SELF MANAGED SUPERANNUATION (SMSF)

If you would like absolute control, transparency and flexibility with your super, then a Self Managed Superannuation Fund (SMSF) may be right for you.

  • You control how your super is invested.
  • Your investment returns, fees and tax are fully transparent.

As you are in control, you have the flexibility to invest in a wide range of investments either through your own research into shares and properties familiar to you, or in combination with a Financial Planner at HC Partners.

FAQ ON SMSF:

What is an SMSF?

Like all superannuation funds, an SMSF is a way of saving for your retirement.

The difference between an SMSF and a retail or industry fund is that the members are also the ‘trustees’ – i.e. the members run the SMSF for their own benefit.

An SMSF can have up to four members – often a husband and wife and potentially children, business partners or other family.

Once established, you have the ability to control your investment choices, creating an investment portfolio that is 100% tailored to your needs.

Is there a minimum balance required to start a SMSF?

No, however the general industry rule of thumb is a balance of approximately $200,000. This is calculated by allowing $2,000 for annual compliance costs representing 1% of the balance.  This would be competitive with many retail super funds.

Although there is no minimum balance for starting a Self Managed Superannuation Fund, the upfront establishment fees and mostly fixed annual compliance costs generally mean a higher balance is required to justify the cost.

What investments can I invest in?

  • Shares listed on the ASX or other international exchanges
  • Term deposits
  • Managed funds
  • Hybrid securities
  • Residential and commercial property
  • Insurance

What responsibilities do trustees have?

While there is little doubt that an SMSF can provide you with greater control, flexibility and transparency of your super, it must also be remembered that along with these benefits comes additional risk and complexity. Added flexibility and control brings with it added responsibilities for the funds’ members and trustees.

These responsibilities, if not followed, may result in the fund not being eligible for tax concessions – one of the key benefits of holding assets in superannuation.

A penalty regime has also been introduced which gives the ATO the power to apply penalties including fines issued directly to the trustees and mandating further trustee education courses.

Some of the areas of responsibility include:

  • Accepting contributions and paying benefits
  • Appointing an auditor
  • Record keeping and other administrative tasks
  • Considering insurance needs of members

These are but a few of the many requirements – all of which we can assist you with.

Can I use my superannuation to purchase a property?

Yes. As mentioned above, an SMSF can invest in a residential or commercial property; however, there are rules about purchasing property from related parties.

Commercial property:

  • Can be purchased from a related party as long as it is on normal commercial terms and classified as Business Real Property
  • Can be leased to a related party of the fund as long as the lease is on normal commercial terms

Residential property:

  • Cannot be purchased from or leased to a related party under any circumstances

Although there are very strict rules to follow, an SMSF can also borrow funds to purchase a commercial or residential property. Just ask us how.

How can HC Partners help with SMSFs?

Being a Chartered Accounting and Financial Planning firm, we can provide a wide range of services for SMSFs, including establishment, compliance, investment advice, management and detailed retirement planning, including Transition to Retirement Pensions.  We can also advise on property borrowing and Limited Recourse Borrowing Arrangements (LRBAs).

What are the costs?

As many of the expenses associated with operating an SMSF are fixed amounts, the general rule is that the bigger the size of the fund, the more cost effective it becomes to run an SMSF.

Please click here for more information on how we charge

Did You Know?

HC Partners Financial Services Pty Ltd is an Authorised Representative of Lonsdale Financial Group Limited ABN 76 006 637 225 AFSL 246934. For a copy of our latest Financial Services Guide, click here. To better understand our relationship with Lonsdale, please click here