The document presents an overview of SMSF (Self-Managed Superannuation Fund) instalment warrants and the associated financial structures for property investment. It emphasizes the importance of assessing individual financial circumstances before acting on the general advice provided and outlines potential target client scenarios for utilizing SMSF instalment warrants. Key considerations include leveraging superannuation for property acquisition, benefits of capital gains tax elimination, and strategies for various client profiles, particularly business owners and retirees.

1. SMSF Instalment Warrants Aaron Dunn, SMSF Specialist Adviser ® Shift your super into a higher gear

2. Disclaimer This presentation provides general advice only. No direct or implicit recommendations are given in this document. This means that the general advice provided has not been prepared taking into account your individual financial circumstances (i.e. your investment objectives, financial situation and particular investment needs). You should assess whether the advice is appropriate to your individual financial circumstances before making an investment decision. You can either assess the advice yourself or seek the help of an authorised representative through an Australian Financial Services License (AFSL) holder. SMSF Funding Pty Ltd believe that the information in this presentation is correct at the time of compilation but do not warrant the accuracy of that information. Save for statutory liability which cannot be excluded, SMSF Funding Pty Ltd disclaims all responsibility for any loss or damage which any person may suffer from reliance on this information or any opinion, conclusion or recommendation in this presentation whether the loss or damage is caused by any fault or negligence on the part of SMSF Funding Pty Ltd or otherwise.

3. Gearing in Super S.67(4A) requirements Borrow funds to acquire an asset held on trust so that the trustee has beneficial interest in the asset and a right to acquire legal ownership (or replacement) through payment of instalments In the event of default or exercise of rights by the trustee, lender’s recourse is limited to rights relating to the asset The asset (or its replacement) is one which the fund would be permitted to acquire and hold directly

4. How it works Bank Fund members Instalment Warrant Trust (Custodian) Secured Asset

5. The parties involved Client Finds property, seeks finance (agent, buyers advocate) Lender Structures and provides finance Lawyer Create Custodian Trust, documentation for IW, conveyancing (property) Financial Planner Financial Product considerations, Investment Strategy, Insurance Accountant / Administrator Fund Admin, Annual Return & Reporting Auditor Financial and Compliance Audit

6. Targeting your clients Four target areas to discuss with clients in using an SMSF Instalment Warrant: Business owners renting or wanting to upgrade Business premises held outside of super Residential and Commercial Property Investors Pre-retirees who are planning a sea-change

7. Gearing options Borrowings from the bank Personal guarantees? BYO Banker refinance against existing equity SMSF JV Special purpose funds for business partners / joint investors

8. Targeting Clients - #1 + #2 Business Owner/Operator Now able to gear to acquire or transfer commercial premises within an SMSF Regardless of existing borrowings outside of super for existing premises Ability to utilise various super and tax strategies to reduce or eliminate any CGT. R estructuring of arrangements can eliminate existing non-deductible debt Strategy target age – 35+

9. The Family Home Family home = $700,000 Debt = $300,000 (not deductible) potentially used as business security The Family business Run a successful widget business. Business premises held in family trust asset protection Factory Valued at $600,000 Debt of $200,000 (deductible) Rental agreement (business & trust) John & Jane Existing Superannuation John = $150,000 Jane = $100,000 Case Study The power of the SMSF & Borrowing Rules Widget Co. Pty Ltd (business) Family Trust Rent Security Security

10. John & Jane John & Jane SMSF John = $150,000 Jane = $100,000 Borrow = $350,000 (LVR 70%) Case Study The power of the SMSF & Borrowing Rules Widget Co. Pty Ltd (business) Family Trust Rent Security Instalment Warrant Trust Limited Recourse Loan Asset held on trust via Custodian Arrangement Outcomes for John & Jane Creation of SMSF & Instalment Warrant Transfer of property No CGT Family Trust receives $600k payout FT debt ($200k) John & Jane payout $300k home loan Further $100k to invest (can contribute back into super) 100% deductible debt for SMSF, being made from deductible super and rental payments in business Future growth of property – no CGT (if sold post retirement) Paid off home loan

11. Targeting Clients - #3 Property Investors (residential or commercial) Need to consider Yield Capital growth LVR Bank or BYO banker Ability to contribute to super / servicing Strategy target age – 35+

12. Targeting clients - #4 Find the perfect house for when you retire?

13. Finding your dream home to retire SMSF can acquire now using SMSF instalment warrant Available to rent until retired You/client can’t use (sole purpose test) Sell own home and move into dream home No CGT on transfer when in pension phase Tax-free in-specie lump sum (>60 tax free); Contribute proceeds of principal residence to replace asset value (subject to age and caps) No stamp duty* Need to consider relevant state stamp duty requirements Strategy target age – 45 to 50+

14. Where are we at? Increasing enquiry for property investment Lower interest rates have created interest in direct residential and commercial property investment Bricks and mortar as part of their retirement plans ‘ Gearing in super’ solution becoming mainstream Establishment costs may be a deterrent Property will capture higher level of asset allocation in SMSFs moving forward

16. Self Managed Super Funding Pty Ltd [email_address] http://www.smsfunding.com