Take Control of Your Future by using a SMSF (Self-Managed Super Fund)
Happy with the current balance of your superannuation account? Want more control over your future financial position? Want greater investment flexibility?
Australians have become increasingly frustrated with the poor returns of their industry and retail funds. When you read your current balance, you find that your superannuation contributions have been dwindled away with management fees and bad investment performances. Ask yourself, am I better off looking after my own future rather than relying on the so called experts?
SMSFs make up the largest sector in the superannuation industry and have generally performed better than industry and retail superannuation funds over the past few years.
What is a SMSF?
A SMSF is a superannuation fund established for 1-4 people with the fund being controlled by trustees/directors who are also members. Control is kept in the hands of the members and the members decide how the fund will operate and what investments the fund will invest in.
What are the advantages of a SMSF?
- Control: a SMSF provides maximum control over your superannuation assets and allows you the flexibility to decide how your fund is to operate.
- Investment Choice: the trustees have absolute discretion with respect to the choice and mode of investment.
- Taxation: a SMSF enjoys the lowest rate of tax of any entity structure in Australia. The fund pays a maximum rate of tax of 15% and may be reduced by offsetting other tax credits.
- Estate Planning: a SMSF can be structured to be used for efficient estate planning.
- Creditor Protection: a member’s fund assets are normally protected from creditors in the event of bankruptcy.
- Flexibility: trustees have the flexibility to make decisions with respect to changing market movements and options for retirement income streams.
- Capital Gains Tax at 10%: on assets held more than 12 months
- Franking Credit refunds: refunds of tax due to franking credits at 30% versus tax rate at 10%
- Cost efficient: if you have a sufficient balance it can be cheaper to run
The disadvantages of a SMSF include:
- Costs: ongoing cost to operate the fund may be prohibitive for members with small balances.
- Loans: trustees are unable to loan money to members or related parties as a SMSF must be used for the benefit of members or their beneficiaries on retirement, disablement or death.
- Time: there may be a burden on the time of Trustees to sign documents and manage the fund investments. However, may be reduced by using a specialist administration service.
Is a SMSF right for me?
A SMSF is best suited to those people looking for maximum control over their superannuation assets but are also willing to accept certain regulatory responsibilities placed on trustees of SMSF’s and to work at managing their investments.
SMSF's offer many advantages to small business owners and high net worth individuals. If deciding to set up a SMSF with less than $100,000, you need to consider ongoing administration costs. Ongoing costs are listed in our SMSF application preparation product
How long does it take and what is the cost of setting up a SMSF?
Once your signed application is received it generally takes around one week to establish a new fund. There is a one off cost of $1215 for the setup including legal fees and ensuring your fund is ATO compliant.
What is the Sole Purpose Test?
SMSF's must be maintained for the purpose of providing benefits to members upon retirement or to their dependents in the case of a members death before retirement.
What can a SMSF invest in?
The investments a SMSF can invest in are very broad. All investments held by the fund must be purchased with the intention of providing benefits in retirement for the members and are subject to the funds investment strategy.
There are certain regulatory limitations placed on SMSFs, such as borrowing to invest in assets, acquiring assets from related parties or investing in in-house assets.
The most popular investments are property, shares, managed funds and term deposits.
How do I transfer my other superannuation benefits to my SMSF?
Just contact your existing fund. They are required by law to provide you with a rollover form. You sign it and return it. They will then send you a cheque to be banked in your SMSF.
Overall business structure
A SMSF should be considered as part of your overall business structure.
Contact Empire Road Investments for an obligation free meeting to discuss if a SMSF is right for you. Click here to advise of a suitable time for us to call you