Case Studies

Case Studies

Instalment Warrant Arrangement/ Superannuation Borrowing

A small business client held freehold commercial property in his own name. His business occupied one of the factories and the others were tenanted by third parties. In July 2008 when the changes in the SIS Act were released we recognised him as a taxpayer that would benefit from the SIS Act changes. As soon as products were released from the banks we set the client up in an Instalment Warrant Arrangement.

Their existing SMSF did not have the funds for the full deposit required by the bank. We borrowed the maximum LVR from the financial institution and the balance of the property was treated as an in-specie contribution into the fund.

This restructure has enabled our client to successfully achieve the following:

  • Allowed the client to payout the loan within the SMSF in 27 months.
  • Repaying the loan via the SMSF means the capital components are tax deductible, as concessional superannuation contributions into the fund.
  • The rental income received by the SMSF is tax free as they are over 55 years old and meet their pension requirements.
  • Rental income paid by the individual taxpayer provides a tax deduction at their marginal rate, while at the same time the rental income received becomes tax free within the superfund.

This restructure has produced terrific long term results that both our clients and our firm are extremely satisfied with. It has enabled our clients to successfully build their superannuation balance, even though there have been strict restrictions on the amount of concessional superannuation contributions they can make. It also has the advantage of protecting their property as it is held by the superfund, ensuring that they will receive tax free rental income both now and in their retirement.

Implementation of internal control procedures in order to avoid liquidation

A client in the building industry was placed in a situation whereby claims for additional costs were denied by the principal contractor. The principal contractor became insolvent leaving our client with a serious cash flow problem. To exacerbate the problem the bank subsequently commenced foreclosure proceedings on our client.

Spending time onsite, preparing cash flow projections, analysis, and budgets we were able to identify the internal control issues and assist our client in implementing tighter internal controls and procedures. In addition, we applied to other financial institutions in order to refinance their debt. All creditors were subsequently contacted and payment arrangements were put in place.

Continuous communication with the banks and creditors involved, coupled with the implementation of tighter internal controls and procedures has enabled our client to regain their position as one of the most successful companies trading within their industry on the central coast.

Player Hall was an integral component to this company's success and we are proud to continue to assist them in growing their business. To this day Player Hall continues to visit onsite in order to monitor the internal control procedures are still effective, and ensure the ratios are in line with the industry benchmarks.

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