In recent years there has been an explosion in the number of Self Managed Superannuation Funds (SMSF) in this country. Self-managed super funds now account for 99 per cent of the number of super funds in Australia. The number of DIY super funds has ballooned 29 per cent in the past five years to hit 534,000 retirement saving vehicles with $557 billion in assets – making it the fastest growing segment of the superannuation market.
New data from the Australian Taxation Office found that self-managed super funds now account for 99 per cent of the number of super funds in Australia, with 30 per cent of the $1.9 trillion in super assets across the country.
What is a SMSF?
A self managed superannuation fund is a do-it-yourself superannuation fund of 1-4 members where each member acts as a trustee of the fund. So all members must be the trustees, and all trustees must be the members. It is possible to have a ‘single member fund’ that requires two individual trustees or a corporate trustee.
Your SMSF must have its own bank account and a trust deed. The deed is basically the rules of operation and sets out who can be a member, how they’re admitted as a member, what the fund can invest in and who can receive a death benefit. Your own SMSF requires an annual audit plus they need to lodge a tax return with the Australian Taxation Office (ATO).
Establishing your own self managed superannuation fund is a very important financial decision but before you decide to go down this pathway you need to know the costs and understand your legal obligations. While managing your own SMSF can offer many benefits, they are subject to considerable compliance and regulation.
One of the primary reasons why self-managed superannuation funds have grown in popularity in recent years is the fact the members have greater control over the range of investments, the ongoing management fees and ultimately their tax payable.
When contemplating the establishment of your own self managed superannuation fund you need to weigh up the advantages and the added responsibilities. For many Australians, SMSFs offer 4 major advantages:
Having a SMSF lets you take full advantage of tax and superannuation law changes as soon as they come into effect. They also provide families with a vehicle to pool their resources and grow their wealth together. You can effectively transfer wealth between generations and these estate planning benefits may not be available through conventional superannuation products.
A SMSF arguably offers even more tax benefits when you consider the ability to segregate accounts and share imputation credits. Finally, your own SMSF also provides portability because your account stays with you wherever you go provided you remain within the framework of Australia’s superannuation laws.
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As a trustee of your own SMSF, you can control where your retirement savings are invested. Compared to ‘off-the-shelf’ superannuation funds, you have a wider choice of investment options including listed shares, bonds, listed investment companies (LICs), exchange traded funds (ETFs) and direct property. You can also transfer personally owned listed shares and managed funds directly into your SMSF plus they can own ‘business real property’ (property used wholly and exclusively for business).You can devise your own investment strategy, actively manage the range of investments and adjust your portfolios as markets change.
Unlike retail and industry based superannuation funds, the members of a SMSF (up to 4 and usually family members) can combine their assets to accumulate retirement funds. This can provide a more cost effective outcome because aSMSF with pooled assets in excess of $200,000 can generally reduce the average cost of managing the fund to below 1.0% per annum.
The Commonwealth Government report, ‘A Statistical Summary of Self-Managed Superannuation Funds’ released in December 2009 (based on ATO and APRA data) found that SMSF members generally paid lower fees in the 3 year period to June 2008. The report also indicated that on average, SMSF investments performed better than all other super funds over
A SMSF offers the members a number of tax concessions including:
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Establishment – including all the requisite forms and paperwork to establish your SMSF. You can then administer the fund yourself or you can use our SMSF administration service. The steps generally involved in setting up a SMSF include:
Our service offering includes all of these functions including:
Administration – we can assist you with the ongoing administration of your SMSF including:
SMSF Trustees must prepare and implement an investment strategy for the fund. All investment decisions must be in accordance with that strategy and it should be regularly reviewed. It must reflect the purpose of the fund taking into account:
The establishment and ongoing maintenance of your SMSF can be both complex and time consuming. We offer you a range of tailored accounting, administration and compliance solutions including:
We are so much more than just tax accountants and part of our client brief is to help you grow your wealth using tax effective strategies like negative gearing and self managed superannuation. We invite you to book a FREE, one hour introductory consultation to discuss your self managed superannuation needs. To book a time, call us today on 1300 789 844 or complete your details in the box at the top of this page.