James Barger-Bos, the CEO of Finance Wise Global Securities Pty Ltd, has over 27 years of financial services experience. Fwgs is offering accountants a simple, clear and cost-effective solution to the accounting exemption. By becoming authorised representatives they will have an intuitive web based software solution, a complete range of training options (including face-to-face RG146 face to face course) and for the first fifty accountants a share of the net profit.
In his first article he deals with RG205.
James has advised on numerous transactions but has not been involved in providing Credit Advice since the APRA changes. These changes are having a profound impact on the lending landscape. As an aside he established his own SMSF several years ago for the purpose of buying an office.
When we chat to the average suburban accountant seeking advice on the exemption expiry and licensing solutions, we ask them what their typical SMSF client looks like. Many accountants respond that the typical clients are Gen Xers seeking to buy residential property.
After the exemption expires on July 1st 2016 many expect this to continue.
A case fwgs recently provided advice on represented a typical scenario; a single professional is rolling her fund of $135,000 into an SMSF and purchasing a residential property. Allowing for $5,000.00 in set up costs we have the following borrowing requirements.
Purchase Price: $340,000
Purchase Costs $18,000
Loan 70% $238,000
Even if there are no surprises ie significant repair of air conditioners, ovens, faulty electricals or plumbing and there is a tenant immediately available would this scenario be acceptable? As a hint, James isn’t sure how insurance could be paid for either.
However, once the exemption expires this scenario will not be acceptable to licensees. RG205 is very clear on advisors recommending that funds be established when the rollover balance is under $200,000. It needs to be justified.
On what basis could this scenario be justified? If the Gen Xer was self-employed and intended to make a concessional contribution of $30,000 within the next month and then another on July most licensees would accept this. Most. The wording needs to be clear in the recommendation section of the Statement of Advice.
If you would like to discuss how the constantly changing banking environment would affect your capacity to provide advice once the exemption expires then please feel free to ask us by emailing firstname.lastname@example.org
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