Self-Managed Super Funds ("SMSF") are superannuation funds managed by 4 or less members. SMSF Members are usually Trustees or Directors of a company where a corporate Trustee is used. SMSF's are used by families, close friends or business associates who wish to retain control of the Fund and decide how to manage its assets.
What decisions can the Trustees of an SMSF make?
Trustees of SMSF's can decide how to invest the assets of the Fund, formulate members' retirement strategies and pensions and determine details of the Trust Deed. It is advisable for Trustees to engage professionals such as auditors, accountants, lawyers and financial advisors to help discharge these duties.
Benefits of an SMSF
There are a number of benefits to having an SMSF, including:
- Greater Investment Choice:
SMSF Members can choose to invest in a wider range of investments such as property, direct shares and overseas assets. However, when doing so, members must make sure that they comply with the relevant superannuation legislation and regulations.
- Estate Planning
SMSF's provide a way to look after your spouse and children when you die. SMSF's are a tax-effective means of providing income payments or payments to a member's family upon their death. As state planning strategies are separate from members' Wills, tax concessions can be made. This also protects the estate of the Deceased from legal challenges and the clause of the NSW Guardian and Trustee.
- Taxation Planning
SMSF's provide an added advantage over retail funds as members can choose how to manage their tax liabilities. Strategies to limit tax include selecting investments such as high-franking dividend stocks and transferring assets to the tax-free pension phase of an SMSF.
- Cost Effective
Administrative and reporting costs can be cut by managing SMSF assets yourself. These savings are amplified for larger funds.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
