11 Aug 2021

Is Independent Legal & Financial Advice Mandatory?

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Securing independent legal and financial advice is mandatory if you are interested in setting up a Self-Managed Super Fund (SMSF). But, why is it compulsory, and are there any reasons you would not have to seek independent advice?


Why Seeking Independent Advice is Mandatory for an SMSF

One of the biggest reasons you must seek independent legal and financial advice is because an SMSF is regulated by the Australian Tax Office (ATO). The best way to ensure you don’t get in trouble with this office is by seeking legal and financial advice. Other reasons seeking advice is mandatory are:


  • To decide who the four members, also known as trustees, will be for your SMSF. Do you want an individual or corporate structure? How does each affect the SMSF?
  • To help you understand the costs of running this type of fund. Is your minimum balance enough to be cost-effective? What are ways you can improve your balance if not?
  • To make sure you pay all the necessary fees and levies. For example, have you paid the annual supervisory levy to the ATO? Have you hired an accountant to prepare your financial statements and tax returns? Have you had an independent audit conducted? Have you paid insurance for all the members of the fund?


Is This Requirement Ever Waived?

While seeking independent legal and financial advice is mandatory, there are instances when this requirement is waived. For example, a level 1 Delegated Lending Authority can waive this requirement only in dollar-for-dollar refinances, provided minimal additional funds can cover the costs. If this is the case and you are the borrower, you can reduce your interest rate. 


The requirements for Self-Managed Super Funds are complicated. However, if you have questions about this fund or need any financial advice, Mortgage House experts can help you. 


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