FAQ

Here are some questions we frequently get asked, perhaps they’re on your mind too:

Note – this is general information only which has not considered your particular circumstances, and should not be considered advice in any way.

What is an SMSF?

SMSF stands for Self Managed Superannuation Fund.  Within the superannuation sector, SMSF’s now hold the largest amount of funds, however because there is no one to run advertising making people aware of SMSF’s many people are unaware of their significance.  SMSF’s typically appeal to people who like to take control of their financial circumstances.  Guidance Financial Services provides a full range of SMSF advice services from which you choose the elements you need.  We can assist you in establishing your fund, rolling over your current super fund into your new SMSF, obtaining an operating account, ABN, TFN, share trading account if applicable, and provide advice around the trustee structure that is optimal for your circumstances.

Once established, we can assist you in managing the fund, through our administration service, and our advice service.  A diagram showing the SMSF structure can be found here.

Can I use my super to invest in property?

 Yes.  An SMSF can invest in property – residential or commercial.  Borrowings are possible through a structure known as an installment warrant.  We can assist you in making this a reality however please note, it is very important that your SMSF structure exists before you sign a contract of sale.  So get your SMSF in order, then go property hunting if that’s your chosen path.  Click here to see a diagram showing the instalment warrant process.

What is the Sole Purpose Test?

The Sole Purpose test applies to Self Managed Super Funds.  It is the key overarching investment rule which trustees must obey.  It requires that any investment entered into by the trustees of a SMSF have as it’s sole or dominant intent, the provision of retirement benefits for the funds members.  It is this rule that means investments like holiday homes are not appropriate for SMSF’s, as whilst they may well expereince capital growth over time, they non-the-less have a secondary purpose of providing the family with holiday accomodation.

What will it cost to meet with Guidance and discuss our situation?

We operate on a fee for service basis rather than commissions, which we feel are incompatible with a professional advisory business.   In situations where you engage us on a project, for example the development of a wealth creation and protection strategy, we waive our fee for the first hour.  In such circumstances, following our initial meeting, we prepare a proposal for your consideration, outlining our understanding or your requirements, and a brief explanation of how we could assist.  We then provide a quote as to the cost of completing this work.  If this meets your needs, you will authorise us to commence work.

Will I qualify for a Centrelink Age Pension / Health Card?

Our retirement specialist Graeme Head gets asked this all the time.  Prior to commencing a career in financial planning, Graeme worked at Centrelink for 24 years.  So if anyone can answer your questions on Centrelink entitlements, Graeme can.

Do you conduct after hours appointments?

We are able to offer appointments up to 6pm on weekdays, Monday to Thursday, so you can certainly come in after work.

We are also able to conduct interviews via Skype if you are unable to make it into the office.

We try to be as flexible as possible, so give us a call on  03 9870 6544   and we will work out something.  

What is Income Protection?  

Income Protection insurance replaces up to 75% of your income if you are unable to work due to illness or injury.  It’s a bit like buying extended sick leave.  In most cases people claim for things like knee reconstructions, or an illness that keeps them away from work for an extended period.  In the event you suffer something which is longer term in nature, policies can be obtained that will pay all the way to you reaching age 65.  

Like all insurances, Income Protection is about giving you peace of mind.  If you have educated and trained yourself to the point where you are earning a good income, then you don’t want to run the risk of having to live off a Disability Support Pension of about $19,000 per year if something went wrong.  

The cost of Income Protection is tax deductable too.  

What is Key Person insurance?  

Key Person insurance is coverage for the business owner or significant contributor to the business.  It provides a lump sum payment into the business in the event the insured person suffers a serious medical condition, or dies.  

By way of example, a Physiotherapist practice might have the owner, who sees patients 5 and a half days a week, and then has two other Physio’s who each work 20 hours, plus two admin staff.  There were set-up costs for the business, and so the business has a bank debt of $200,000.  

The business may choose to take out key person insurance over the owner, so that in the event he suffered a heart attack, was diagnosed with cancer, etc, a lump sum was paid into the business to ensure loan repayments were meet, and the other expenses of the business were covered during the owner’s absence.  An allowance might be made for the fact that some patients will be lost to other practices during the owner’s period of absence, so an amount to cover a profit decline may be included.  

As with Income Protection, Key Person insurance is all about gaining peace of mind – if something happened to you, the business will still be their and be viable once you recover, and you will not be under pressure to return to work before you are really ready.  

Are their any other services that you provide?

At Guidance we have a firm focus on sticking to what we are good at, and calling on other’s expertise where required.  To that end we have relationships with specialist providers in the following areas:

• Mortgages and loans
• General insurance
• Accounting
• Book-keeping and payroll services
• Property advice
• IT Services

 Just ask for a referal.

Still haven’t answered your question?  Give us a call or send us an email.