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Holding property in SMSFs
Auditors are the mid-point between a self-managed super fund (SMSF) and the Australian Taxation Office (ATO) and therefore have a statutory responsibility to determine whether the fund has met the superannuation standards in the Superannuation Industry (Supervision) Act 1993 (SIS Act).
A fund that owns residential or commercial property should put in place procedures and supporting documents that the fund complies with the legislation.
Here are some things auditors may be interested in:
1. WHO OWNS THE PROPERTY?
The great currency differentials
Much has been written about comparisons between the Global Financial Crisis (GFC) in 2009 and that of today. Having worked in the currency markets since the late 1990s, I can see four stark differences between 2009 and 2020 and the factors influencing currencies.
1. THE CURRENT FISCAL EASING IS LARGER THAN IN 2009, BUT VERY DIFFERENT IN NATURE
Considering a listed vehicle
The listed investment company (LIC) and trust (LIT)sector contains some of the largest and most cost-efficient actively managed investment entities that can be accessed by retail investors in Australia with more than 700,000 individual investors in LICs and LITs.
Here we outline some of the key things financial advisers and investors need to know about this unique sector.
PROFESSIONAL INVESTMENT MANAGEMENT
Alternatives for income
Even before COVID-19, a surfeit of support from central banks around the world had created a global glut of liquidity, contributing to lower interest rates. These monetary policies helped to bolster the prices of stocks and bonds and ensured the flow of credit in economies, but they made it difficult for ordinary investors to get any income from traditional sources like government bonds.
Bringing the X factor
Over the past decade, prominent institutional investors have publicly embraced factor-based approaches to securities selection and portfolio allocation.
Concepts such as value investing or low-volatility investing have gained popularity, with the number of retail investors introducing factor-based products into their portfolios also increasing substantially in recent times.
Accessing home equity to generate retirement income
Retiree clients with minimal retirement savings and an unencumbered family home may see unlocking equity from their principle residence as the only way to generate additional income for a comfortable retirement. Common ways to access equity in the family home include selling the property or using an equity release product i.e. a reverse mortgage. However, a commercial reverse mortgage can have high costs including the interest rate, upfront/ongoing and exit fees.
Contributing to super
The recent change to change to the work test for making contributions to superannuation to age 67 has certainly raised issues with clients making contributions after 65 and how those changes impact on any contributions that are being made for them. The downside of the Government’s 2018 budget announcements for superannuation contributions is that the opportunity to use the bring forward rule is still restricted to those age 65 or younger.
The law of 'quant' amid a global pandemic
Quantitative investors research and use a range of disciplines to determine which stocks are worth acquiring and, importantly, those which are not worth buying.
These range from longer-horizon, financial statements-based disciplines such as valuation, quality, sustainability, and growth, through to shorter-horizon strategies that aim to capture investor sentiment, company news and market events. This differs from a traditional fundamental approach which usually focuses on just one style or investment discipline.
The Cinderella of real estate investments
Almost 50 years ago the investment sector witnessed the floating of Australia’s first real estate investment trust (REIT), shining a spotlight on commercial property’s ability to generate returns for individuals as well as institutions. While office and industrial assets continue to hold the limelight, emerging from the shadows is the overlooked, soon-to-be belle of the ball – healthcare property.
A brave new financial world
This has been the most unusual end of the financial year in my more than 30 years in financial services. The entire Australian population has been affected by COVID-19 and financial services has not been immune from this impact.
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