Self-managed super funds (SMSFs) are a way of saving for retirement.
SMSFs are one of the fastest growing sectors of the Australian super industry.
SMSFs give people full control of their own super fund, including all the legal and tax responsibilities associated with doing this.
Is a self-managed super fund right for you?
According to Association of Superannuation Funds Australia (ASFA), SMSFs may be the right choice for you if you:
- are very knowledgeable about finance and legal matters
- have a lot of money in superannuation to make set up and yearly running costs worthwhile
- have enough money for ongoing expenses including professional accounting, tax, audit, legal and financial advice
- have a lot of spare time to research and check your super investments regularly
- have a lot of spare time to manage the fund
- have life insurance, including income protection and total and permanent disability cover.
What is Self-Managed Super?
SMSFs are a legal tax structure with the sole purpose of providing for your retirement. SMSFs are regulated by the Australian Taxation Office (ATO).
- An SMSF can have 1-4 members.
- An SMSF is a trust structure and must have a trustee. There are two options: Corporate Trustee Structure or Individual Trustee Structure.
- Generally, SMSF trustees will use one central bank account to receive contributions and use that account to make investments.
- An SMSF must have a Trust Deed that sets out the governing of the SMSF
- An Investment Strategy must be in place that states how you plan to invest the SMSF assets
- A Binding Death Nomination will state who you would like you super benefits to be paid in the event of death
- Annual tax return and audit must occur every year
What are the key differences between self-managed funds and other types of super?
As the fund is ‘self-managed’ the members of the fund are responsible for meeting all of the funds paperwork and compliance requirements. This is because the members of the funds are also trustees of the fund. The upside of this responsibility means that members of the fund have a greater level of control than that would have in other types of super funds. They make all the decisions too, however rules apply.
Another key difference is the kind of property that can be held inside a self-managed super fund. Real estate or a building can be purchased and held inside a self-managed super fund, so can other forms of property like artworks, jewellery, vehicles, boats and wine. There however several rules around how assets are used. Fund members for example cannot get a present-day benefit from these items. A business owner however can buying their place of business premises inside a self-managed fund, provided they pay rent to the fund for use of that property.
Can’t you do it all yourself?
Despite some people calling SMSFs ‘do it yourself super’ or ‘DIY funds’ you will have to work with some other people to meet your obligations.
You will need an independent self-managed super fund auditor who is registered with ASIC to complete your fund’s audit each year.
In some circumstances, you will need a qualified actuary to provide you with an actuarial certificate.
Each year, you need to value your assets at market value. In some circumstances, you will need an independent valuer who is qualified to do this; for example, to value artwork.
You may also work with:
- An administrator who will manage most of the day-to-day running of the SMSF. The legal and tax responsibilities are still yours even if you use an administrator.
- An Accountant to prepare financial accounts, statements and tax returns.
- A Financial Adviser for investment and estate planning advice.
What is the cost of a SMSF?
The costs of setting up and running an SMSF vary depending on, among other things, your circumstances, super balance, investment strategy and how you choose to manage your fund. The more complex you make it, the more it is likely to cost. For information about SMSFs please contact us at Alphington Private Wealth on Phone 03 9038 9449.
How we can help you with self-managed super advice
The team at Alphington Private Wealth can assist to determine if a self-managed fund is right for you. We can also assist you with the investment and estate planning strategies for your SMSF.
We will recommend an investment strategy that is in line with your risk profile and incorporates your ideas about investing within your SMSF. We make the recommendations. You make the decisions.
SMSFs and Estate Planning is a complex area, but with our experience we will help to make sure your money goes to the right people at the right time.
To make an appointment, call us on 03 9038 9449 (Melbourne) or 08 8461 9191 (Adelaide) during business hours. Alternatively, complete the contact form and a member of our team will reach out to you to make an appointment for you. We can meet face to face in our offices, and in capital cities. Video meetings are also available.