Self Managed Super Funds (SMSF’s) Review22nd Oct 2014
A Self Managed Super Fund can offer members greater control over their retirement savings than other types of superannuation funds such as industry or retail super funds. The difference between a SMSF and other types of funds is that the members of a SMSF are usually also the trustees. This means the members of the SMSF run it for their own benefit and are responsible for complying with the super and tax laws.
Self managed superannuation funds (SMSF) are not suitable for everyone. Their appropriateness will depend upon the monies available for investment, and the skills and abilities of the proposed trustees/members.
Please contact the team at Simeoni in relation to SMSF suitability for your specific requirements or if any further information is required.
The below table summarises some of the advantages and disadvantages of SMSF’s.
|1. Control & Scale||1 .Responsibility|
|Complete control over the fund’s investments including those held outside superannuation.
Ability to pool your resources with up to 4 fund members with similar financial objectives, such as family members. A corporate trustee will be required for single member superfunds.
All decisions and responsibilities associated with managing the fund rest with the trustee. All superannuation funds have to comply with certain rules and certain deadlines.
As a trustee, you’ll be responsible for making sure the fund meets all legislative requirements on time. Any breaches of government regulations may result in your fund’s assets and income being penalised at the top marginal tax rate and in extreme cases the trustee being fined.
|2. Flexibility||2. Limited Ability to Diversify Investments & Time Consumption|
Flexibility to invest in a range of assets including bank deposits, property, shares, managed funds, art, collectibles and pooled investment trusts amongst others.
These investments can be modified or switched.
Personally owned listed shares, business real property and managed funds can also be transferred directly into your superannuation fund.
You may not have sufficient money in the fund to diversify your investments.
The investment performace of the fund needs to be monitored. These tasks could be simplified by investing in managed/pooled investments which are managed by experienced fund managers. Ongoing Management and administration of the fund’s investments can also be time consuming.
|4. The Fund Can Go on After Your Death||4. No Access to Superannuation Complaints Tribunal|
The fund can provide benefits to you, your spouse and even your children and can continue after your death.
A SMSF can be passed on tax effectively to dependant beneficiaries.
As SMSF member you are not able to bring complaints or disputes to the Superannuation Complaints Tribunal.
Instead you must have any matters heard by the Courts which may become expensive and result in delays.
|5. Cost Savings|
|The greater the account balance of the superfund, the more cost effective is the SMSF.|
|6. Tax Concessions|
The credits from franked dividends can be used to reduce the 15% tax rate.
Capital gains in a superfund are eligible for CGT Discount.
The fund can provide tax concessions such as the deferral of lump sum tax in the pension phase.
|7.Structure Flexibility & Tax Effectiveness|
Ability to roll the fund into an account based pension or transition to a retirement pension and still retain investment flexibility and control over the funds.
This includes not selling asset’s with high levels of capital gains until retirement when the SMSF would commence a pension, hence being able to make the most of the capital gains tax free nature of assets sold in the pension environment.
|8. Advantages for Small Business|
|The ability to own business real property in your superannuation fund, to assist your business cashflow.|
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