Self-Managed Super 101

Self-Managed Super Funds (SMSFs) have become a popular way for Australians to control their superannuation. The basic requirements are that the fund must have between one and four members and these people are normally family or business related. All members need to be trustees (guardians of the money) and even if the fund is only for one person you still require two trustees, although a corporate trustee with only one director can be used.

SMSFs give members unique control of their retirement investments, which can mean greater comfort with superannuation as a retirement vehicle. For investors with at least $250,000 in superannuation (or likely to have that much fairly quickly) SMSFs are generally cost-effective to manage.

This style of super fund will suit more experienced investors who may fall into the following categories:

  • Investors capable of and interested in managing their own assets;
  • Executives and professionals who wish to take advantage of super choice offered by their employer or business structure;
  • Retirees who want to pay themselves a pension from a low-tax environment;
  • Family groups who want to take advantage of estate planning initiatives available via the SMSF structure;
  • Business owners who may own or are thinking of purchasing their premises.

Regulation and administration

Self-managed funds are regulated by law and there are strict guidelines to ensure that fund investments are made with a view to providing for the members’ retirement. Administration requirements include preparing tax returns, annual audits, minuting trustee meetings and development of an appropriate investment strategy. There can be dire consequences for non-compliance of the rules, including loss of tax deductions on contributions and heavy tax penalties on the fund and its members. Depending on the severity of non-compliance, a jail sentence can be a real possibility.

The establishment of your own fund is relatively simple with professional assistance. Once you take the time to understand the rules and opportunities it may be one of the best investments you make.

To explore managing your own super and determine if it would suit you, please contact us.

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