Self Managed Superannuation Funds
Setting up your own self-managed superannuation fund (SMSF) can have its advantages, but before you make this decision, it would be prudent to speak to your financial planner or us.
If you have less than $200,000 in superannuation, then the administrative costs would probably make the venture uneconomical. In addition to establishment costs, you can expect to spend some $1,500 to $2,500 a year on running your fund.
Aside from costs, you also need the skills and time to manage your own fund or use the services of an accountant and financial planner to ensure that you are fully compliant.
Nevertheless, there are some advantages in having your own super fund; it gives you greater control over your investments and offers a broader choice of assets to invest in. The sole purpose of an SMSF must be to secure money for your retirement so you cannot use assets in the fund for your current benefit.
If you decide to establish your own, where do you start? According to the Australian Taxation Office, there are four key steps:
- Organise financial advice from an AFSL holder
- Establish the trust and other documents that an SMSF specialist will prepare.
- Elect to be a regulated fund, obtain a tax file number and an Australian business number.
- Prepare an investment strategy.
- Open a bank account.
We can help establish the deeds, etc., but we cannot advise you on whether it is the right financial decision for you. Therefore, we recommend that you obtain the services of a Financial Planner who holds an Australian financial services licence.
The trust deed sets out such matters as the details of the trustees, how they are appointed, their powers and the conditions for contributions and benefit payments. You must make sure the trust deed is dated and properly executed.
All SMSFs must have trustees, and in turn, all members of the fund must be appointed as trustees. if your fund has a corporate trustee(the most popular option) then all directors must be members of the fund. Anybody aged over 18 can be a trustee as long as they have not been convicted for an offence involving dishonesty or are undischarged bankrupt.
As a trustee or director or corporate trustee, you are legally responsible for the actions of the fund. Your responsibilities include filing an annual tax return, lodging member contributions statements and appointing an approved auditor to complete the annual audit. The next step is to elect to be regulated by the Superannuation Industry (Supervision) Act (SISA) in order to receive concessional tax treatment.
We can also help you in applying to the ATO for the ABN and Tax File Number together with electing to be a regulated fund. The Investment Strategy would be prepared with the trustees and the financial planner. All that is then left to do is to open a bank account and have your current superannuation rolled over to your SMSF.
Please contact us for any further information.
