What is a SMSF?
Scott Associates advise and support on establishing and running your SMSF
The main difference between a Self Managed Superannuation Fund (SMSF) and other types of funds is that members of an SMSF are its trustees. SMSF members run their fund for the sole purpose of providing retirement benefits to the members.
If you set up an SMSF, you become a trustee of the fund (or a director of a company that is a trustee). You are responsible for managing the fund according to the trust deed (which must be drawn up) and the laws and rules that apply to SMSFs.
SMSF investments must be separate from the personal and business affairs of fund members. You will need good advice and strong support from your accountant and other professionals.
Why set up your own SMSF?
It gives you greater control and flexibility with your investment portfolio.
Setting up a self-managed superannuation fund (SMSF) is an alternative to investing in large superannuation (super) funds managed by professional trust managers.
SMSFs are set up solely to save for your retirement. Don’t set up an SMSF to get early access to your super, or to buy a holiday home to use or artworks to decorate your house. These do not comply with super law and severe penalties can apply.
What are the advantages of a SMSF?
Being a trustee of an SMSF gives you ?exibility to choose the investments for your fund. Options including listed shares, bonds, listed investment companies, exchange traded funds and direct property.
This flexibility allows you to adjust your asset and investment portfolios as markets change, adjusting to different risk profiles.
A SMSF gives you the option of transferring personally owned listed shares, business real property and managed funds directly into your superannuation fund.
What are the disadvantages of a SMSF?
Establishing an SMSF is a major financial decision requiring knowledge of Government rules and regulations—you need to have the time and skills to learn them. You will also need to get specific, professional advice from financial planners, accountants and solicitors on setting up and maintaining your fund.
Trustees have administrative obligations including arranging annual audits of the funds, keeping appropriate records and reporting to the Australian Taxation Office on fund operation.
Using individual or corporate trustee structure?
When starting an SMSF there are two options for establishing the trustees structure, one uses individual trustees the other uses a corporate trustee.
The key advantage of using a corporate trustee structure is that it protects the trustees from personal liability in the case of major losses or litigation in the case of disputes. Initially it is more expensive to establish but we believe it offers a better solution than individual trustees.
Can you include real estate in your SMSF?
Yes, you can transfer business real estate properties into your SMSF but not residential investment properties or your home that you own. If you own a property that has both business and non-business uses then you cannot transfer this property to your SMSF.
Before you buy or transfer a business property into your SMSF, make sure you understand and comply with the super laws concerning the transfer as well as the strict requirements for maintaining “arms-length” market rents, having legally binding leases in place and the restrictions on significant improvements.
The importance of SMSF professionals
The Australian Taxation Office (ATO) recommends that people establishing self managed super funds use SMSF professionals to help them set up and run their fund.
Using a tax agent on your SMSF
You need a registered tax agent. They prepare your fund’s accounts, annual financial position, operating statements, and complete and lodge your SMSF annual return. They provide tax advice and represent you in your dealings with the ATO.
Mark Scott is a member of the Self-Managed Super Fund Association of Australia (SMSFA) and is an accredited SMSF Specialist Advisor (SSA).
Using a Fund Administrator on your SMSF
A fund administrator will help you manage the day-to-day running of your fund and meet your annual reporting and administrative obligations. Mark Scott is a member of the Self-Managed Super Fund Association of Australia (SMSF Assoc) and is an accredited SMSF Specialist Advisor (SSA).
Using a legal practitioner on your SMSF
Legal practitioners are required to prepare and update your fund’s trust deed. Usually this is done through a Trust Deed Provider.
Scott Associates will advise you of suitably experienced SMSF lawyers and or Trust Deed Providers.
Using a financial advisor on your SMSF
A financial adviser can help you prepare an investment strategy. Scott Associates will advise you of suitably experienced financial advisors.
Using a SMSF Auditor
You will need to have a qualified and independent SMSF auditor to undertake an annual audit of the SMSF. Scott Associates will manage an appropriate SMSF auditor on behalf of the trustees.
Mark Scott is a registered ASIC SMSF Auditor but cannot undertake the audit where Scott Associates in involved in the administration.