Professional Superannuation Services

About a Self Managed Superannuation Fund (SMSF)

 
 

 

The growth of Self Managed Superannuation funds speaks for itself. This type of fund has become very popular as it represents the most effective tax and social security structure available. A SMSF allows the trustee choice and control on how the money in the fund is invested. Most important is that a SMSF represents credit protection and a unique opportunity for estate planning. It also allows the provision of tailored pensions and lump sum benefits.

The trustee has a duty to act on the best interest of the members. This means the members have the responsibility for the funds performance and compliance. Wealth creation is customised and in control of the trustee.

A self managed fund is a powerful vehicle offering benefits across generations.

What is a SMSF Fund
A SMSF is a trust where money and investments are held and managed on behalf of the members. The funds purpose is to provide future income streams for retirement. The Superannuation Industry (Supervision) Act 1993 and Regulations (SIS) and related legislation govern Australian superannuation funds. The Australian Taxation office (ATO) is responsible for overseeing the regulation of self managed super funds.

Why should I set up a SMSF

  • You have flexibility
  • Wide range of investments to choose from
  • On going after retirement
  • Pension establishment
  • Estate planning opportunities
  • Tax advantages
  • Asset test advantages
  • Portability

Essential regulated requirements when setting up a SMSF

  • Elect to become a regulated fund
  • Must have 2 members unless trustee is a company
  • Members are trustees or directors of trustee company
  • Trustees are members or directors
  • Obtain a tax file number (TFN)
  • Obtain a Australian business number (ABN)
  • Obtain an Australian Company number if the trustee is a company
  • A trust deed must be obtained
  • Prepare an investment strategy (seek help from a financial planner if required)
  • Fund is regulated by ATO

Regulatory information:
Duties of trustees - the Superannuation Industry (Supervision) Act 1993 (SISA) contains covenants or rules that impose certain requirements on trustees. These requirements are explained in this link.

Investment strategy and investment decisions - the trustees of every fund are required to prepare and implement an investment strategy for the superannuation fund. This link also examines certain restrictions on the investment practices of self managed superannuation funds.

Setting up a Self managed Super Fund - Click here for details

Disadvantages of a SMSF

  • Lack of investment expertise among trustees (solution is to use an experienced financial planner) Professional Superannuation Services are able to offer you this service
  • Risk of non compliance due to lack of knowledge of SIS act
  • Could have greater running costs

Should I be concerned about the cost of setup?

  • The one off setup cost is for an entity that can last a lifetime
  • The taxation benefits out weigh the cost of the fund

Investment standards

  • Investments must satisfy the 'sole purpose test'

Things a SMSF cannot do

  • Borrow money
  • Acquire assets from related parties
  • Lend money to members
  • Help members out of financial trouble
  • Invest > 5% of the funds assets in house investments

Is a self managed fund for me?
Recent research by the Australian Stock Exchange has identified that SMSF trustees are characterised by a strong need to have control and responsibility for their own financial well being.

You are able to take advantage of the benefits such as the permanency and portability of the trust. The fund can be used to pay an asset test exempt complying pension which may allow you to also receive social security benefits you would otherwise not be entitled to.

By setting up a Self Managed Fund your assets remain in the fund and are allocated to surviving family members. Members in pension mode are wholly exempt under the income test.
 
 
   
 
         
         
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About a Self Managed Superannuation Fund (SMSF)

Self Managed Super Gold Coast

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