The Telstra offer and corporate trustees

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Question: Paul, I’m in full pension mode in my SMSF. Wouldn’t the franking credits with the Telstra buyback sit in the ATO until the next tax return, and we can’t access them until say Oct 2015? I have 40% of my fund in TLS and am keen to take advantage of the offer.

Answer (Paul Rickard): 
You are spot on – you won’t get the imputation credit refund until the 2015/16 tax year. Timing is in your hands – depends when you lodge your annual return. For many people, this will be around October 2015.

That said, I still think you will be better off accepting the offer (and you will only be accepted in part).

Question 2: We are considering buying an investment property with our SMSF and thinking for the first step to convert from an individual trustee to a corporate trustee as you have been proposing. I went over your relevant articles and have the following inquires/concerns.

  1.  What is a special purpose company – one that can take advantage of reduced annual ASIC fees of $43 a year, or pay $324 in advance for 10 years (note these figures are 2013 ones)?
  2. How do we buy insurance within an SMSF with a corporate trustee structure and remain the beneficiaries?
  3. Do we need a registered ASIC agent to communicate with ASIC on our behalf?

Answer (Tony Negline):

  1. A special purpose company is one that performs one single purpose (e.g. super fund trustee), and this is noted in the company’s constitution that it has this single purpose.
  2. The SMSF company trustee is the owner of the policy, you are the life insured. There can be no nominated beneficiaries for the policy. Any claim proceeds need to be paid directly to the super fund.
  3. To create and register the company yes, but from then on you can organise to have all correspondence sent to your preferred address.

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.

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