Question: Can I use my personal credit card to pay SMSF expenses, for example, insurance premiums, auditor fees, accountant fees, etc. and treat these expenses as post-tax contribution to my SMSF. Is this legally allowed?
Answer (By Tony Negline): It is not best practice to pay fund expenses in this way. For auditing purposes and simplicity, you are best to have fund expenses paid by the fund itself.
Frequent flyer points from a credit card use in this case, whilst probably seen as incidental, are a potential hassle from a sole purpose test perspective. The credit card debt might be seen as your super fund borrowing from you, which it isn’t allowed to do.
Question 2: If one is to consider, say investing $100,000 in the banks CBA and Westpac, then, as an educated guestimate, what would you expect the investment to be worth, inclusive of dividends, to the end of December 2015.
Answer 2 (By Paul Rickard): Thanks for the question – however, it is one I am only going to answer in part.
CBA will pay three dividends – payable on Oct 14, April 14, and Oct 15 – on a forecast yield of 5.0%, assume $7,500 in dividends on $100,000 invested.
Westpac will pay three dividends (they have just gone ex-dividend, so you will miss the July 14 dividend) – payable on Dec 14, July 14 and Dec 15 – on a forecast yield of 5.4%, assume $8,100 on $100,000 invested.
Averaging these out, $7,800 in dividends, plus franking credits.
In terms of the prices of both stocks, I expect the market to move higher over the next six to nine months and we will see 6000 on the S&P/ASX 200 – this will require both the CBA and Westpac to move higher in price. What this means for 2015, I am not sure yet – and I’m not prepared to place a ‘guesstimate’ on Dec 2015.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
Follow the Switzer Super Report on Twitter
Also in the Switzer Super Report:
- Charlie Aitken: Be ready to strike when the price is right
- Staff Reporter: Buy, Sell, Hold – what the brokers say
- Barrie Dunstan: EOFY and SMSFs
- Penny Pryor: Short ‘n’ sweet – bank breakdown
- Fundie’s Favourite: Unloved Lend Lease offers value
- Ron Bewley: Reinvesting dividends – RIO and US exposure
- Tony Negline: Know your property taxes
