Running your very own self managed super fund (SMSF) is now easier than ever. SMSFs currently hold 30% of all money invested in super by Australians (As at 30 June 2017, APRA report ‘Quarterly Superannuation Performance’ issued 22 August 2017.
The main attractions of SMSF’s are:
- You have control over how and where your money is invested
- There can be fee savings if you have more than $200,000 invested
- SMSFs offer the potential to use tax saving strategies not possible in other types of funds
- SMSFs can purchase your business real property
- SMSFs can give you certainty for your estate planning.
What is the trustee’s role?
The trustee is responsible for establishing the trust deed, setting and maintaining the fund’s investment strategy, finalising reporting obligations, lodging APRA and tax returns, payment of levies and taxes, and compliance with APRA and Taxation Office laws and regulations.
With a SMSF, there can be individual member trustees or a company acting as trustee. For individual member trustees, every member must be a trustee and all trustees must be members. Where there is a company acting as trustee, all company directors must be members and all members must be directors.
How does a SMSF work?
A SMSF works much the same as a normal retail superannuation fund. It accepts contributions from members, and invests and manages those contributions and subsequent earnings.
It’s responsible for paying tax and making payments to members who are retired (ie lump sums and pension payments).
There are also administration and accounting tasks which need to be completed to ensure all members’ records are correct, the correct taxes are paid, and the fund remains compliant with all relevant laws and regulations.
In which assets can an SMSF invest?
An SMSF can invest in any assets allowed for by the fund’s investment strategy. These usually include:
- Managed funds, shares and property
- Cash and fixed interest
- Business real property
What can’t an SMSF do?
There are restrictions on what SMSFs are allowed to do. There are some types of assets in which an SMSF cannot invest and/or are limited on how much of the fund can be invested in them. Loans to members or relatives are not allowed.
The fund must be run to meet the sole purpose of providing retirement benefits for members.
An SMSF which contravenes the regulations risks being declared non-complying and losing its concessional tax status. The result is all contributions and earnings being taxed at 46.5% instead of at up to 15%.
Who can be in your SMSF?
The fund can include relatives such as your spouse, children and/or parents (up to a total of four members). The main benefit is that fixed costs are shared by more members, thus creating additional cost savings.
SMSF’s are not appropriate for all types of investors, for further information please contact us.
To discuss Self Managed Super Funds, click here
