An overall audit of the systems and processes each year ensures tax reporting can be provided in a summarised form suitable for immediate inclusion in a tax return. Your tax summary will be unique.
The dividends received and other tax items will not be automatically pre-filled in your ATO tax return because the listed Company does not have your TFN or individual holding, only the Responsible Entity does.
Note it is not treated by the ATO as a managed fund either, as it is not unitised. That’s important because any realised losses in the tax statement can be claimed and carried forward if needed, which is not possible with a unitised product.
The process is to extract the summary tax information from the tax statement.
Step 1. – in your ATO return, set up a security called Aldersley Capital Direct
Step 2. Extract all the summary tax information such as total dividends received and add these manually to your tax return.
Please note that OpenInvest, the Responsible Entity, may elect in the future to pre-fill the ATO online tax reports on your behalf as it has your verified TFN with which to do so.
A Managed Account is a managed investment governed by the same legal rules as a unit trust. However, while a unit trust pools all its investors funds and issues units, a managed account separately accounts for each investor’s interest.
This sophistication allows you to retain the important benefits associated with beneficial ownership of direct shares (eg efficient taxation, full transparency) together with the benefits of a managed fund environment (pooled institutional low cost dealing, access to professional placements, secure environment) while avoiding the disadvantages normally associated with each approach.
Key features
- All clients are members of a financial product.
- Uses a single pooled HIN for dealing but administratively reports each client’s holdings and tax records separately, retaining individual beneficial ownership.
- You are usually able to transfer in your existing ASX listed securities
- A range of investment “models” are offered, managed by professionals on a discretionary basis, Those offered by Aldersley Capital are managed on a “tax-aware” basis
- Records but does not usually pay out dividends. Instead each client may nominate a regular amount to meet living expenses. Some let you choose either approach
- “Crossings” between clients are “netted off” within the product. Brokerage is a fraction of what a retail or wholesale investor would to deal directly with even an online broker.
- Reporting is online or via smartphone app, fully administered and consolidated portfolio reporting
- An audited taxation summary, unique to each client entity, is provided each year.
Australian tax residents over 18 years of age. You don’t need to be a citizen.
An adult on behalf of a child under 18.
A company, trust or SMSF.
You will need a minimum of $5,000 to invest.
All active portfolios following a particular investment model are managed pro-rata regardless of whether you invest $5,000 or $100 million.
There are 15 quick steps in the 5 minute application process. The information you need to hand is highlighted
- From the Aldersley Capital website click on any GET STARTED button. This will take you to the Welcome page.
- On the Welcome page put in your correct legal name (not the one you prefer to be called. For example, if you are legally Henry John Smith, but you prefer to go by the name John Smith, put in Henry Smith at this stage. You can revert to John Smith later). Add your preferred valid email address. Choose your own password which must be at least eight digits with an upper case letter, a number and a special character within it as a minimum. Click next.
- This brings up a new screen. To progress quickly, Click on Explore products.
- This brings up a menu of three models. Click on the one you have chosen eg Managed Equity.
- You are asked to add an investment amount. This does not need to be exact at all, just guess if you are not sure about the value of shares you are transferring in addition to any cash you may invest. Click next.
- Add your full legal name including any middle name. Click next
- Add your Date of Birth in the form DDMMYYYY without adding any dividers. Next.
- Add your Tax File number. In the event the Tax File Number is rejected when you know it is correct, which sometimes occurs with 8 digit tax file numbers, use 123456782 as a default TFN to get to the next stage of the application and let OpenWealth sort it out later.
- Add your residential address. The system prompts your address after a few characters. Add your preferred phone number. Note the phone numberis preloaded with +61. Insert your house or mobile number without the first zero. If it fails, it’s because you are not placing the cursor to the left of the 4 before inserting. …Next.
- Confirm your Identification with either a Driving Licence (insert Licence number and card number) or Passport (you just need the passport number). If you don’t have either, inserting the two numbers from a Photo Card under the Driving licence gets you to the next stage and you can sort it out later with OpenWealth. Otherwise contact online support. Next.
- Confirm you are an Australian resident for tax purposes (you don’t need to be a citizen) by clicking next.
- Name your account by putting in the name you prefer now. In the example above, this is where Henry John Smith can call himself John Smith.
- Submit the application. This brings up a 4 digit verification code. Go to your email account and add the 4 digits. If there are two parties, for example in a company application with two directors, then both will need to authorise the account this way before the account is authorised. The verification code is not time stamped, so you can log out and come back to this stage later by following the link from the emailed code. You will of course need to remember your email address and password used. Click Next. There may be some latency (a few seconds of nothing happening on the screen) before it finally approves the authorisation.
- Once the account is authorised you are allocated a new client reference number in the style OW0000****. You can then add your banking details and arrange to transfer in cash or shares.
- You receive a welcome letter by email advising you of your new OW client reference number which you must always add to any deposit as a reference since the Scheme operates on an omnibus basis (one actual bank account for everyone)
For Companies, Trusts and SMSF’s applications you will need the ABN or A.C.N. of the entity and its Tax File Number, as well as verify its trustees or directors as above. No need for certified trust deed or certified documents. The account will only be authorised once all directors/trustees have separately verified by submitting a code supplied to their email address. If you have a corporate trustee with a sole director, while perfectly legal, the OpenWealth software may not allow for that. Contact OpenWealth and they will adjust it at the back end.
You stay informed with real-time portfolio tracking, available through either the Investor Portal or the mobile app you can download on signing up.
You will also receive regular email updates from the investment team which are usually then posted to the website.
We intend to hold occasional client “webinars” where you get an opportunity to interact.
A PDS is a Product Disclosure Statement, a key document required under the Corporations Act for registered managed investment schemes such as that operated by OpenInvest Limited as Responsible Entity. It sets out information about the services provided by the product, its key features and benefits, details about risks, costs, fees, how it works and your rights and obligations as an investor.
A TMD is a Target Market Determination document. This is another key document, produced by the Responsible Entity, although technically not designed for retail clients to read. It’s a recent innovation, introduced by the government and regulator to try and ensure that financial products are both designed and distributed in a way that suits the “target market” they are aimed at.
For example, if you want to make all your decisions about individual trades, have only $1000 to invest and want to punt the whole lot on some bitcoin, then the TMD would indicate to us as distributor and the regulator that you would fall outside the target market set by the Responsible Entity on all three counts.
Your application would not get accepted.
You can access all the Key Documents (PDS, TMD, Investment Menu) without registering first by by clicking on the button below. This also gives access to OpenWealth’s other legal documents such as Complaints Handling policy, privacy, terms and conditions etc.
We have a fact find document that is used to collect personal information prior to providing general advice, which we have adapted for use also by direct investors considering Aldersley Capital Direct. Read this and then click on the link to open it.
It contains a section which explains there are two components of Risk Tolerance. Emotional Risk tolerance and Financial Risk Tolerance. Its important to understand these concepts.
It provides a series of questions with multiple choices designed to provide you with a total score out of 500. The higher your score, the greater your overall risk tolerance. The lower your score the lower is your tolerance.
A comparison table then suggests which one or combination of models probably best fits someone who scores as you do.
The three model portfolio cater for a very wide range of risk tolerances. The Income Plus is designed for investors with a low tolerance for volatility and capital loss. The other two are growth oriented portfolios.
It also explains a couple of common financial planning strategies for managing risk, particularly for retirees.
If you only want a product that has no capital risk at all, like a term deposit, then you are in the wrong place. We do not cater for investors seeking a capital guaranteed product.
The fact_find document is here
Sophisticated portfolio management software enables all investors’ holdings to be pooled into one custodial HIN to attract the benefits of pooled dealing and custody in a single H.I.N., but separately accounts for each investor’s holdings at all times. It works on an omnibus system a bit like a normal bank account. In a bank account you see your $5,000 but the bank actually pools it all together for investing it.
As a client you still retain beneficial ownership of an identifiable portfolio of shares, not an interest in a pooled fund as you would in a unit trust or E.T.F. You can see your portfolio at any time online.
When you invest you get a brand new portfolio for you, you do not inherit the inherent gains of others as you do in a unit trust.
This modern sophisticated form of portfolio management administration means that the costs of administering and dealing are significantly reduced compared with clients transacting directly in the market.
Instead of getting paperwork through the post every time you buy or sell something, you don’t receive any mail at all. Even corporate actions are all dealt with directly by the investment manager and administrator.
One benefit of this is your investment is anonymous to the outside world. Neither regular post, nor appearing in share registers will tip off possible scammers to your investments.
Avoiding all the paperwork hassles is probably the greatest benefit outside of access to professional management.
Your portfolio is also able to participate, pro- rata, in wholesale placements of new securities, normally issued at a discount to market value to ensure take-up, which are otherwise only available to sophisticated investors, who usually have to cough up at least $500,000 per trade.
On the downside, you will not be able to participate in share top-up plans offered to individual shareholders and similar corporate actions offered only to individual holders, because the Company can only see an institutional holding. Just remember these offers are generally very small-scale in nature so not a significant detractor.
There is a single management fee across the three portfolios which on small balances is 1.25% per annum. That attracts a discount as your portfolio size grows. Above $500,000 it is levied at 1% per annum on the whole amount, a 20% discount.
Over $1m the fee is 0.875% a discount of 30%.
Above $2m it is 0.75% per annum, a discount of 40%.
And above $3 million balance it is 0.625% per annum, a discount of 50%.
The management fee is calculated daily on end of day valuation. This fee is designed to cover all scheme expenses, investment management and administration expenses and distribution expenses.
There are no other fees such entry fees, minimum fees, adviser fees.
There are transactions costs charged by the Responsible Entity as disclosed in their PDS and your portfolio may incur indirect costs where it holds a managed fund such as an E.T.F. Estimates of these fees are in the Investment Menu and also under Key Documents in the Portal.
You can view the latest versions of the Key Documents (PDS, Investment Menu, TMD) without first registering by clicking here
To reiterate some of the benefits, (mainly for the benefit of people thinking of starting one):
1. Tax incentives
Investment income is tax-sheltered within all superannuation funds. Investment earnings are taxed at a maximum 15% tax rate when a member is working and zero when the member is transitioning to retirement (salary sacrifice combined with transitioning to retirement is a “must consider” strategy when you reach preservation age. On reaching pension age a member can draw without restriction (or tax) and in the meantime, the portfolio is better than tax free. Imputation credits, which can be offset against earnings tax for working members, receive a cash rebate for non-tax paying pension mode investors. On death, there can be very favourable concessions including tax free payments to dependent beneficiaries.
2. Strategies for the Individual member
A SMSF gives each member the freedom to choose an investment strategy which suits their phase of life and preferences. Sophisticated investors are often comfortable with investing entirely in a diversified share portfolio or an actively managed mixture of assets. By contrast, the typical pooled superannuation fund in Australia defaults to a relatively constant asset allocation across all asset classes. This reduces short-term volatility (eg. normally the fund would avoid a “loss” in any one year), but this is at the expense of long term expected return. To supposedly protect the interest of the marginal retiree in any one year, accumulators and retirees with a six-year plus time frame are disadvantaged.
3. Retirement pension
A SMSF can be structured to pay you a pension upon retirement. Once the SMSF starts paying you a pension, the investment earnings, including all capital gains, are free from income tax. On reaching preservation age, you should seriously consider whether a transition to retirement pension is appropriate for you. It has the same tax rules, but has limitations (upper and lower) on the pension amount each year.
4. Cost efficiency
Most of the administration costs of a SMSF are fixed. Aldersley Capital Direct provides a timely and audited annual taxation summary for each client. If you wish to segregate assets (to reduce actuarial costs) this can be done too. Your accountant or administrator can treat your portfolio) within Aldersley Capital Direct as a single security for ATO purposes and rely on the audited tax summary. This keeps your accounting administration costs associated with owning shares through your SMSF under control because it can be treated as a single share as there is no need to verify individual transactions, holdings, dividends or capital gains and losses.
5. Family benefits
Recent regulations (July 2021) now allow the trustee of a SMSF to accept up to six members. It enables the trustee of a fund to pay tax-free lump sums to a spouse and to pay concessionally taxed income streams to dependent children in the event of death. More complicated families can set up more than super fund.
6. Portability
A SMSF is fully portable and forever unless you choose not to. It can be used as you change from job to job and can extend beyond one lifetime to the spouse and the children providing it pays a pension to a dependant beneficiary.
7. Choice
One of the most significant advantages of a SMSF is that of investment choice and flexibility. Current government regulation allows SMSF trustees to invest in a variety of assets, which include shares and property. Some advisers argue that it should be invested conservatively because it is your source of future retirement savings. That’s crap advice. Since you can’t access super until retirement (aside from government meddling as in covid) it should be invested in a sensible growth manner. Even on retirement, going conservative introduces longevity risks that you need to consider. A more conservative share portfolio may well be the answer. Cash is definitely not a long term solution.
8. Life Insurance
A life insurance policy can be tax effectively structured within a SMSF. The premium is treated as a deductible expense
Why do so many direct investors own a Self Managed Super Fund?
To reiterate some of the benefits, (mainly for the benefit of people thinking of starting one):
1. Tax incentives
Investment income is tax-sheltered within all superannuation funds. Investment earnings are taxed at a maximum 15% tax rate when a member is working and zero when the member is transitioning to retirement (salary sacrifice combined with transitioning to retirement is a “must consider” strategy when you reach 55). On reaching age 60 a member can draw without restriction (or tax) and in the meantime, the portfolio is better than tax free. Imputation credits, which can be offset against earnings tax for working members, receive a cash rebate for non-tax paying pension mode investors. On death, there can be very favourable concessions incluiding tax free payments to dependent beneficiaries.
2. Strategies for the Individual member
A SMSF gives each member the freedom to choose an investment strategy which suits their phase of life and preferences. Sophisticated investors are often comfortable with investing entirely in a diversified share portfolio or an actively managed mixture of assets. By contrast, the typical pooled superannuation fund in Australia defaults to a relatively constant asset allocation across all asset classes. This reduces short-term volatility (eg. normally the fund would avoid a “loss” in any one year), but this is at the expense of long term expected return. To supposedly protect the interest of the marginal retiree in any one year, accumulators and retirees with a ten-year plus time frame are disadvantaged.
3. Retirement pension
A SMSF can be structured to pay you a pension upon retirement. Once the SMSF starts paying you a pension, the investment earnings, including all capital gains, are free from income tax.. At 55, you should seriously consider whether a transition to retirement pension is appropriate for you. It has the same tax rules, but has limitations (upper and lower) on the pension amount each year.
4. Cost efficiency
Most of the administration costs of a SMSF are fixed. Linear Managed Accounts provides a timely and audited annual taxation summary for each client. If you wish to segregate assets (to reduce actuarial costs) this can be done too. Your accountant can treat your portfolio(s) within AMA as a single security for ATO purposes and rely on the audited tax summary. This keeps your accounting administration costs associated with owning shares through your SMSF under control because it can be treated as a single share as there is no need to verify individual transactions, holdings, dividends or capital gains and losses.
5. Family benefits
Current regulations allow the trustee of a SMSF to accept up to four members, which is an ideal vehicle for modern families (two or one adult(s) and two children). It enables the trustee of a fund to pay tax-free lump sums to a spouse and to pay concessionally taxed income streams to dependent children in the event of death. More complicated families can set up more than super fund.
6. Portability
A SMSF is fully portable and forever unless you choose not to. It can be used as you change from job to job and can extend beyond one lifetime to the spouse and the children providing it pays a pension to a dependant beneficiary. You can even decide to exit Linear Managed Accounts before death and select another investment provider without it impacting on your pension.
7. Choice
One of the most significant advantages of a SMSF is that of investment choice and flexibility. Current government regulation allows SMSF trustees to invest in a variety of assets, which include shares, exchange traded options and property.
8. Life Insurance
A life insurance policy can be tax effectively structured within a SMSF. The premium is treated as a deductible expense
Aldersley Capital Direct can greatly simplify the tax management and administration of client entities, especially those investing via a self-managed super fund. An external audit of the systems and processes is conducted each year. An audit report accompanies a summarised taxation report so your accountant may rely on it in preparing your tax returns.
Instead of having to verify every transaction, dividend and gain/loss, your accountant can treat your Aldersley Capital portfolio as a single security for ATO purposes. Aldersley Capital Direct does not pay out “distributions” like unitised managed funds; the dividends are accounted for within the product so do not appear automatically in your ATO return so it is appropriate to report a Managed Account such as Aldersley Capital Direct as a “security” for tax purposes.
It’s worth mentioning that Aldersley Capital Direct can greatly simplify the handling of a deceased estate, because all the capital gains information is immediately available at the parcel level. It can be arranged for it to be readily apportioned between beneficiaries (as new accounts) in a fair and equitable manner.
Investing via a managed account simplifies tax administration of your entities. It frees up your accountant’s time to provide more value-added services. Accountants often struggle to justify the true cost of unravelling the mess of paperwork they are often presented with for active traders doing it themselves.
