Self Managed Superannuation

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.

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.

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

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.

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.

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).

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.

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