Keep in mind the following information is General Advice and is obviously not personalised for your unique needs, objectives or financial situation. Please get in touch with your advisor before taking any action on the below points so they can advise on the appropriateness of this for you.
Self-managed super funds are those which are structured differently to traditional superannuation funds to provide their members with more direct control and different benefits. SMSF’s allows members who are also trustees of the fund, to have decision-making input in the direction of the fund. Members face different obligations and regulations as a result of the alternative structure. SMSF’s are especially suited to those who have substantial knowledge in super, tax, financial and legal matters, and are therefore in a better position to make investment decisions.
Benefits of Being a Self-Managed Super Fund Trustee
SMSF allows you to be the trustee of your own fund. This comes with several benefits:
You have access to a wider range of investments. SMSF members can develop and implement investment strategies in shares, term deposits, managed funds and property. There are of course, regulations governing the investment into these kinds of assets which SMSF members must be aware of.
Like all super funds, SMSFs provide concessional tax rates. Considered tax strategies can help your super growth and ease the transition into retirement.
As SMSF’s allow multiple members to run a variety of accounts, you will be able to adjust your investment mix more efficiently and flexibly, according to your needs. An essential benefit provided to SMSF members is the ability to respond faster to changes in the market environment and super rules.
Although set-up costs and annual running expenditures may be relatively high in comparison to public funds, SMSF’s can be significantly more beneficial if you have a larger balance. This also means that as more growth occurs, the more cost-effective the fund becomes to manage.
What You Need to Consider when Joining an SMSF
Like all super choices, joining an SMSF is a major decision. It is crucial that you have the time and skill to manage it or, have ongoing counsel to help you do so. An SMSF is run for the sole purpose of providing retirement benefits to members or their dependents. As a member you must abide by the super rules, regulations and restrictions.
When you run your own SMSF you must carry out the role of a trustee – to arrange and follow an investment strategy that can meet your retirement needs and is compliant to your risk strategy. Duties you need to consider include:
- Investment research
- Fund management and administration
- Record keeping
- Insurance organisation
- Arranging an annual audit by an approved SMSF auditor
An attractive application might involve business purchasing property through their SMSF and then renting it to the business to operate from. This provides additional security and flexibility for the business as well as reliable income for the SMSF.
We strongly recommended that you seek advice from an accredited SMSF specialist financial advisor, who can provide you with insights as to whether an SMSF is a viable and good choice for you. They are also able to assist with a range of SMSF tasks such as administration and compliance.
For more information, reach out to the Morrows Private Wealth team for advice on whether an SMSF is appropriate for your circumstances.