A Self-Managed Super Fund (SMSF) is a superannuation fund that is structured to provide benefits to the members upon retirement. This private fund is regulated by the Australian Taxation Office.
The striking feature which acts as a major difference between other Super Funds and the Self-Managed Super Funds is that the members of the funds are also the trustees. SMSFs can hold up to four members a fund.
How does an SMSF work?
The sole benefit of Self-Managed Super Funds is providing benefits in retirement to the members and beneficiaries on death. They can receive contributions and rollovers with the help of Tax File Number, Australian Business Number and other transaction details of Bank Account.
Every SMSF holder must:
- Know the role of trustee, which comes with some legal obligations attached to it.
- Devise a retirement strategy that is risk-tolerant and meets your retirement needs the best.
- Hold sound knowledge of investment and financial decisions.
- Research investments and manage the fund well.
- Organise insurance, income protection plan as well as total and permanent disability cover.
What is the trustee structure for Self-Managed Super Funds?
- Corporate Trustee – In this arrangement, the company acts as trustee for every member who holds the place of a director. This structure eases the registration task of the assets also provides the provision of administration efficiencies.
- Individual Trustee – Every member acts as a trustee, and a minimum of two trustees are required.
What are the responsibilities of an SMSF trustee?
As an SMSF trustee, the major responsibility you must undertake is making investment decisions and also making sure that the implementation of the investment strategy for the fund is well planned. Most trustees hence engage SMSF specialists who help them better manage auditing, accounting, and tax reporting along with other financial advice.
What are the costs involved?
SMSF funds consist of various costs. These are broadly divided into:
- Establishment cost – SMSF needs to established first, and for that comes the establishment cost. This is inclusive of obtaining a trust deed, signing a trustee declaration, and appointing a trustee. The setup cost can range from $345 to $990.
- Operating cost – SMSF like any other super fund comes with operating cost. This cost is majorly inclusive of investment, auditing, and accounting expenses. Operating cost in the accumulation phase amounts to a total of approx. $1,1,63 to $2,367.
- Ongoing investment costs- The cost is inclusive of:
- Annual ASIC corporate fee.
- Audit fees
- Annual ATO supervisory levy.
- Costs incurred for the preparation of tax returns and financial statements.
- Assistance with administrative tasks for the fund
- Insurance for SMSF members
- Evaluation of assets held by SMSF.
- Investment management costs – The cost of managing these funds for a meager portion of investments is necessary to pay. This amount varies majorly based on the size of the investment. SMSF with a balance of $500, 00 the annual management cost varies $208 to $714.
SMSF offers benefits upon retirement
Here are some of the benefits of managing your SMSF.
- SMSF extends a collection of investment options for you to choose from. Trustees may access direct shares, high-yielding cash accounts, direct property, unlisted assets, collectibles, and much more.
- Like every super fund, SMSF benefits from concessional tax rates too. Carefully resorting to tax strategies is sure to help grow super savings and administer significant reduction when a transition is made towards retirement.
- SMSF gives the freedom to multiple members to function on a mixture of accumulation and pension accounts. The market conditions are significantly changed to suit super rules and personal circumstances.
- SMSFs allow trustees to get in line with their personal goals and investment decisions. Your passion for property, shares, and ethical investment all becomes distinct and visible with SMSF.
- An SMSF allows a trustee to share the superannuation assets with three members. This consolidation of funds creates large fund balance which helps shoot up the assets of the fund and investment opportunities.
Superannuation fund seems the right choice for you, but you are unsure how to initiate the process, who to trust, how to gain the best? Fret not! Percept Financial Services is committed to extending customized solutions for both the employees as well as the employer. We strive to help people with investment opportunities and excellent superannuation backed up by outstanding service. Trust us, to stay with you through it all and help you reap the benefits for your investment.