A Self Managed Super Fund (SMSF) is a fund designed to hold and distribute retirement benefits for its members. These funds are controlled by their members, and may have no more than four members.

Why use an SMSF?

SMSFs currently hold 29.6% of all money invested in super by Australians*. The main attractions of SMSFs are that you have control over where your super money is invested, and they can help you create additional tax efficiencies and save on administration fees

* As at 1 September 2016, APRA report ‘Quarterly Superannuation Performance’ (released 22 November 2016)

What is the trustee’s role?

The trustee is responsible for establishing the trust deed, setting and maintaining the fund’s investment strategy, finalising reporting obligations, lodging APRA and tax returns, payment of levies and taxes, and compliance with APRA and Taxation Office laws and regulations. Trustees who are found to be in breach of these duties can be fined and, in extreme cases, jailed.

With an SMSF, there can be individual member trustees or a company acting as trustee. For individual member trustees, every member must be a trustee and all trustees must be members.

Where there is a company acting as trustee, all company directors must be members and all members must be directors.

How does an SMSF work?

An SMSF works much the same as a normal retail superannuation fund. It accepts contributions from members, and invests and manages those contributions and subsequent earnings.

It is responsible for paying tax and making payments to members who are retired (i.e. lump sums and pension payments).

There are also administration and accounting tasks which need to be completed to ensure all members’ records are correct, the correct taxes are paid, and the fund remains compliant with all relevant laws and regulations.

In which assets can an SMSF invest?

An SMSF can invest in any assets allowed for by the fund’s investment strategy. These usually include:

  • Managed funds, shares and property
  • Cash and fixed interest
  • Business real property.

What can’t an SMSF do?

There are restrictions on what SMSFs are allowed to do. There are some types of assets in which an SMSF cannot invest and/ or are limited on how much of the fund can be invested in them. Loans to members or relatives are not allowed.

The fund must be run to meet the sole purpose of providing retirement benefits for members.

An SMSF which contravenes the regulations risks being declared non-complying and losing its concessional tax status.

Does an SMSF have additional tax advantages that other super funds can’t give you?

Yes. As well as the usual tax advantages enjoyed by all super funds, an SMSF may also provide you with the opportunity to create additional tax efficiencies through the use of sophisticated strategies.

Who can be in your SMSF?

The fund can include relatives such as your spouse, children and/or parents (up to a total of four members). The main benefit is that fixed costs are shared by more members, thus creating additional cost savings.

What are the costs of running an SMSF?

An SMSF may have to pay fees for investments (e.g. brokerage), trustee services, accounting, administration and audits.

In general terms, an SMSF can be cheaper than a retail fund if the fund has more than $200,000 invested.

Call Invest4Life on (07) 5456 1355 to discuss your superannuation situation with our Financial Advisers.

Disclaimer: This information has been produced by Australian Unity Personal Financial Services Ltd (‘AUPFS’) ABN 26 098 725 145, of 114 Albert Road, South Melbourne, VIC 3205, AFSL & Australian Credit Licence 234459. Any advice in this document is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. You should obtain financial advice relevant to your circumstances before making investment decisions. AUPFS is a registered tax (financial) adviser and any reference to tax advice contained in this document is incidental to the general financial advice it may contain. You should seek specialist advice from a tax professional to confirm the impact of this advice on your overall tax position. Nothing in this document represents an offer or solicitation in relation to securities or investments in any jurisdiction. Where a particular financial product is mentioned, you should consider the Product Disclosure Statement before making any decisions in relation to the product and we make no guarantees regarding future performance or in relation to any particular outcome. Whilst every care has been taken in the preparation of this information, it may not remain current after the date of publication and AUPFS and its related bodies corporate make no representation as to its accuracy or completeness. Published: February 2017 © Copyright 2017