Self Managed Super Funds in Australia

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.

Advantages of Having a SMSF

• 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
• Flexibility
• 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.

Disadvantages of Having an SMSF

• 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

Why Choose Griffiths Advisory for SMSF

Here are some reasons why you should choose Griffiths Advisory to set up your Self-Managed Super Fund or SMSF based on our clients’ testimonials:

• We will help you understand the whole process so that you can have full control over your hard-earned funds.
• You will learn how to monitor super funds in the Australian shares market.
• We will help you get rid of unnecessary and hidden costs in your super funds.
• You will learn how to set up loans in SMSF for other investments.
• We provide reasonably priced setup fees.
• We value professionalism over everything else.
• We’ll keep you updated on compliance requirements.

FAQs

What Can I Do With My SMSF?

In a gist, you can accumulate wealth for retirement through your SMSF. This is possible by:

• Investing in properties, shares, cash, managed funds, or term deposits
• Receiving contributions from your employer
• Combining super fund balances
• Paying life insurance, income protection insurance, or trauma insurance from your SMSF
• Setting up payment for your pension
• Allotting lump sum money you can withdraw upon retirement and use where needed
• Having tax-free earnings from your SMSF

How Long Does It Take to Set Up SMSF?

Setting up SMSF may take 4 to 6 weeks because the process needs to be carefully thought of and planned. See below for an overview of the whole process.

1. Assessing your current financial status with the help of a licensed adviser. This step allows you to determine if SMSF is the right financial decision for you. It will also help you decide on the investment and insurance strategies for your fund.
2. Preparing and signing a Statement of Advice (SOA). After agreeing on a strategy for your SMSF, your financial adviser will prepare a Statement of Advice (SOA), which will serve as official documentation. Signing it will officially commence the setup of your fund. A SOA outlines the following details about your SMSF: Investment strategy including, risks and returns, payment obligations, liquidity requirements, investment diversification. Type of insurance and coverages.
3. Setting up your SMSF. You need to name your fund and nominate a trustee. The latter is usually a company you create and register an ABN, ACN, and ASIC for. Note that your fund should also be registered with a TFN with the ATO.
4. Setting up a bank account for your super fund. Most banks do not have an account keeping fee for SMSFs, but do check to be sure. You will also use your bank account to rollover super from your other funds. Most banks also provide immediate online access to new accounts. Still, place a request to be sure. It shouldn't take more than a day.
5. Starting your investment. Once all setups are done, including a broking account, you can start investing in managed funds, shares, properties, or term deposits.

Do SMSF Pay Capital Gains Tax?

SMSF income is generally taxed at a concessional rate of 15%, according to the Australian Taxation Office. However, your fund must comply with the requirements mandated for SMSFs to keep this rate. Those that are non-compliant receive a higher capital gains tax.

Can I Borrow Money from My SMSF?

Loans are allowed on SMSFs, but the ATO does not have a fixed set of guidelines as to what types of loans can be granted. It’s still best to seek professional advice before borrowing money from your fund.

Related Content:
• Can You Use Self-managed Super Fund To Purchase Business?
• How Much Money Do I Need For Self Managed Superfund?
• Can You Withdraw Money From Self-Managed Super Fund?
• Understanding Your SMSF: What Can You Use Your SMSF For?