Deed of Promissory Note

About Product

The LightYear Docs Deed of Promissory Note (PN) is a short-term promise to pay an amount paid to the issuer of the PN by the note holder.

It may be transferred and can be used as a cash equivalent.

Please note: This is a short term Promissory Note only and the term should be for a period no longer than 6 months. A SMSF Trustee Promisee should be no more than 3 months.

► $129.00 (inc GST) - OR provided under your unlimited membership.

► The master document has been signed off by Abbott & Mourly and is congruent with Australian law.

General Information

The Commissioner of Taxation considers a PN to be a cash equivalent, provided the note is for a short-term duration only. Any longer term and the PN turns into a loan.

The parties to the PN may be individuals, companies, Trusts or SMSFs.

Please note: This is a short term Promissory Note only and the term should be for a period no longer than 6 months. 

Benefits

• A short-term cash equivalent.
• Can be used as a contribution into superannuation but must be repaid within a short period of time (a few business days for an SMSF).
• Also useful for asset purchases from an SMSF, Trust or Company rather than in-specie.
• Can be a longer-dated PN however, it is better to create a Loan Agreement where possible.

Note: For an SMSF, ensure that the loan duration is no longer than 3 months, as it may be seen as providing financial accommodation or a loan to a related party.

Frequently Asked Legal Questions

Who can be the Promisor and the Promisee?

The Promisor can be a related party if a contribution is seeking to be made however, it must be short-term accommodation otherwise it may become a loan.  The Promissee may transfer or assign the PN to another party subject to the terms and conditions of the PN.

What is the accommodation rate?

The rate for PN may be nil for very short term or set at a relevant interest rate as between the two parties to the PN.

What happens on the death of Promisor?

If the Promisor dies the PN is terminated and becomes immediately payable.

Can the PN be used for an SMSF LRBA?

The PN cannot be used as a related party loan for an SMSF LRBA.  Advisers should use The LightYear Docs RPA – Related Party LRBA meeting ATO guideline – PCG 2016/5 RRPL and has the following ten documents compiled into one process:

1. A Product Disclosure Statement
2. The Commissioner’s guideline PCG 2016/5 as a reference for compliance purposes
3. Trustee Minutes upgrading the deed and authorising the acquisition of a single acquirable asset under a Holding Trust
4. SMSF Deed Upgrade plus Minutes
5. Investment Strategy covering asset and loan
6. Holding Trust establishment plus Minutes
7. Related Party Loan
8. Mortgage Deed
9. Personal Guarantee (optional)
10. Lease if asset to be used for rental income (optional)

How long does this document take to assemble?

Depending on the complexity of the data, this document should take approximately 10-25 secs to assemble. If you experience timing outside of this please contact Support via the Surge app, alternatively please read this article for troubleshooting tips https://info.lightyeardocs.com.au/supportcentre/troubleshooting-longer-assembly-times-timeouts .

Is this document a legal document?

All master documents have been signed off by Abbott & Mourly lawyers. Tony Anamourlis of Abbott & Mourly advises that “at no time, due to inbuilt legal protection and security measures can a user change or amend a document on the LightYear Docs platform that has been signed off by a practicing solicitor. To do so would result in the user drafting a document of a legal nature and engaging in the provision of legal services. In addition, it would be a breach of copyright. In our opinion when completing the form fields through the LightYear Docs platform, users and their employees are merely carrying out an administrative task which is not the provision of legal advice.”

However in some complex areas such as the insertion of a varied range of client instructions into a Will or other such documents the user must be mindful of the extent to which a document is being drafted by the user rather than merely the administrative task of completing a form where the relevant fields are inserted into the reviewed and signed  legal document provided by Abbott & Mourly.

The above advice is born out of numerous cases dating back to Re Sanderson, Ex parte Law Institute of Victoria [1927] VLR 394, 397 where the Court held:

“if a person does a thing usually done by a solicitor, and does it in such a way as to lead to the reasonable inference that he is a solicitor – if he combines professing to be a solicitor with action usually taken by a solicitor – I think he then does act as a solicitor.”

Likewise in ACCC v Murray (2002) 121 FCR 428, 448 where Murray was building a franchise business that involved the legal writing and drafting of Wills from scratch based on the client’s personal circumstances.  The Court held that this process was legal work.

Is the document easy to read?

All LightYear Docs products are written in plain English and assessed for readability. If at any time you come across any errors, please contact support@lightyeardocs.com.au.

What lawyers sign off on the LightYear Docs documents?

All LightYear documents are prepared and signed off by Abbott & Mourly from Melbourne, Sydney and Brisbane.

Are the LightYear Docs documents reviewed regularly?

All LightYear Docs documents form part of the LightYear Docs internal review process. We review all documents at least annually or when required to do so due to changes in legislation. Further details of this process and a review schedule is include on this website.

Can I get a sample of this document?

Yes, please email support@lightyeardocs.com.au to request a sample document for you to review.