Why Set Up A SMSF

An employer managed super fund is generally viewed by some as the only way of saving money for retirement.

But did you know that there are various advantages and benefits associated with a Self Managed Super Fund (SMSF)?

You can have more control over your finances and your investment decisions, maximising the profitability of your SMSF. Read on to find out how you can start up a DIY super fund!

Benefits of a SMSF

Unlike employer provided superannuation, a SMSF gives you the freedom to use the SMSF trust as a vehicle to invest in residential or commercial property that will grow in value, increasing the profitability of your investment portfolio.

A SMSF is effectively like a business and as such, any income that you earn from your investment properties is tax deductible, as are any capital gains on property.

Make your own decisions

Controlling your super contributions and investment choices means that you can select the assets that best suit your property goals.

You can plan your retirement effectively by managing your funds in accordance with your own investment plan.

Those that have some investment knowledge can use this to their advantage, identify risks in the property market and capitalise on opportunities to buy and sell profitable real estate.

You can set up the SMSF in a structure that suits you, as long as it complies with all legislative and regulatory frameworks.

A fund for mutual benefit

Setting up your own fund means that you can choose the 1-4 members that form part of your SMSF.

This means that you can collectively combine resources to achieve your financial and investment goals.

Members or their families can offer loans to the SMSF, helping to increase liquidity in the fund.

This way, you can all mutually benefit from any profits made, for example, rents received from a duplex or unit bought by a fund that consists of family members.

Pension income

If the fund members are receiving a valid pension, a SMSF allows you to offset any tax. This may include an Account Based Pensions inclusive of Transition to Retirement Pension.

If you are over the age of 60 and are a member of a SMSF, you will not be required to pay any tax on your pension! This could save you thousands of dollars every year.

To find out how you can save on tax for your SMSF, please enquire online today. Our specialist SMSF experts have the experience and knowledge to provide you with the right advice for your situation.

The SMSF assets

A variety of personal assets including property, can be transferred into your SMSF.

This will increase your super funds ability to borrow and invest.

Depending on the needs and investment goals of the members in your SMSF, you can put your money into any investment type that you wish.

Investment options

A SMSF can invest in residential or commercial investment property, shares or any other assets such as art or collectibles (however there are separate, stricter rules that deal with these types of investments).

There are few restrictions, provided that the investments are entered into and the fund maintained for the sole purpose of providing a benefit to members upon retirement.

For more information on the investment limitations of a SMSF, please read our What Can A SMSF Invest In page.

How do I know if it’s right for me?

Starting a SMSF means greater investment freedom and flexibility. It allows you to take control of your superannuation and make decisions as to how you will use your funds, with the ultimate goal of benefiting members upon retirement.

However, as it is self-managed, there is quite a large body of regulation that needs to be adhered to. The Australian Taxation Office (ATO) is one department that heavily penalises non-compliance.

Therefore, those that start up a SMSF must be willing to accept the responsibility that comes with managing a fund.

These include all reporting and administration duties as well as general duties that relate to operating the SMSF and the conditions that warrant the release of funds.

To find out what duties and obligations you need to comply with under your super fund, please enquire online and we will contact you as soon as possible to discuss your situation.

Getting the most out of a SMSF

If you have a large investment portfolio or own a small business, a SMSF may be the right choice for you.

However, there are hefty administration costs involved, so managing your own super fund is only really profitable if your assets are more than $100,000.

Otherwise, it may not be the most cost effective way to manage your super.

Still can’t decide? Speak to us!

We are the experts in helping individuals, groups and families set up a SMSF that complies with regulation and helps the members make sound and informed investment decisions.

If you would like to speak to someone about setting up a SMSF, please call us today or enquire online.

Note: this website is for informational purposes only and should not be substituted for professional financial or taxation advice.