Good news: if an SMSF needs multiple SMSF borrowing document packages, Cleardocs has reduced prices for the second and later orders. The discount is useful for SMSF trustee(s) who are acquiring more than one asset through more than one SMSF borrowing — whether at the same time or over a period, ... even a lengthy period.
We can also help those SMSF trustee(s) and their advisers by automating an “order-replication process” for multiple orders. How many? . . . Well:
The full stories are below.
Why is the multiple order price reduction required?
The price reduction is in response:
What does the law require about acquiring only “one asset” — especially shares?
Although the law changes that came in on 7 July 2010 confirm that for each borrowing the SMSF's Trustee(s) make they can acquire only a “single acquirable asset”, there is a useful clarification for shares etc. The clarification is that the concept of “single acquirable asset” covers:
For example, if the SMSF's trustee(s) borrow to buy 10,000 ordinary shares in company X at $1.00, then that holding is seen as one asset. If the SMSF trustee(s) want to borrow to acquire another 2,000 of those shares at $1.04, then that second holding is a separate asset — and it requires a separate borrowing and a separate set of SMSF borrowing documents.
Similarly if the SMSF trustee(s) were to acquire 2 properties at the same time — each on a separate title — then the trustee(s) would need a separate borrowing and a separate set of SMSF borrowing documents for each property.
What sort of SMSF needs a dozen or so SMSF borrowing packages?
One of our customers is arranging for his own SMSF to borrow a fair amount from one of his related entities. Over the next few months or so, his SMSF's trustee wants to use the loan money to acquire shares in about 12 different companies.
The new law makes clear that each time the trustee of his SMSF acquires shares — of the one company, in the same class, and at the same price — the trustee is acquiring a separate asset. Therefore:
. . . and what sort of SMSF needs more than 100 SMSF borrowing packages on the same day?
One of our accountant customers was acting for a client who was buying more than 100 car spaces (before the recent law change). As each car space had its own Certificate of Title his bank took the view that each of them was a separate asset. Therefore, each car space needed to be covered by a separate borrowing and so required a separate set of documents. (By the way, our customer's client was borrowing the money from one of the big 4 banks — apparently, the bank manager was somewhat irritated at having to prepare so many sets of loan documents.)
How does Cleardocs automate the “order-replication process”?
For the customer ordering the document packages for the 100+ car spaces, each order was going to be identical — other than for the Folio number on the Certificate of Title. So our IT Manager, Thomas Lam, wrote a bit of code that:
We reckon Thomas' bit of code saved our customer at least 10 minutes for each order — that's more than 1,000 minutes, or more than 16 hours, of repetitive typing saved.
To make sure the automation was working properly, we did the first 3 orders one-at-a-time for our customer to check. He checked and confirmed they were correct. Then in one click we did the other 100+ orders for him.
It's fair to say our customer was delighted by the efficiency delivered by the Cleardocs IT, and by Thomas. And he appreciated the significant discount we gave him too.
What are the reduced Cleardocs prices for multiple orders?
Cleardocs has reduced prices for the second, third and so on (even the 100th) of the same type of borrowing package for the same SMSF to a flat $99 a package.
Here's how the discount works for the 2 customers mentioned above
The fact that one of those customers will order their SMSF borrowing packages over a few months and the other did them all on the same day is irrelevant. The discount applies to all orders of the same type of document package for the same SMSF throughout that SMSF's life.
(By the way, the main difference between the Cleardocs documents package for a “bank” lender and a “related party” lender is that the “related party” package includes a loan agreement and, if the asset being acquired is a holding of shares etc, it also includes a security document.)
Did the law changes on 7 July clarify anything else?
Yes, the 7 July law change also clarified that:
More Cleardocs information on SMSFs
You can read other articles concerning superannuation and SMSFs here.
Order SMSF related document packagesSet up an SMSF
Arrange SMSF borrowing lending docs:Set up an SMSF corporate trustee
The legal information and commentary on this site is general only. Documents ordered through Cleardocs affect the user's legal rights and liabilities. To assess their suitability for the user, legal accounting and financial advice must be obtained.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.