Self-Managed Super Funds
There are more than 300,000 Self-Managed Super Funds (SMSF) in Australia the number continues to grow.
A SMSF is a superannuation fund with one to four members who are also the trustees responsible for the investment strategy and administration of the fund.
There are a great number of benefits for having a SMSF including:
- All income is taxed at 15% except for Capital Gains which is taxed at 10% if the asset is held for more than 12 months
- Complete knowledge and control of the investments
- Can borrow funds to buy property under new super fund lending rules
- Liquidity – recent analysis indicated that sometime in near future major retail & industry funds will experience payout difficulties.
- Funds may be frozen as you are not the owner of the assets only a member that has an entitlement. A SMSF eliminates this risk.
- Creation of tax free income stream once retired
- Ability to pool superannuation with spouse or friend.
However, there are also some disadvantages including:
- If the fund becomes a non-complying fund, 47 % tax is charged
- Must have a certain level of funds for it to be cost effective
- More personal involvement and responsibility