SMSF How LRBA's work & Setup Checklist for an Asset Acquisition & Borrowings Calculator

The setting up of a Self-Managed Superannuation Fund (SMSF) can be a particularly tricky and stressful process. If you as the accountant do not hold an Australian Financial Services Licence (AFSL), there are some very strict rules on what you can and cannot advise during this process.

The Australian Securities and Investments Commission (ASIC) take a dim view on accountants giving advice on the set up of an SMSF as you are not allowed to advise or even coach your client through any part of the decision making process. You cannot advise if it is a good idea or not to set up an SMSF. If you add in borrowings and a Limited Recourse Borrowing Arrangement (LRBA) into the mix, an accountant without an AFSL is on dangerous ground.

However, as your client’s trusted adviser, they come to you for help. In respect to SMSF’s, you are allowed to advise your client on certain income tax considerations, on the Goods and Services Tax (GST) rules, on the registration and lodgement of income tax returns for the Fund, on the requirement to lodge regular activity statements and the rules on record keeping requirements by the Trustee of the Fund. And someone needs to tell the trustee the Fund needs to be audited every year, with all assets valued at market value and in many cases, you’re the one liaising with the auditor to make sure all is in order.

So what can you do to make sure the SMSF is set up correctly and to make sure you do not end up with a mess to fix up? The client cannot do this on their own. They do not have the knowledge or the skills. Getting Financial Planners, Solicitors, Finance Brokers, Banks, Real Estate Agents and Auditors to do their part correctly can be like herding cats.

This calculator help you to show your client generally how an SMSF usually works, how an SMSF with borrowings works, the mechanics of it all and the flow of funds. It helps you track the progress of each step of the set up process making sure each adviser provides you with all of the necessary documentation correctly executed and with all of the information necessary for you to administer the SMSF as the accountant for the Fund.

To recap, if you are an accountant that does not hold an AFSL, you are NOT allowed to advise or coach your client on the set up of an SMSF. You CANNOT advise you client if it is a good idea or not to set up the SMSF. Leave that up to the holders of an AFSL. Use this calculator to show your client how it all works for tax and GST purposes and track the progress of the set up.