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This information is current at February 2014 and is subject to change. As this information (including the statements on taxation which are of a general nature only and based on current laws, rulings and interpretation) has been prepared without considering your objectives, financial situation or needs, you should,

before acting on this information, consider its appropriateness to your circumstances. My Financial Group Health is a corporate authorised

representative of Synchronised Business Services (ABN 33 009 657 176, AFSL 243313) You should consult with your financial adviser before selecting any insurance or investment products. The information provided here tonight is general in nature and any personal advice to meet your personal objectives.

Disclaimer – Synchronised Business Services Pty Ltd

SMSF BACK TO BASICS

AGENDA Investment process

SMSF is this for you?

Commercial property case study

Shares can play a role in diversification and yield

Property development using SMSF

Don’t put it at risk!

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THE INVESTMENT SELECTION PROCESS

STEP 1:Review your personal circumstances with a professional in light of Taxation, Litigation, Income and Growth Requirements and Investment Objectives Short and Long Term.

STEP 2:Decide on the appropriate Style of investment to meet your requirements above. E.g. Property, shares, business

STEP 3:Decide on the most effective ownership structure to take into account CURRENT and FUTURE tax requirements.

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TAX ENVIRONMENTS

Super

15%

Individual46.5%

Company

30%Trust

Retirement

Income 0%

Capital Gains 0%

Marginal Tax Rate up to 46.5%

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CREATING ASSETS + INVESTMENTS

TERM DEPOSITS

SHARES

PROPERTY

TAXUP TO 46.5%ON EARNINGS

DOWN TO 15%ON EARNINGS

10%CAPITAL GAINS

0%AFTER 60!

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SMSF IS THIS FOR YOU?

RETIREMENT STRATEGY

RETIR

EMEN

T

STRAT

EGY

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Acknowledged as one of the most tax effective structures for wealth creation, SMSFs offer a number of key benefits, including:

Control over the structure and all decisions made by fund

Flexibility of investment choice, timing of contributions and access to

income stream (pension) payments

Tax effectiveness the opportunity to reduce tax rates on investment income and

capital gains through, for example, the use of franking credits,

offsetting capital losses, timing of disposal of assets and other

capital gains considerations

Estate planning SMSFs can be structured to provide effective estate planning

Asset ownership ability to transfer personal shares and business real property

into the fund, and

Asset protection from bankruptcy and other legal claims (up to a limit).

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1. Sole purpose testCore purpose: retirement, age 65, death benefits

2. Investment strategyTrustee obligation to have an investment strategy (Key role for Adviser)

3. Arm’s length transactionsInvestments must be made and maintained on a strict commercial basis

4. Financial assistance to members or related parties

Cannot use the fund to provide financial assistance to a member or relative of a member

5. Prohibitions on loans

6. Acquisition of assets from related partiesGenerally prohibited. Exemptions include listed securities, units in a widely held unit trust, life policies (except from a member or relative), business real property, in-house asset (5% limitation applies)

7. In-house assets testlimited to 5% of the fund’s market value

8. General prohibition on the fund borrowing.

What is allowed:Geared managed funds Cash applications of (traditional) instalment warrantsOther instalment trust arrangements

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SMSF – MAIN POINTS

SUPERANNUAT

ION

Asset Ownership – Control of these investments Leverage which creates purchasing power Flat fees instead of percentage based fees Low costing once you have reached an amount of

$200K + Provides further diversification

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ALL ABOUT SMSFsHow big is the SMSFmarket?

At 30 June 2013 there were:• Over 450,000 SMSFs• Nearly 850,000 SMSF members• Over $432 billion in total assets in

SMSF

Growth in SMSF market since June 2004

• APRA found that at the end of June 2013, SMSFs continued to hold the largest proportion of superannuation assets, accounting for 31.2% of the total of Australian superannuation assets, followed by retail funds with 27.5%. Industry funds accounted for 18.6%, public sector funds 15.1% and corporate funds 4.5%. Small APRA funds (fewer than five members, but not classified as a bone fide SMSF) held 0.1% of total assets.

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WHY MFG HEALTH?Experience - in the SMSF segment of the superannuation industry for 25

years

Specialist SMSF administration experts

Quality, client focussed service

Accurate and compliant accounting and ATO reporting

Proven risk management structure

Complete range of SMSF services

Market leading technical capability and expertise

Brand strength and stability

Dedicated contact and relationship managementAll About MFGHealth

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DEFINING SUPERANNUATION

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DAN + JUDY’S SUPERANNUATION

CASE

STUDY

SUPERANNUAT

ION

Total income $560,000 Home mortgage $500,000 P/A Practice Turnover $2,000,000 Profit

$380,000 Dan fee draw $200,000 Judy fee draw $80,000 Premises leased $62,000

OPPORTUNITY = BUY PREMISES FOR

$1,000,000

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DAN + JUDY’S SUPERANNUATION

CASE

STUDY

SUPERANNUAT

ION

Current Super $200,000+ Cash boost of $50,000 (Combined Contribution)= $242,000 after 15% Tax

10% dep = $100,000 Stamp Duty + Costs =$48,000 LOAN = $900,000

$94,500 CASH IN SUPER

+

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DAN + JUDY’S

CASE

STUDY

SUPERANNUAT

ION

INCOME / P.A.

Rent $62,000 Contribution

$50,000(%15 Tax + offset by depreciation etc) TOTAL $112,000

SUPERANNUATION

EXPENSES

Interests $62,000

Outgoings $12,000

Gen. Costs $7,500

Dep’n $28,300 TOTAL $83,000 OFFSETS $115,300

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JOHN + MARY’S PRACTICE

CASE

STUDY

2

SUPERANNUAT

ION

Common FundAge based fee

0.71%

SUPERANNUATION

SMSFFlat fee $4000

VS

= $16,330 = $4,000

SMSF Flat Fee is geared to complexity not fund value

$2.3 MILLION IN SUPER FUND

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DEFINING SUPERANNUATIONDEFINING SHARES

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JASON + MAREE’S

CASE

STUDY

3STO

CK

MARKET

STOCK MARKET

47 yr. old Jason earns $180,00043 yr. old Maree earns $35,0002 small kids

Several investment properties

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BLUECHIP20 PORTFOLIO Security Description Portfolio Weight Dollars Invested

BHP Billiton Limited 14.51% $54,413Commonwealth Bank. 12.76% $47,850Westpac Banking Corp 10.12% $37,950ANZ Banking Grp Ltd 8.91% $33,413National Aust. Bank 7.87% $29,513Telstra Corporation. 7.12% $26,700Wesfarmers Limited 5.31% $19,913Woolworths Limited 4.95% $18,563Rio Tinto Limited 3.55% $13,313Westfield Group 2.99% $11,213CSL Limited 3.01% $11,288Woodside Petroleum 2.81% $10,538Newcrest Mining 2.40% $9,000QBE Insurance Group 2.36% $8,850Origin Energy 1.94% $7,275AMP Limited 1.64% $6,150Suncorp-Metway 1.57% $5,888Santos Limited 1.47% $5,513Brambles Limited 1.40% $5,250Macquarie Group 1.31% $4,913Cash 2.00% $7,500  100.00% $375,000

TOP 20 STOCKS PORTFOLIO

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BLUECHIP20 PORTFOLIO TOP 20 STOCKS PORTFOLIO TAX

POSITION

INCOME EXPENSES

Franked Dividends (4%)

$15,036Interest on loan -$17,062

Imputation Credits $5,616Interest on LOC -$6,750

Cash Interest $300Portfolio Fee -$1,500

Total (5.58%) $20,951  -$25,312

$4,361 TAX OFFSET EACH YEAR

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THE BENEFITS OF LONG TERM INVESTINGNo negative rolling ten year returns on the ASX 200 Accumulation Index since 1910

*Source Goldman Sachs JB Were (derived from a number of original sources including the ASX)

Past performance may not be a reliable indicator of future performance

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JASON + MAREE’S

CASE

STUDY

3STO

CK

MARKET

BENEFITS

Regular dividends Franking credits

(tax paid at 30% on dividends already )

Long term growth Liquidity Ability to reinvest

distributorsor add further funds to access a long term average price

STOCK MARKET

DISADVANTAGES

High level of volatility Risk associated with

holding individual stocks

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BLUECHIP20 PORTFOLIO BLUECHIP20 PORTFOLIO

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REAL PROPERTY

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DAN + JUDY’S COMMERCIAL PROPERTY

CASE

STUDY

4

SUPERANNUAT

ION

Total rollover $560,000 Add Concessional Contributions $50,000 ($42,500

after tax) Add Non Concessional Contributions $900,000 Borrow $1,000,000

Premises purchased $2,200,000

OPPORTUNITY = BUY PREMISES FOR

$2,200,000

Total Available $2,502,500

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DAN + JUDY’S COMMERCIAL PROPERTY

CASE

STUDY

4

SUPERANNUAT

ION

Concessional Contributions $50,000Lease from property $190,000

= $255,000 income

Interest $70,000 Property Costs $10,000

Interest/Dividends $15,000

Tax Deductions

= $105,000 deductions

Depreciation $25,000

= $150,000 taxable at 15% = total tax $22,500

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DAN + JUDY’S COMMERCIAL PROPERTY

CASE

STUDY

4

SUPERANNUAT

ION

Surplus Cashflow $175,000 Repay Loan over 5 yrs approx

Over Time

= $255,000 taxable at 15%

Income in SMSF then $255,000 indexed

VS $255,000 taxable at 46.5%

= total tax $118,575

= total tax $38,250

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LOOKING BENEATH FOR THE OUTCOMES

TAX

UP TO

46.5%ON EARNINGS

15%ON EARNINGS

10%CAPITAL GAINS

0% AFTER 60!

VS

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DALE + SANDRA’S SUPERANNUATION

CASE

STUDY

5STO

CK

MARKET

REAL PROPERTY INVESTMENT Property cost: $577,000

including stamp duty Town planning and other costs:

$18,000 Cost to construct: $338,000 Other costs of construction i.e.

council contributions: $40,000 Total costs: $973,000 Final valuation: $1,120,000

Total project took 18 months and net equity developed $147,000

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DALE + SANDRA’S SUPERANNUATION

CASE

STUDY

5STO

CK

MARKET

BENEFITS

Tangible asset Feeling of safety Growth asset in the long

run Regular income

offered through rent Depreciation can be

claimed as a deduction

Can potentially offer other opportunities such as improvements mentioned above

REAL PROPERTY INVESTMENT

DISADVANTAGES

Not highly liquid Can also be volatile May incur high ongoing

maintenance and cost

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CHALLENGES WITH INSURANCE COVER

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CHALLENGES WITH INSURANCE COVER

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Medicals – blood test, medical check ups, medical history report

Be mindful of disclosure

Family History

Financials

May take up to 3 months therefore no check ups

WE HAVE A 100% CLAIMS SUCCESS

CHALLENGES WITH INSURANCE COVER

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E-BOOK’S FOR PROPERTY GROUP MEMBERS

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Any questions?

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