Small APRA funds are under-utilised by practitioners as an alternative to SMSFs for clients that are facing bankruptcy or relationship breakdown issues, according to one industry consultant.
Many of the investments or assets that can be held in an SMSF can also be held in a small APRA fund, Miller Super Solutions founder Tim Miller said at the SMSF Association conference.
“The small APRA fund is to me one of the most undervalued parts of this industry,” said Mr Miller.
While it is slightly more expensive to run a small APRA fund compared with an SMSF, Mr Miller said the fees are less prohibitive for funds with $500,000 and can be a good alternative to SMSFs for certain clients.
“I went through the list of APRA-regulated funds which also lists the small APRA funds and who the trustee is of those funds, and a lot of the names I recognise from historical administration when I dealt with these people that had bankruptcy issues, living overseas issues and relationship issues,” he said.
“The small APRA environment offered them a choice, and it still gives them that control.”
Small APRA funds, he said, are a particularly useful mechanism for trustees who have become disqualified due to bankruptcy, he explained.
“Bankruptcy and SMSFs are a very difficult situation to deal with. You’ve got basically two choices: get a small APRA fund or get rid of the SMSF fund completely,” he said.
A small APRA fund may enable a disqualified trustee may to regain control of their fund again at a later point, he said, once they are discharged from bankruptcy by asking the small APRA fund trustee to resign and asking to be reappointed as trustee.
The trustee will lose control of their fund while they are bankrupt but it does mean the trustee can keep their SMSF and assets such as real business property that sit within the fund, he said.
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
27 Feb 2017Newer SMSF investment products facing APL constraintsBy Miranda Brownlee
27 Feb 2017Government slammed over actuarial certificate plansBy Miranda Brownlee
27 Feb 2017High-level departures at AMP’s SMSF licensing armBy Aleks Vickovich
24 Feb 2017Government urged to rectify ‘legislative shortcoming’ with CGT reliefBy Miranda Brownlee
24 Feb 2017Actuaries Institute highlights further legacy pension issuesBy Miranda Brownlee
24 Feb 2017Fintech company launches online client management toolBy Staff Reporter
- view all
Newer SMSF investment products facing APL constraints
Newer investment products entering the market may provide SMSF practitioners associated with smaller independent dealer groups an opportunit...read more
Government slammed over actuarial certificate plans
Several industry bodies have raised concerns regarding the government’s proposals to implement an exemption to obtain an actuary certifica...read more
Government urged to rectify ‘legislative shortcoming’ with CGT relief
The Tax Institute has called for an extension of the deadline for applying the CGT relief in respect to the segregated approach, amid conce...read more
- view all