Responses to Assessments

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Self Managed Superannuation Fund (SMSF)

Assessment Booklet

Students should complete and submit all responses to the assessments digitally on the electronic SMSFAssessment Booklet (‘soft copy’) provided as a Microsoft Word file inthe (SMSF) CD-ROM.

1.Save a copy of the SMSF Assessment Booklet to your computer.

2.Change the file name to your Student Number provided by Investment Banking Institute, for example, ‘SMSF SMITH001May2011 Version 1”.

3.Deliver any re-submissions (if required) with changes with different file name and version number, for example the second submission should be
‘SMSF SMITH001May2011 Version 2’.

4.Multiple Choice Questions (MCQ)

Students select their answer for each Multiple Choice Questions (MCQ) by placing the cursor over your selection and simply clicking on the box chosen

A / To / F

You can unselect any answer by clicking on the same box again or, alternatively, by clicking on another box (toggle).

Case Study and Role Play (RP)

All Students, after completing all the Multiple Choice Questions,must deliver the SMSF Role Play Assessment.

Please use our Guidelines contained in the Course Materials as a framework for the Presentation. The Role Play requires the student to assume the role of a financial advisor.

Role Play (Workshop Students)

SMSF Role Play Assessment requires face to face workshop Students to deliver the Role Play to an Investment Banking Institute assessor at IBI training session or via webcam.

Role Play (Distance Students Only)

All Students enrolled purely by correspondence need to complete the SMSF Role Play Assessment, after completing all MCQs.

Your delivery of the Role Play MUST be assessed.

This can be done either by:

1.an IBI assessor at an IBI training centre or

2.an IBI assessor via a webcam

Instructions

Students should work through the SMSF Course materials and the corresponding Assessment Material carefully and at a comfortable pace.

Once you have completed all the responses to the assessment activities for SMSF Course (ie. the MCQs and the Case Study short answers), please submit your completed Assessment Booklet by:

Email:

“I affirm that all work submitted within the Assessment Booklet is my true and original work unless otherwise credited”

“I also declare that by insertingmy name and date at the top of each page of the Assessment Booklet Students that all assessment submissions to the Investment Banking Institute are a result of their own work”.

Student Signature ______

Date: ______

Self Managed Superannuation Fund (SMSF_AssessBooklet_26Apr2011

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SMSF Assessment Booklet

Student / Date
Location / Assessor

Self Managed Superannuation Fund (SMSF_AssessBooklet_26Apr2011

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Please indicate your answer by selecting the appropriate box next to the corresponding activity.

Self Managed Superannuation Fund (SMSF_AssessBooklet_26Apr2011

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Question / Answer
Module 2 / (a) / (b) / (c) / (d) / (e) / (f)
Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Activity 7
Activity 8
Activity 9
Activity 10
Activity 11
Activity 12
Activity 13
Activity 14
Activity 15
Activity 16
Activity 17
Activity 18
Activity 19
Activity 20
Activity 21
Activity 22 / Short Answer
Please see question below
Activity 23 / Short Answer
Please see question below
Activity 24 / Short Answer
Please see question below
Activity 25 / Short Answer
Please see question below
Activity 26 / Short Answer
Please see question below
Activity 27 / Short Answer
Please see question below
Activity 28 / Please fill out form below
Activity 29 / Please fill out form below
Module 3
Activity 1 / Short Answer
Please see question below
Question / Answer
Module 4 / (a) / (b) / (c) / (d) / (e) / (f)
Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Module 5 / (a) / (b) / (c) / (d) / (e) / (f)
Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Activity 7
Activity 8
Activity 9
Activity 10
Activity 11
Activity 12
Activity 13
Activity 14
Activity 15
Activity 16
Question / Answer
Module 6 / (a) / (b) / (c) / (d) / (e) / (f)
Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Activity 7
Activity 8
Activity 9
Activity 10
Activity 11
Activity 12
Activity 13
Module 7
Activity 1 / Short Essay
Please see question below (attach hereto)
Module 8 / (a) / (b) / (c) / (d) / (e) / (f)
Activity 1
Activity 2
Module 9 / (a) / (b) / (c) / (d) / (e) / (f)
Activity 1
Activity 2
Module 10
Activity 1 / Short Answer
Please see question below
Activity 2 / Short Answer
Please see question below
Activity 3 / Short Answer
Please see question below
Activity 4 / Short Answer
Please see question below
Module 11
Activity 1 / Short Essay
Please see question below
Module 12
Activity 1 / Short Essay
Please see question below
Activity 2 / Short Essay
Please see question below
Question / Answer
Module 13 / (a) / (b) / (c) / (d) / (e) / (f)
Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Activity 7
Activity 8
Activity 9
Activity 10
Activity 11
Activity 12
Activity 13
Activity 14
Activity 15
Activity 16
Activity 17
Activity 18
Activity 19
Activity 20
Module 14
Activity 1 / Case Study
Please see question below
Activity 2 / Role Play Presentation
Please see question below
Activity 3 / Short Answer
Please see question below
Activity 4 / Short Answer
Please see question below
Activity 5 / Short Answer
Please see question below
Activity 6 / Short Answer
Please see question below
Activity 7 / Short Answer
Please see question below

Self Managed Superannuation Fund (SMSF_AssessBooklet_26Apr2011

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Module 2 – Assessments

Activity 22 – Trusts versus SMSF

a)What is the difference between a trust and a trustee?

(b) What is the difference between a trust and a company?

(d) What is the difference between a SMSF and a Public Superannuation Fund?

Activity 23 – SMSF versus a Discretionary trust

What is the difference between a common law trust and statutory trust?

Activity 24 – SAF versus SMSF

What are the 3 main differences between a SAF and SMSF?

1
2
3

Activity 25 – Benefits of a SMSF

Identify and describe 4 key benefits of commencing an SMSF?

1
2
3
4

Identify and describe 4 key disadvantages of a SMSF?

1
2
3
4

Activity 26 – Steps in creating a SMSF

Please detail 6 sequential steps in establishing a SMSF?

1
2
3
4
5
6

Activity 27 – Non Member Trustee

Please identify 3 situations when a SMSF can have a non member trustee?

1
2
3

Activity 28 - SMSF Corporate Trustee Establishment Form

Please complete the following details in your assessment booklet to create your corporate trustee for your fictional SMSF (educational purposes only). You need to name 2 directors for your SMSF corporate trustee. If you have any queries regarding the questions you are being asked, please contact us for further information.

Self-Managed Superannuation Fund Name:

Company Details
Company Name
Registered Office Address
(where the company records will be held)
Do you occupy these premises? / Yes No
If no, please provide the details below
Occupiers Name
Occupiers Signatory
Do you have permission to use this as your registered address / Yes No
Postal Address
Do you intend to utilise this company for purposes other than to act as trustee of your self-managed superannuation fund? / Yes No
Officeholder Details
Please note that other details will be drawn from the Self-Managed Superannuation Fund Establishment Instruction Form where necessary to complete your application. All superannuation fund members will automatically be admitted as Directors and shareholders of the Corporate Trustee.
Directors Details
Director One
Full Legal Name
Former Name
Place of Birth
(town and state if born in Australia or town and country if born outside Australia)
Director Two
Full Legal Name
Former Name
Place of Birth
(town and state if born in Australia or town and country if born outside Australia)
Public Officer
Who will act as the company Public Officer? / Director 1 / 2
Client Authorisation
I/We hereby provide complete authorisation to our company and its representatives to undertake the following tasks on our behalf in relation to establishing a corporate trust for our self-managed superannuation fund:-

Engage legal assistance if/where necessary
Preparation of any other documentation, registrations etc that may be required throughout the establishment process.
Invoice me directly for the establishment cost.

Name/Signature (type name)
Name/Signature (type name)

Activity 29 – Complete SMSF Establishment Form

Please complete details for your SMSF members for your fictional SMSF with corporate trustee details you completed in the previous assessment .

Fund Details
SMSF (Fund Name)
Street Address
Postal Address
Do you intend to keep the SMSF operating as an ATO self managed superannuation fund for 12 months or longer? / Yes No
Member Details
Please note that all members will be admitted as Individual Trustees of the self-managed superannuation fund unless a corporate trustee is selected, in which case they will be elected as directors of that company.
Member One
Full Legal Name
Date of Birth
Sex / Female Male
Tax File Number
Street Address
Member Two
Full Legal Name
Date of Birth
Sex / Female Male
Tax File Number
Street Address
Trustee Details
Will you be using a corporate trustee? / Yes No
If yes, please complete the corporate trustee section. If no, please complete the individuals section.
Individual Trustees
If you are a single member Fund, please provide details of the individual who has consented to act as the co-trustee of your Fund. Otherwise, please proceed to the Trustee Declaration.
Full Legal Name
Date of Birth
Tax File Number
Street Address
Relationship to Member
Trustee Declaration
Trustee 1 / Trustee 2
Have you ever been convicted of an offence in respect to dishonest conduct under Commonwealth, state, territory or foreign country law? / Yes
No / Yes
No
Has a civil penalty order ever been made in relation to yourself under the SIS Act? / Yes
No / Yes
No
Are you an undischarged bankrupt? / Yes
No / Yes
No
Have you been notified by either the ATO or APRA that you are a disqualified person? / Yes
No / Yes
No
Corporate Trustee
Do you have an existing company you wish to use as your Trustee? / Yes No
If yes, please provide the company details below. If no, please complete the separate corporate trustee instruction form
Existing Company Details
Company Name (ACN)
Tax File Number
Registered Office Address
Date of Incorporation
Directors Details
Are all fund members currently directors of the company? / Yes No
Are there any non fund members acting as directors of the company? / Yes No
If yes, please provide their full legal name in the ‘special notes’ section of the instruction form
Public Officer
Who is the company Public Officer? / Member 1 Member 2
Trustee Declarations
Yes No
(You are a disqualified person if you are an undischarged bankrupt, been convicted of a dishonest act or had a civil penalty order applied against you under the SIS Act.)
Has a receiver of the company been appointed? / Yes No
Has the company been placed under official management? / Yes No
Has a provisional liquidator of the company been appointed? / Yes No
Is the company being wound up? / Yes No
Client Authorisation
I/We hereby provide complete authorisation our company and its representatives to undertake the following tasks on our behalf in relation to establishing our self-managed superannuation fund:-

Engage legal assistance if/where necessary
Applying for a TFN/ABN from the Australian Tax Office and liaising with them until receipt of said registration is received.
Preparation of any other documentation, registrations etc that may be required throughout the establishment process..

Name and Signature
Name and Signature

Module 3 - Assessments

Activity 1 – Draft a SMSF Investment Strategy for your SMSF

Please draft a SMSF Investment Strategy and attached it along with your SMSF Assessment Booklet

Please refer to the sample SMSF Investment Strategy provided on IBI CD Rom

Please read “Advisers Guide to Setting an Investment Strategy” article

Module 7 - Assessments

Activity 1 – TTR pension (200 word assignment)

Wendy is 55 and requires your advice as to whether she should start a TTR pension from her SMSF.

Explain the concept of a TTR including their advantages and disadvantages.

Why are TTR pension so valuable for client nearing retirement?

Please explain the reasons why SMSF members use TTR pensions.

Module 10 - Assessments

Activity 1 – Mortgage versus a Charge

Please provide a detailed answer to the questions below

a)Describe the major difference between a mortgage and a charge?

b) Describe the major difference between a mortgage and a charge?

Activity 2 – Guarantee

Please provide a detailed answer to the questions below

a) Describe the major difference between a promise to repay and a guarantee?

b) Describe the major difference between a mortgage and a guarantee?

Activity 3 – SMSF borrowing & guarantees

Please provide a detailed answer to the questions below

a) Can a lender in a post 7 July 20110 SMSF borrowing arrangement demand a personal guarantee? Why / Why not?

b) Can a lender in a pre 7 July 20110 SMSF borrowing arrangement demand a personal guarantee? Why / Why not?

Activity 4 – Personal Property Securities Act

Please provide a detailed answer to the questions below

a) When does the Personal Property Securities Act come into operation?

b) What type of property does the Personal Property Securities Act deal with?

Please read article on Personal Property Securities Act 2009

Module 11 - Assessments

Activity 1 – BRP exception Assignment – 200 words

Explain the conditions that must be satisfied under BRP exception to the general prohibition of a SMSF trustee from acquiring assets from a related party.

Please complete a 200 word assignment below.

Module 12 - Assessments

Activity 1 – SMSF Property development Assignment (200 words)

Can a SMSF conduct a property development within a SMSF? Discuss

Activity 2 – Special Income – Assignment (200 words)

If Wendy SMSF pays $2,000 for each share issued by Coastal Flowers Pty Ltd is this a fair market value?

If Coastal Flowers Pty Ltd declares a dividend of $1,500 for each share in the company would the ATO commissioner find this to be special income? (See tests below)

What do you think the ATO Commissioner having regard to all of the matters in paragraphs 273(2)(a) to (e) think about the transaction and whether the income would be regarded as special income.

Please provide a detailed response

Module 14 - Assessments - SMSF Borrowing Advice – Case Study

Case Study – SMSF Borrowing Advice

Wendy Smith and Wilmar Burrows are both 51 years of age. Wendy and Wilmar work together and earn $65,000 per annum and have been best friends for more than 20 years. They have never been previously married and have no children or other family. They each own their home that was valued last year at $460,000 and have no mortgage currently. They are interested in establishing together their own SMSF. They want to become members of their own self-managed superannuation fund (SMSF) and call it the Wendy and Wilmar SMSF to purchase an investment property. (they both have a medium risk profiles). They currently have accumulation accounts with a Retail Industry Super Fund that have benefits currently valued at $220,000 each.

Wendy Smith and Wilmar long term goal is to retire when they reach 65 and live near the sea together. Wendy travels down to Torquay frequently and last weekend see finds the ideal coastal property she wants to retire in (auction is in 60 days).

Wendy and Wilmar want your SMSF borrowing advice to cover the following:

What is superannuation and its primary and ancillary purpose?
What SMSF structure they should adopt and whether they should use individual trustees or corporate trustees?
What is the difference between a family trust and a SMSF?
What costs are involved in establishing a SMSF and how does it compare to Retail SMSF?
What are the advantages and disadvantages of operating a SMSF?
Whether they can purchase together this holiday home in Torquay for $650,000 through a SMSF that rents for $1,600 per month (what SMSF trustee restrictions apply and exemptions are available? What co-ownership issues arise)?
Whether they can borrow money against their home to pay the deposit for the investment property through a related party loan?
Whether they can borrow money from a bank to pay the balance of the purchase price? (Please assume a SMSF can borrow 80% of the purchase price of the investment property purchase price at 7% interest per annum interest only)
What issues does she need to consider in determining the full costs of borrowing and serviceability of the bank and related party loans?
What key steps are involved in structuring a SMSF borrowing?
What Legal structures are involved in a SMSF borrowing?
What are the benefits of borrowing in a SMSF?
What income and capital gains tax will they pay if the property is transferred into a pension at retirement?

Activity 1 – SMSF Borrowing – Case Study

Please provide a detailed answer to the questions below

a) What is superannuation and its purpose?

What is the sole purpose test?

b) What SMSF structure they should adopt and why including whether they should use individual trustees or corporate trustees?

What is the difference between a family trust and a SMSF?

c) What costs are involved in establishing their own SMSF and how does it compare to the cost associated with a Retail SMSF?

d) What are the advantages and disadvantages of operating a SMSF?

e) Whether they can purchase together this holiday home in Torquay for $650,000 through a SMSF that rents for $1,600 per month (what SMSF trustee restrictions apply and exemptions are available? What co-ownership issues arise)?

f) Whether they can borrow money against their home to pay the deposit for the investment property through a related party loan?

g) Whether they can borrow money from a bank to pay the balance of the purchase price? (Please assume a SMSF can borrow 80% of the purchase price of the investment property purchase price at 7% interest per annum interest only)

h) What issues does she need to consider in determining the full costs of borrowing and serviceability of the bank and related party loans?