a fund the same day or next day after you lodge

the request online

Fund

establishment

The fund will ‘exist’ as soon as the client signs the documentation

TFN and ABN Up to 28 days

The ATO advises that issuing of a fund TFN and ABN should occur within 28 days – in practice it

is generally much quicker

Investment

accounts

The fund’s NAB CMA and MLC Wrap Investment accounts will be ready for action as soon as the

ABN and TFN have been received

Fund details

online

Within 7 days of issuing the fund’s ABN

The ATO will put some details about the fund on the Australian Business Register

(www.abr.business.gov.au) and the Super Fund Lookup register (www.superfundlookup.gov.au).

It is these registers that your clients ‘existing’ super funds will consult before agreeing to rollover

existing balances to the SMSF.

http://www.abr.business.gov.au/

http://www.superfundlookup.gov.au/

Up and running


Up and running

Getting money into the fund

Money can be deposited into the fund either directly to MLC Wrap or via NAB CMA.

There are slightly different steps depending on the nature of the transaction but some are common in all cases:

Deposit

Method Into the NAB CMA? Into the MLC Wrap?

Electronic

funds

transfer

The fund’s NAB CMA will have a BSB and

account number – deposits can be made

using these details using the normal

internet banking processes.

You can also have payments made directly to MLC Wrap

by EFT. Simply register here:

http://wealth.mlc.com.au/site/cms/web/public/forms/eft

to obtain the MLC Wrap Investment account’s individual

EFT details.

Note that if a single fund has multiple MLC Wrap

accounts, register each one that will receive payments

by EFT to receive unique details for that account.

BPay not available Enter the Biller Code (10959) and your client’s MLC Wrap

Reference Number. You can obtain the relevant MLC

Wrap’s BPay reference number by calling MLC.

Cheque Cheques should be:

made payable to

“[Name of SMSF]”

crossed "Not Negotiable"

then banked by you or the trustee

directly into the NAB CMA at any NAB

branch.

Cheques should be:

made payable to

"MLC Wrap Investments - [Name of SMSF]"

crossed "Not Negotiable"

attached to the relevant form (see later sections of

this Guide for an explanation of which forms to use)

scanned and emailed to [email protected]

then posted to MLC

How do you decide whether to deposit money into your clients’ NAB CMA or their MLC Wrap?

See Section Some Real Examples

HINT

If the fund has transferred from MLC Wrap SMSF and had already registered for

EFT, these details can remain in use. Note, however, that the EFT details under

the old service were specific to the SMSF as a whole, not individual wrap

accounts. This means MLC and Heffron may need to ask you for extra

information to allocate the contribution to the correct Wrap account and classify

it correctly. If the fund has more than one member, and contributions are to go

to different MLC Wrap accounts, you should consider applying for new details

and providing these to contributors. Don’t forget to also give any employers the

Electronic Service Address (see Section Employers - cash contributions below)


Up and running


Personal Cash contributions

Clients wishing to make one-off personal contributions to their SMSF should simply follow the cash deposit process

above.

What happens next depends on whether the contribution is paid to their NAB CMA or MLC Wrap Cash Account:

Let us know:

The type of contribution (personal – concessional,

personal – non-concessional, spouse, other)

For whom it was made

An email to [email protected] is sufficient for this

purpose OR it can be included in the narration entered as

part of the internet banking process.

When you want to move funds from your clients’ NAB

CMAs into their MLC Wrap Investment accounts, you

simply use NAB Connect.

Complete an ‘Additional and regular investments’ form

and submit this to MLC ([email protected]).

Also send a copy to Heffron ([email protected])

with one change (below).

As a general rule, the sections on MLC forms that only

relate to superannuation accounts should be ignored (as

the fund holds a traditional investment account rather

than a superannuation account).

However, adding some additional information to this form

by completing Section 4 (below) is a convenient way of

also advising Heffron of the information we need. Where

a single MLC Wrap Investments account relates to more

than one fund member, please also tell us which member

the contribution relates to by including their name next to

the contribution type here:

If we need any further information, we will contact you.

Contribution paid into

the NAB CMAs

Contribution paid into

the MLC Wrap Cash Accounts



Up and running


Employers - cash contributions

Follow the steps above for cash deposits depending on

whether the employer contributions are to be paid into

your clients’ NAB CMAs or MLC Wrap Cash Accounts.

In the future, most employers will be required (by law)

to make contributions electronically, and to send full

details of each contribution to the fund's ‘Electronic

Service Address’ (ESA). The fund’s ESA is like a special

digital post office box that is used to pass information

from the employer directly to Heffron. Make sure your

clients’ employer(s) have the ESA for their fund. A letter

for this purpose will have been provided as part of the

Fund Establishment pack (or separately for existing

funds moving from MLC Wrap SMSF to the Heffron

administration service).

The information we need (name of the employer, name

of the contribution recipient, type of contribution, date,

amount) will be available to us via the ESA. If the

information is insufficient, we will contact you for

details.

Where the employer is not providing electronic data to

the fund’s ESA, MLC or Heffron may contact you for

additional information. To avoid being asked the same

question twice, simply cc [email protected] on

any information you provide to MLC about the nature of

the transaction.


Up and running


Starting a pension

As you know, pensions provide a number of excellent planning opportunities in SMSFs and it’s an area in which

Heffron is well placed to support you. The steps to follow when starting a pension depend on whether you wish to

‘segregate’ the new pension account to a separate wrap or whether you will run the fund on a ‘pooled’ basis. (See

Section Getting Started for some suggestions on this).

Starting a pension in a pooled fund Starting a pension in a segregated fund

1. Notify Heffron (via email to

[email protected]) of:

the member’s name

the date the pension will start (this can

be whatever date the trustee formally

decided to start the pension, it need not

wait for the paperwork to be prepared)

whether it will be reversionary (and if so,

to whom)

the amount used to start the pension (or

just ‘whole balance’)

the condition of release

2. We will prepare various documents (minutes,

a product disclosure statement, notification of

the minimum / maximum pension payment

and forward them to you.

3. The documents should be signed by the client

and returned to us ([email protected])

along with any documentation required for

MLC Wrap (see below)

4. Establish the regular withdrawals to make the

pension payments either from:

NAB CMA (using NAB Connect); or

MLC Wrap (via n-link – go to the

‘Portfolio Facilities’ panel and then

Regular Withdrawal / Automatic Income

Distribution > Add Facility. Your clients

will need to sign the completed

instructions and these should be emailed

to [email protected]). Note that you

can also provide these instructions by

completing the paper ‘MLC Wrap Update

Account Details’ form).

1. If a new MLC Wrap Investments account is required,

open this by completing the MLC Wrap Investments

Series 2 application form. Note that a new MLC Wrap

account is not always required – even in a segregated

fund. See below.

2. If applicable (see below) transfer the relevant assets

between MLC Wrap accounts.

3. Notify Heffron (via email to [email protected]) of:

the member’s name

the date the pension will start (this may depend on

when a new MLC Wrap is established if this is

applicable)

whether it will be reversionary (and if so, to whom)

the amount used to start the pension (or just ‘whole

balance’)

the condition of release

4. We will prepare various documents (minutes, a product

disclosure statement, notification of the minimum /

maximum pension payments) and forward them to you

5. The documents should be signed by the client and a copy

returned to us ([email protected]) along with a

copy of any documentation required for MLC Wrap (see

below).

6. Establish the regular withdrawals to make the pension

payments either from:

NAB CMA (using NAB Connect); or

MLC Wrap. If the payments are to come from a new

MLC Wrap account, the regular withdrawals can be

established as part of the MLC Wrap application

process. If they are to be paid from an existing MLC

Wrap account, set up the regular withdrawal via n-

link – go to the ‘Portfolio Facilities’ panel and then

Regular Withdrawal / Automatic Income Distribution

> Add Facility. (Your clients will need to sign the

completed instructions and these should be emailed

to [email protected]). Note that you can also

provide these instructions by completing the paper

‘MLC Wrap Update Account Details’ form).







Up and running


When using n-link or completing paper forms,

remember that while the account holder is a

superannuation fund (the client’s SMSF), MLC Wrap

itself is not a superannuation account. Hence you

should set up (say) a ‘regular withdrawal’ rather than

regular pension payments.

Is a new wrap account always required if

the fund operates on a segregated basis?

Not necessarily. If the whole balance in an existing MLC

Wrap account is converting to pension phase and the

member is no longer receiving contributions, no new

account is required – the existing account can simply be

reclassified as a ‘pension account’ in Heffron’s systems.

This does not affect MLC Wrap as MLC no longer

maintains records as to which accounts are pension

accounts and which are non-pension accounts.

However, a new MLC Wrap account will be required for

segregated funds if:

1. Only part of the balance is converting to a

pension. Note that the ‘pension’ account can be

either the existing MLC Wrap or the new one –

depending on how you arrange the transfer of

assets between the two. For example, you could

decide to classify the existing wrap as the pension

account and move assets which will remain in

accumulation phase to the new wrap. Or you

could do the exact opposite. Generally you should

do whatever is easiest as the choice you make has

no impact on tax or the ongoing administration of

the fund;

2. The member will continue to receive contributions.

In this case, you would generally establish a new

wrap account to receive those contributions.

Make sure you advise the member and

employer (if applicable) of the new EFT

details – otherwise the contributions will be

banked in their MLC Wrap account which you have

just decided to classify as a pension account. The

Electronic Service Address for contributions will

remain the same – this only changes if you move

to a different fund.

The pension can start whenever you are confident that

the ‘pension’ assets are separated from the ‘non-

pension assets’. For example, if the member’s whole

balance is converting to a pension and the new MLC

Wrap account is purely to accept future contributions,

the pension can start before this new account has been

established – it will just be important to ensure that it

has been set up and new EFT details provided to the

employer before any contributions are paid. Even if the

employer accidentally contributes to the pension

account, this can be rectified without compromising the

pension.

What does Heffron do then?

Regardless of whether you operate the fund on a

pooled or segregated basis, Heffron will:

Keep you posted on how your clients’ pension

payments compare to the minimum amount they

must take over the year (or maximum if applicable)

– this information is available from our online portal

at any time and is updated monthly;

Proactively alert you towards the end of the

financial year if it appears that the payments will

fall short of the required minimum;

Complete all tax reporting for the member and the

fund (PAYG summaries, IAS / BAS).

Note also that there is no requirement to take regular

pension payments – SMSF members can draw

payments on whatever frequency they wish, including

just once a year or on an ad hoc basis.

See how much your clients need to withdraw this year

using our online portal.

Up and running


Pension payments and making changes

Pension payment amounts can be changed at any time.

Note also that sometimes a member might draw

pension payments from both the MLC Wrap

Investments accounts and NAB CMAs – both classify as

payments from the fund and therefore help meet the

minimum payment obligations. A good example is the

final ‘top-up’ that is often required at the end of the

year to make sure the minimum payment requirements

are met. Clients might draw a regular monthly amount

from their MLC Wrap Investments account, but arrange

that final payment as an electronic transfer from their

NAB CMA via online banking - just because it can be

quicker and simpler than completing forms.

One instance where you might need to make changes

to clients’ regular pension payments is each new

financial year when their minimum payment will

change. The way this works is as follows:

1. Estimated 30 June balance

We will receive daily updates on transactions

made by your clients’ SMSFs and will formally

review, reconcile and update their records once a

month. This means that in late July / early August,

an estimate of the balance of every member

account will be available on our online portal. It

might not be final for a number of reasons – we

won’t have received tax reporting from the fund’s

investments, we won’t have sought revaluations of

any private assets etc. However, in many cases, it

will be a very close estimate of the actual balance

at 30 June.

2. Estimated minimum payment for the

forthcoming year

Our adviser portal will also show an estimate

minimum (and maximum if applicable) pension

payment for the forthcoming year for each of the

member accounts.

3. Final schedule of pension payments

(based on audited accounts)

Once we have completed the annual accounts and

the fund has been audited, we will provide a final

schedule of the amounts that must be drawn from

each pension account during the forthcoming

year.

You can change your clients’ monthly pension

payments at any time – ie in July (when you know

the estimated amount) or when you receive the

audited financial statements and know the

confirmed amount.

You can also track how your clients’ actual

payments compare to the amounts they must

draw over the full year at any time on our online

portal.

4. Proactive prompt before 30 June

We will also contact you in May / June if your

clients’ regular drawings will not be sufficient to

ensure that their minimum payment obligations

are met.

Pensions paid from NAB CMAs Pensions paid directly from MLC Wrap

Adjust the regular withdrawals via NAB Connect and let

us know what has changed (and for whom) by emailing

[email protected]

Adjust the regular withdrawals via n-link – go to the

‘Portfolio Facilities’ panel and then Regular Withdrawal /

Automatic Income Distribution. Click on the relevant

Regular Withdrawal Facility and make the required

changes. Your clients will need to sign the completed

instructions and these should be emailed to

[email protected]). Note that you can also provide

these instructions by completing the paper ‘MLC Wrap

Update Account Details’ form). Email a copy of any forms

to Heffron ([email protected]). Let us know what

has changed and for whom.




Up and running


Adhoc benefit payments

From time to time you will need to make adhoc withdrawals for your clients – for example:

A non-pension member might draw a lump sum

A pension member might draw an extra payment over and above their regular pension withdrawals. This could

be a lump sum or a pension payment.

A pension member might need to take an extra payment to make sure they meet the minimum pension

requirements for the year.

Heffron can administer any payment, permitted by law, and can assist you in understanding what is allowed for your

clients. Call us any time.

Payments from NAB CMA Payments directly from MLC Wrap

Make payments from NAB CMAs using NAB Connect. Create a withdrawal via n-link – go to the ‘Portfolio

Valuation’ panel and then Withdrawal > Withdrawal

Details. Your clients will need to sign the completed


[email protected]) Note that you can also provide

these instructions by completing the paper ‘MLC Wrap

Withdrawal’ form). Email a copy of any forms to Heffron

([email protected]). Let us know which member

has received the additional payment.



Up and running


Pension refresh

From time to time, it makes sense to ‘refresh’ a pension – maybe a pension member has made new contributions or

maybe you want to combine several pensions into one. Technically what happens as part of this process is that one

pension ends, the amounts are combined and a new pension starts.

If the refresh happens at any time other than 30 June, you will need to make sure that the old pension is paid ‘up to

date’ first. Heffron can assist with this (see below). Whether you also need to move assets from one MLC Wrap

account to another depends on whether you operate the fund on a pooled or segregated basis.

Pension refresh in a pooled fund

Pension refresh in a segregated fund

(where each pension account has its own MLC Wrap

Investments account)

1. If the refresh date is any date other than 30 June,

check that the old pension has been paid up to

date (email [email protected] to ask us if

you’re not sure.)

2. If the pension is not yet up to date, arrange the

required payment from the NAB CMA or MLC

Wrap as appropriate (see Section Up and Running

– Ad hoc benefit payments)

3. Advise Heffron:

which member accounts are to be combined

on what date

whether the new pension will be

reversionary (and if so, to whom)

4. We will prepare various documents (minutes, a

product disclosure statement, notification of the

ongoing minimum / maximum pension payments)

and forward them to you

5. The documents should be signed by the client

and a copy returned to us

([email protected])

6. Establish the regular withdrawals to make the

pension payments either from:

The NAB CMA (using NAB Connect); or

The MLC Wrap (via n-link – go to the

‘Portfolio Facilities’ panel and then Regular

Withdrawal / Automatic Income Distribution

> Add Facility. Your client will need to sign

the completed instructions and these should

be emailed to [email protected]). Note

that you can also provide these instructions

by completing the paper ‘MLC Wrap Update

Account Details’ form).

1. If the refresh date is any date other than 30 June,

check that the old pension has been paid up to date.

(Email [email protected] to ask us if you’re not

sure.)

2. If the pension is not yet up to date, arrange the

required payment from the NAB CMA or MLC Wrap as

appropriate (see Section Up and Running – Ad hoc

benefit payments )

3. For the MLC Wrap Investments account that is to be

closed (or from which cash / assets will be

withdrawn), complete the MLC Wrap Withdrawal form

4. For the MLC Wrap Investments account that is to

receive additional money or assets, complete the MLC

Wrap Additional and Regular investments form

5. We will prepare various documents (minutes, a

product disclosure statement, notification of the

minimum / maximum pension payments) and forward

them to you

6. The documents should be signed by the client and a

copy returned to us ([email protected])

7. Establish the regular withdrawals to make the pension

payments either from:

The NAB CMA (using NAB Connect); or

The MLC Wrap (via n-link – go to the ‘Portfolio

Facilities’ panel and then Regular Withdrawal /

Automatic Income Distribution > Add Facility.

Your client will need to sign the completed


[email protected]). Note that you can also

provide these instructions by completing the

paper ‘MLC Wrap Update Account Details’ form).

8. Forward completed forms to [email protected]

and [email protected]









Up and running


Payment of fees, insurance and other expenses

There are a range of payments that could fall under this general heading. For example:

Fees to anyone other than you such as the auditor, Heffron, costs relating to private assets

Insurance premiums

These are exactly the sorts of transactions for which the NAB CMA is perfect. They generally relate to the fund as a

whole rather than one specific member or account – so even if the fund is being run on a segregated basis it will

make sense to pay them from the NAB CMA. Heffron will then keep track of how much relates to each member

account.

The fact that the NAB CMA comes with the usual range of bank account features such as a cheque book, online

banking and the ability to set up direct debit arrangements means that you and your clients can easily handle these

payments directly from the NAB CMA.

* We strongly recommend you use the NAB CMA for these transactions rather than making payments directly from

your clients’ MLC Wrap Investments accounts.

Some fees will arise on a regular basis and can be streamlined by establishing a direct debit arrangement from the

NAB CMA. This will minimise the work required from you and your clients. For example, when we set up a fund or

take over a new one, we will provide the forms your client needs to sign to set up a direct debit for our fees and

other charges related to the administration of the fund such as audit and actuarial costs. Unfortunately this is not

possible for payments directly from your clients’ MLC Wrap Investment accounts.

Payments from NAB CMA Payments made directly from MLC Wrap

Investments accounts *

1. You should ensure you (or the client) receive an

invoice or other documentation that supports the

payment. For example, you will receive invoices

from Heffron for our fees, audit fees etc. Where we

have not initiated the payment, please email us a

copy of the invoice. ([email protected])

2. Make the payment via NAB Connect or a cheque.

1. You should ensure you (or the client) receive an

invoice or other documentation that supports the

payment. For example, you will receive invoices

from Heffron for our fees, audit fees etc.

2. Complete the MLC Wrap Withdrawal form. Where

the payment relates to multiple wrap accounts, you

will need to complete one withdrawal form for each

one – showing the portion of the fee / tax payment

to be met from each one. Email the form(s) and

invoice to [email protected]. Where we have

not initiated the payment, please also email us a

copy ([email protected])

3. MLC Wrap will forward a cheque to you so that you

can make the payment.

4. You can forward the cheque to the relevant party.

In the case of tax, we will provide a remittance slip

which should accompany the payment.




Up and running


Payment of tax

Tax payments can include regular instalments lodged

with the fund’s Business Activity Statement or

Instalment Activity Statement or the annual tax bill paid

when the fund’s income tax return is lodged.

This is one payment that will – in practice – need to

some from the NAB CMA unless the fund has only one

MLC Wrap Investments account.

The process for paying tax is exactly the same as any

other cost but there are just a few extra steps that

arise.

1. Heffron will calculate how much tax is

payable

(or refundable) and how this should be divided

between the various member accounts. While the

fund only ever receives one tax bill, it can actually

be made up of several components – eg tax to

pay from one member account but a refund to

another.

2. For segregated funds, Heffron will also

advise you if simply paying that tax bill

from the NAB CMA would cause any of

the members’ ‘share’ of that account to

fall below $0.

For example, let’s say the CMA contains $10,000

and is due to pay a tax bill of $5,000. The account

clearly holds enough cash to make the payment,

but what if the fund is segregated and the NAB

CMA is notionally divided between the two

members as follows : $8,000 for Greg and $2,000

for Mary? If the tax bill would normally be split

exactly evenly between the two members, Mary’s

share isn’t enough to make the payment. If the

fund is to remain segregated, you will need to

transfer at least $500 from Mary’s MLC Wrap

Investments account to her NAB CMA first.

If money needs to be transferred to the NAB CMA

before paying tax, you can do this electronically

providing the NAB CMA is the nominated bank

accounts for your clients’ MLC Wrap Investments

accounts.

3. Pay the tax from the NAB CMA using NAB

Connect.

Up and running


Private assets

Setting up - buying a new private asset

Heffron can support any private assets permitted by law

– there is no approved list or other restrictions. You and

your clients can also buy and sell these assets without

requiring approval from us.

That said, we would strongly recommend you talk to us

first about new private assets you’ve not bought before

in an SMSF environment. Compliance is our focus and

we are well placed to help you verify that a particular

asset can be acquired as planned and help you make

sure you collect the right documentation for the future

(eg documentation needed for audit purposes at the

end of the year).

Once you have confirmed that a particular asset can be

bought in your clients’ SMSFs, we recommend that the

acquisition, subsequent income and all expenses are

managed through the NAB CMA.

Ongoing

We report assets at market value in the fund’s financial

statements and so any private assets will need to be

regularly revalued. This does not mean a formal

valuation carried out by an external professional is

required every year. Our usual approach is as follows:

commercial property investments – you or your

clients should arrange a formal valuation at least

every three years. For the interim years, a

valuation by the trustee will suffice – sometimes

that might even be to adopt the same valuation as

the previous year if the trustee feels that the value

of the asset has not changed during that period;

residential property investments – either the

trustee should provide an updated valuation each

year, or in some cases, we can draw on data for

comparable properties in the same area to provide

a suggested valuation;

unlisted unit trusts and companies – the trustee

should provide an updated valuation each year

based on the market value of the assets held by

these structures.

Note that when the private asset represents a very

large proportion of the fund, the auditor will sometimes

request additional documentation. For example, an

investment in a private company that represents more

than 20% of the fund might warrant additional sign off

by the company’s accountant.

Special rules for segregated funds

There is nothing to prevent a private asset being shared

between several members who each ‘own’ a fixed

proportion of the asset. In our accounting records, we

will make sure that the income and expenses are

divided appropriately. Remember, however, that if the

fund is divided between pension and accumulation

balances, a single private asset such as a property must

be owned by pension accounts or accumulation

accounts, not a combination of the two.

Stay informed


Stay informed

Heffron has a range of services to help you manage

your clients’ SMSFs. Not only are our SMSF experts

available to help on any technical compliance issue

relating to the funds we administer but our online portal

also gives you instant access to important information.

Up-to-date Financial Data

Our portal allows you to see exactly what we see when

it comes to the financial data for your clients. The

investment data is kept up to date on a daily basis via

data feeds directly from MLC Wrap and the NAB CMA

(plus a range of other assets).

At the end of each month, we reconcile these

transactions and check back with you for more

information if there are any that we can’t classify. Once

that process is complete, we formally update all the

member balances and update amounts such as

preservation components, tax components. These

amounts are therefore up to date each month (rather

than daily).

You can use the information in our portal to:

monitor how your clients are tracking relative to

their contribution caps

check their pension payments against the minimum

/ maximum required

view the current asset allocation for the fund as a

whole (and compare this to the fund’s current

investment strategy)

see a full breakdown of all the fund’s investments

as well as finding details such as the fund’s TFN,

ABN and member and trustee data.

Many of these reports can be downloaded as PDFs or in

some cases .csv files so that you can include them in

your advice.

Stay informed


Documents

All the key documents for your clients’ funds are

available from our portal – for example the trust deed,

insurance policies, death benefit nominations, most

recent financial statements, investment strategy,

trustee minutes etc.

They are presented in an intuitive dashboard that

actually gives you much of the information you need

about those documents without requiring you to even

open them.

This dashboard highlights:

any documents that are unsigned (indicated with a

x)

key dates for example, Joe’s death benefit

nomination was signed on 26 June 2008;

extra information relevant to specific documents

(the Power of Attorney we have on file for Joe is an

enduring power of attorney, Alicia’s death benefit

nomination is binding and non-lapsing)

If you need the documents themselves, you can

download them from the portal at any time.

Some real examples


Some real examples

The case studies below are designed to bring together the information in this Guide and highlight how an adviser

might choose to deal with a particular client scenario.

Meet the Smith family.

Stacey and George Smith have been married for years and do everything together – from entertaining the

grandchildren to managing their finances. While they have two children, they are the only members of their SMSF.

All their fund’s assets are in the MLC Wrap.

They are both receiving a pension and because he does occasional consulting work, George still receives

contributions from time to time.

Currently Stacey and George operate a ‘segregated’ structure – their fund has three MLC Wraps:

one each for their pensions; and

one for George’s contributions.

Their adviser is considering whether or not they should collapse their MLC Wrap accounts into one and if so, how

the NAB CMA would fit in.

How would the

various cash

transactions

flow?

Collapse the segregation Leave the segregation in place

Pensions Paid directly from the (combined) MLC Wrap

Investments account.

While they could be passed through the NAB

CMA, there’s really no need.

Paid directly from their respective MLC Wrap

Investments accounts.

While they could be passed through the NAB

CMA, there’s really no need.

George’s

contributions

To the combined MLC Wrap Investments

account.

(Although remember that as it is now pooled

with the two pension accounts, cash flow from

the contributions could be used to partly fund

the regular pension payments.

This doesn’t mean that George is missing out

on his contributions as behind the scenes,

Heffron is carefully tracking each individual

member account. However, there is less need

for the fund to buy and sell investments.)

To George’s old ‘super’ MLC Wrap account.

(Although remember that it’s now a MLC Wrap

Investments account rather than a super

account).

Wrap

investment

income

To the combined MLC Wrap Cash Account. To the cash account for each MLC Wrap


Some real examples


How would the

various cash

transactions

flow?


Tax When their fund receives an annual tax refund

of $10,000, they could have this deposited

directly into the (combined) MLC Wrap


Behind the scenes, Heffron would keep track

of how that refund should be divided between

the three member accounts – as follows:

George (pension) $8,000

Stacey (pension) $4,000

George (super) ($2,000)

Net refund $10,000

(In other words, George’s super account pays

tax while the other two accounts are owed

refunds.)

Alternatively, they would have the refund paid

into the CMA to provide a float for that

account.

When they get their annual tax refund of

$10,000, Heffron tells them that it needs to be

divided up as shown in the left hand column.

Stacey and George bank the refund into their

NAB CMA. Heffron is able to tell their adviser

how it should be divided up and the adviser

transfers the right amounts to / from the

relevant MLC Wrap Investments accounts.

The adviser uses n-link to transfer $2,000 from

George’s old super Wrap account to the NAB

CMA and then NAB Connect to transfer $8,000

and $4,000 to the two MLC Wrap accounts set

aside for the pensions.

Other costs

(administration

fees etc)

From the NAB CMA – generally via a direct

debit arrangement. Of course, for this to work

it will be important to ensure that the NAB

CMA has sufficient cash and it will be

necessary to move money from their MLC

Wrap Investments account to their NAB CMA

from time to time to do this.

Like tax, the fund’s administration and audit

fees are each a single transaction to Heffron

(via direct debit from the NAB CMA) but made

up of payments from several MLC Wrap

accounts.

Stacey is an ex-accountant and she is keen to

do this very precisely – she wants the adviser to

make exact transactions to / from the various

wraps to match what is happening in the NAB

CMA.

George, on the other hand, is a bit more

pragmatic. He feels they should probably leave

a ‘float’ in their NAB CMA and share it between

them. All he really cares about is that Heffron is

tracking this behind the scenes and making sure

that their NAB CMA is carefully allocated

between each member account. He wants to

keep their fund ‘segregated’ and so it’s

important that the notional ‘share’ of their NAB

CMA attributed to each member account is

positive at all times.

Either approach would be fine.

Some real examples


How would the

various cash

transactions

flow?


What bank

account was

chosen to be

the nominated

bank account

for the MLC

Wrap

Investments

account(s)?

The NAB CMA – although this is less critical if

the segregation is collapsed. Remember,

though, that only the NAB CMA can offer the

usual banking facilities such as direct debit

arrangements, a cheque book etc. that might

be valuable for George, Stacey and their

adviser even if most transactions happen via

their MLC Wrap Investments accounts.

The NAB CMA – given that each shared

transaction will require several underlying

transactions from individual MLC Wrap

accounts, it is even more important that the

NAB CMA is the nominated bank account.

What else had

to happen?

George and Stacey needed to:

Collapse the three MLC Wrap

accounts into one. Their adviser

was able to choose one of their

existing accounts and simply

transfer all the assets across to that

account using a simple paper form

(the MLC SMSF Account

Consolidation form);

Re-arrange the regular withdrawals

for pension payments – for

example, if one of the accounts

being collapsed was a pension

account, the regular withdrawal

from that account would cease.

Their adviser was able to do this on

n-link (although they had to sign

the form before it could be acted

upon by MLC)

Advise George’s employer of new

EFT details for the combined MLC

Wrap Investments account (unless

his old super account happens to

have been the one chosen for the

combined account).

Opt into eReporting for the

combined MLC Wrap account.

Give their adviser transaction

authority on their NAB CMA.


Opt into eReporting for all their Wrap

accounts and give their adviser

transaction authority on their NAB

CMA (it certainly makes it easier for

them to make sure any ‘top up’

payments required for their pensions

can be made even if they are

overseas at the time).

George’s adviser also made sure that when all

their MLC Wrap accounts converted across to

MLC Wrap Investment accounts, he applied for

EFT details for each one. That way:

Any transfers from the NAB CMA to

the MLC Wrap Investments accounts

could be directed to precisely the

right account.

George could give his employer(s)

new EFT details to ensure that his

contributions could be paid directly to

the right Wrap account. He had to

give his employer the new Eligible

Service Address once the fund moved

to Heffron anyway – he just did it all

at the same time.

Some real examples


Or what about two other examples:

Brad Jones Jane & Peter Gold

About the

client

Brad is single and in accumulation phase.

All his SMSF assets are in MLC Wrap – he has

no private assets.

Jane and Peter have a mixture of pension and

accumulation benefits currently held in different

MLC Wrap accounts. They are both receiving

regular contributions.

In addition, the fund has an investment

property that represents around 70% of the

fund’s assets. Rent is paid monthly and there

are some quarterly expenses that relate to the

property.

Where does

the NAB CMA

fit in?

The transactions into / out of Brad’s SMSF are

simple:

his employer makes regular

contributions – these go directly to

the MLC Wrap via EFT each month

all the income from his MLC Wrap

investments is also deposited into

the Wrap cash account

both are invested by his adviser in

accordance with standing

instructions they agreed when the

Wrap was set up

But he does have some transactions that are

made from his NAB CMA:

his fund pays tax instalments every

quarter. Initially he thought he

would have these paid from the

Wrap but he and his adviser had to

arrange & sign withdrawal forms,

wait for cheques etc. In the end, he

found it more convenient to run a

small cash balance in the CMA and

authorise his adviser to make these

payments to the ATO directly from

the CMA each quarter. Brad’s

adviser uses NAB Connect to make

these payments.

every now and again, his adviser

‘tops up’ the CMA by transferring

some funds across from the MLC

Wrap account to the CMA. The

adviser just uses n-link to handle

this on line – Brad doesn’t need to

sign any forms.

Heffron collects fund

administration, audit and actuarial

For Jane and Peter, the CMA might play a more

central role. One approach for them could be to

have:

all private asset income and

expenses dealt with via the NAB CMA

contributions paid to the NAB CMA

pensions paid from the NAB CMA;

even investment income from the

MLC Wrap paid to the CMA.

All their expenses would be paid through their

NAB CMA, ideally via direct debit to minimise

the work involved in transacting for them. For

example, Heffron’s fees, audit fees, actuarial

fees, council rates, body corporate fees,

insurance and a range of others could all be

automated from their NAB CMA. They no longer

need to complete withdrawal forms and wait for

cheques.

Some real examples



fees by a direct debit arrangement.

This is a transaction that the

adviser doesn’t need to arrange – it

is done by Heffron. Because Brad’s

fund was set up after 1 April these

fees are collected monthly.

What bank

account was

chosen to be

the nominated

bank account

for their MLC

Wrap

Investments

account(s)?

The NAB CMA – Brad wants the convenience

of having his adviser top up his NAB CMA from

time to time, and so he made the NAB CMA

the nominated bank account on his MLC Wrap


The NAB CMA – for Peter and Jane it is likely

that the NAB CMA will actually evolve into their

primary cash hub as the majority of their

investment income and expenses comes from

their private asset.

What else had

to happen?

Some other important housekeeping matters

that Brad and his adviser took care of to make

sure things ran smoothly:

When the NAB CMA was set up,

Brad made sure he gave his adviser

transaction authority on the

account. (Remember that this is

only allowed by the MLC Advice and

Licensee Boards if the CMA is a

NAB account, the fund has a MLC

Wrap Investments account and

Heffron is the administrator).

The MLC Wrap Investments

account has opted into eReporting

(essential for the straight through

processing of transactions from the

MLC Wrap Investments account to

the NAB CMA via n-link)

Brad made sure he provided the

EFT details for his MLC Wrap and

his Electronic Service Address to his

employer – that way Heffron

receives data about his

contributions directly from his

employer’s payroll system.

Again, Jane and Peter would need to opt-in to

eReporting and give their adviser transaction


They would also need to provide new EFT

details (the NAB CMA’s) to their employers.

But nothing

ever stays the

same

It’s a few years on. Brad has retired and

wants to start a pension. He’s confident he

won’t be receiving any more contributions.

What if they sold their investment property and

decided to invest the proceeds in their MLC

Wrap Investments account?

What happens? Brad’s adviser can simply instruct Heffron to

start his pension.

There is no need to close the old MLC Wrap

Now their primary investment vehicle would be

the MLC Wrap Investments account. At this

point it is likely they would reduce the role

Some real examples



Investments account and start a new one.

The pension can start instantly and all Brad’s

adviser needs to do is establish the regular

withdrawals to meet Brad’s pension payments.

The nominated bank account for their MLC

Wrap Investments account remains the NAB

CMA – Brad’s pension payments are paid

regularly and are set up as a regular

withdrawal to his personal account.

The only time Brad’s adviser needs to get

involved is:

Around June each year to make a

top-up payment if necessary (which

he usually does as a straight

through process from MLC Wrap

Investments account to NAB CMA

and out to Brad).

Early in the financial year to adjust

the regular withdrawal amount (he

does this through n-link but needs

to get Brad to sign the form each

year).

Every now and again when Brad

wants extra money. This is handled

the same way as a top-up

payment.

played by their NAB CMA – for example, we

expect they would have MLC Wrap Investment

income paid to the MLC Wrap Cash Account

rather than the NAB CMA. They would continue

to use the NAB CMA for things like fees, tax etc

but not need such a sizeable cash float.

They may also move to have their contributions

paid directly to their MLC Wrap Investments

account.

What else had

to happen?


Collapse the three MLC Wrap

accounts into one. Their adviser

was able to choose one of their

existing accounts and simply

transfer all the assets across to that

account using a simple paper form

(the MLC SMSF Account

Consolidation form);

Re-arrange the regular withdrawals

for pension payments – for

example, if one of the accounts

being collapsed was a pension

account, the regular withdrawal

from that account would cease.

Their adviser was able to do this on

n-link (although they had to sign

the form before it could be acted

upon by MLC)

Advise George’s employer of new

EFT details for the combined MLC


Opt into eReporting for all their Wrap

accounts and give their adviser

transaction authority on their NAB

CMA (it certainly makes it easier for

them to make sure any ‘top up’

payments required for their pensions

can be made even if they are

overseas at the time).

George’s adviser also made sure that when all

their MLC Wrap accounts converted across to

MLC Wrap Investment accounts, he applied for

EFT details for each one. That way:

Any transfers from the NAB CMA to

the MLC Wrap Investments accounts

could be directed to precisely the

right account.

George could give his employer(s)

new EFT details to ensure that his

contributions could be paid directly to

Some real examples



Wrap Investments account (unless

his old super account happens to

have been the one chosen for the

combined account).

Opt into eReporting for the

combined MLC Wrap account.

Give their adviser transaction


the right Wrap account. He had to

give his employer the new Eligible

Service Address once the fund moved

to Heffron anyway – he just did it all

at the same time.

What if…? What if Brad was continuing to receive

contributions?

He might move to a pooled structure (and

have those contributions paid to the same

MLC Wrap Investments account as his

pension) or he might choose to keep them

separate. If he did want to keep his super and

pension accounts in separate MLC Wrap

accounts, he would probably set up a new

account for contributions rather than

moving his existing wrap account around.

Importantly, the MLC Wrap Investments

account can be reclassified, it doesn’t need to

be closed etc. This is because it is an MLC

Wrap Investments account, not specifically a

super or pension Wrap account.

CONTACT US

[email protected]

1/27 Bulwer Street, Maitland NSW 2320

PO Box 200, Maitland NSW 2320

1300 792 778

Dedicated number for MLC Advice Partnership advisers

http://mlc.heffron.com.au

Access your MLC Advice Partnership resources online

http://mlc.heffron.com.au/