There are many advantages associated with having a Self Managed Super Fund (SMSF) compared to other forms of Superannuation. These include greater freedom and control, potential tax benefits and being more cost-effective. A SMSF is a regulated superannuation fund which has four, or fewer, members. Those members are typically family members or close associates. The members of the fund are also the trustees of the fund (or directors of the trustee company) and, therefore, have the freedom – but also the responsibility – to make all of the decisions relating to the fund.
Isn’t it time you took control of your Super?
An SMSF gives you more control over how you manage you own Superannuation. If you’re thinking about investing in property, but don’t have enough funds to make an outright purchase, you may be interested to know that it’s possible to borrow money through a SMSF and receive many of the same benefits as traditional property investments.
What are the benefits of using a Self Managed Super Fund?
A common reason for choosing to set up a SMSF is that the trustees want to be able to control the investment of their superannuation savings. While the power to choose investments for the SMSF resides with the trustees, care needs to be taken to ensure that the trustees meet the relevant superannuation laws in terms of investment choice. Generally speaking, a SMSF can invest in a wide range of investments; including shares, overseas assets, and property.
A SMSF can be a flexible, targeted and tax-effective vehicle to provide lump sums or income streams to a member’s spouse and/or eligible children when the member dies – and it allows members to control the process. Importantly, a member’s SMSF estate planning strategy resides outside the member’s will. This is not known to many SMSF trustees who forget to put in place an SMSF estate plan and, thereby, are potentially missing out on highly valued taxation concessions and opening the deceased member’s benefits to legal challenges and, in some cases, the Public Trustee.
The cost of managing your own superannuation fund can be lower than a traditional retail fund, depending on its size, the complexity of the investments and how it is managed. Indeed, for larger funds there can be significant cost advantages. The Australian Tax Office reports that the majority of SMSFs in Australia have total operating expenses of 1.10% (as at 30th June 2015).
A SMSF provides a flexible platform within which to manage the members’ taxation liability. This might, for example, be through the selective investment of high franking dividend stocks and capital gains tax minimisation through the transfer of assets to pension phase, where they become tax free. These features are generally not available in retail superannuation funds.
A SMSF provides the opportunity for up to four family members to belong to the same fund. A Family Super Fund allows the aggregation and investment of a family’s superannuation funds and they provide a pool of assets to look after family members, including children, at the time of a member’s accident, sickness, permanent disability, death, pre-retirement and retirement. Family Super Funds also allow you to consider how you might pass down the benefits of the fund to your family by way of estate planning.