What Are Self-Managed Super Funds?

September 21, 2020

SMSF Auditor in Australia

If you have a lot of excellent and comprehensive knowledge of tax and legal matters, a self-managed super fund (SMSF) may be fit for you.

You need to recognize your legal responsibilities and the investments that you make because even though you employ experts to help you, you’re still the one that ultimately controls your own SMSF.

Do-it-yourself Super Fund

The word “Self-Managed Super Funds” basically means to create your own superannuation fund. Having an SMSF is gaining full control of your super – how it is invested and utilised. This has become a popular way of saving for retirement.

While SMSF merits a do-it-yourself procedure, it is absolutely incorrect to assume that managing a super would be as easy as 1, 2, 3. It is essential to note that you must be aware of the compliance requirements and regulations set by the Australian Taxation Office (ATO) and the Australian Securities and Investments Commission (ASIC).


What Is Really an SMSF?

The SMSF is a trust where assets or resources are kept and managed to provide future retirement income on behalf of up to four persons. The shareholders of an SMSF must be trustees of the fund or directors of the corporate trustee of the fund, subject to certain exemptions.

This private superannuation fund that you manage by yourself is regulated by the ATO.  All the 4 members must be trustees and are responsible for the decisions made about the fund. The decisions made in accordance with the super should be compliant with relevant laws.

The setup expenses and yearly operating costs can be high, so unless you have a high balance, it’s most value-effective.


What Is the Difference between an SMSF and Other Types of Funds

The main distinction between an SMSF and other types of funds is that typically the trustees are also the members of an SMSF. This implies that the SMSF participants are accountable for abiding with the super and tax laws.


What Are Its Benefits? 

The primary reason for setting up your own SMSF is the improved autonomy degree you have, as well as the option of investment and mobility. You are the fund’s director and thus make decisions about the investment strategy of your fund and the volume of assets held in your account.

With SMSFs’ customisability, you can invest in investments not available in the public super fund, though these investments need to follow certain limitations and restrictions.

This will be beneficial for all members as it can cater and suit to the various requirements of all members, from the set up to the wind-down of your account.

Ultimately, like all other super funds, an SMSF can be taxed at a lower rate. The highest tax rate for earning from an SMSF is at 15 percent. This lower tax rate is available only for SMSFs which are compliant to the rules implemented by the ATO, the Superannuation Industry (Supervision) (SIS) Act 1993 and the SIS Regulations.

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