Navstar Financial Services & Solutions Pty Ltd ABN 14 110 510 024 STEPS IN A TYPICAL SMSF BORROWING Typically a borrowing by an SMSF has the following steps: 1     Determine with your financial adviser that borrowing would be an appropriate strategy to leverage investment 2     Check the trust deed to ensure the SMSF Trustee has power to borrow, grant security and allow assets to be held by custodians/nominees for the trustee (if not, have the trust deed amended if appropriate) 3     Check the investment strategy to ensure it allows for the acquisition of the investment asset and permits borrowing for that purpose (if not, amend the investment strategy if appropriate) 4     Source the asset for purchase, negotiate the price and reach agreement with the vendor 5     Finalise borrowing arrangements with the lender including in-principle loan approval 6     Determine who is to be the Bare Trustee — if a new company, arrange to purchase/establish the new company 7    Arrange for the Bare Trustee to resolve in writing to act as custodian of the asset for the SMSF Trustee 8    Arrange for the SMSF Trustee to resolve in writing to purchase the asset and to appoint the Trustee to act for the SMSF Trustee as bare trustee of the bare trust 9    Arrange for the Bare Trustee (note: not the SMSF Trustee) to sign the purchase contract. Use only SMSF money for any deposit to be paid. 10   Ensure the SMSF Trustee provides all the deposit money for the purchase directly from the SMSF's account 11    Arrange for the Bare Trustee and the SMSF Trustee to sign the bare trust deed (signing of the bare trust deed must occur before exchange of contracts in Queensland and South Australia and after exchange of contracts in NSW, Victoria, Tasmania and the ACT — either is ok in WA) 12   Arrange for the SMSF Trustee (note: SMSF Trustee is the borrower) to sign all loan documents with the lender 13   Complete the purchase of the asset using only the SMSF's money and the loan by the lender 14     Submit the bare trust deed/security deed together with supporting transaction documentation to the stamp duty authority for payment of stamp duty 15  When the loan is eventually repaid, transfer the asset from the Bare Trustee to the SMSF Trustee for nominal stamp duty provided the bare trust deed was stamped previously. Australian Credit Licence Number 385525