Who can have a SMSF?

Almost anyone can set up a Self Managed Super Fund (SMSF).

However, there are a few exceptions for individuals who are insolvent, have been convicted of a dishonest act or have been banned by the Australian Prudential Regulation Authority (APRA) or the Australian Taxation Office (ATO). In these cases, you cannot be a trustee or a director of a trustee company.

Note that to start up a SMSF, you must already have money in superannuation or be able to make contributions to super. You may also need to have assets.

What is a member?

A member of a super fund is someone that makes contributions to the fund and then receives a benefit at retirement.

The benefit can be in the form of a pension or a lump sum payment. It is also possible to have a combination of both.

What is a trustee?

A SMSF trustee is the person that is responsible for making sure that the fund complies with all the regulations and the sole purpose test.

Other trustee responsibilities include managing the fund’s investment strategy, appointing an auditor and lodging all documents with the taxation department.

How many trustees can a SMSF have?

An SMSF can have a maximum of four trustees, however the trustee must be a member of the fund.

What types of SMSF are there?

You can establish either a Multiple Member Fund, or a Single Member Fund.

The trustee can be either a company, or an individual.

If the fund has 2-4 members, it is necessary that they are all trustees or directors of the trustee company.

With a single member fund the member and another person who is not an employer, can be trustees of the SMSF.

Alternatively, there may be a trustee company and the member may be the sole director.

There are other rules surrounding acceptable trustees for single member funds.

For more information please consult the Australian Taxation Office website or enquire online to get in contact with our SMSF experts.

Who can make contributions?

It depends on what age bracket you are in. If you are under 65, you can make both employer and personal contributions.

You may also be able to make spouse contributions, if eligible to do so.

If you are between 65-74 you are entitled to make employer contributions and personal contributions.

However, you would have to have been employed for a minimum of 40 hours, at least 30 days before making the contribution.

When can we get the benefits?

Generally, you can receive the benefits under the fund, upon retirement or death.

However, you may be entitled to access the funds earlier, if falling under an exception. Some include, permanent incapacity, severe financial hardship or other compassionate grounds.

Who receives the benefit if a member dies?

If a member of a fund dies, their benefits under the fund will be distributed in accordance with the terms of the trust deed.

The trustee is usually the one that pays their funds to the deceased member’s dependents or their estate.

However, if the member has given a binding nomination, the trustees must then pay the benefit to that nominated person.

Note that under some trust deeds this nomination may lapse at 3 years and will have to be renewed.

What is the balance required in a SMSF

There is no minimum amount. However, the costs associated with a SMSF usually mean that unless the super fund has assets of at least $200,000, or can make substantial contributions to superannuation, a SMSF may not be your most cost-effective option.

What are the main benefits of having a SMSF?

The main benefits of a SMSF are as follows:

This is often considered to be the main advantage. You choose which assets your fund invests in.

With a fund that’s managed by others, you may have no input in investment decisions.

You will be able to consider a range of investments that suit you (subject to legislation) and be able to change those investments as you see fit.

Tax Savings
Self managed super funds can use credits from franked dividends to reduce the 15% tax rate. In a self managed fund you are in a better position to select your investments to reduce this tax rate than you would be in a fund managed by others.

Cost Savings
Managed funds may charge entry fees on contributions and have annual management fees which can vary, being on average 1.5%.

There will generally be set up costs, as well as ongoing administration and advisory costs. However, depending on your investment choice, there may be little or no ongoing investment management fees.

For Self Managed Super Funds (SMSF) with assets in excess of $200,000, there can often be significant cost savings when compared to a super fund managed by others.

Speak to our experts!

We are the specialists in Self Managed Super Funds (SMSF). Our team has the experience and the knowledge to ensure that your fund is set up in a way that complies with regulation.

Additionally, we know which banks and lenders will finance your SMSF investments, making sure that you maximise your return on investments.

For more general information or to speak to someone about your situation, please enquire online today.