A large number of average Australian’s are making the decision to establish their own Self-Managed Superannuation Fund (SMSF).
SMSF’s allow members to have additional control over their superannuation, additional flexibility and further investment options moving forward. SMSF’s have the ability to invest in a significantly wider range of investments (including property – and also the possibility of borrowing to acquire property). SMSF’s can also be used as an effective Estate Planning tool.
What is a Self-Manged Superannuation Fund (SMSF)?
A Self-Managed Superannuation Fund (SMSF) is a trust where money or assets are held and managed on behalf of members to provide retirement income in the future. Essentially, SMSF’s are for family members and close business associates who wish to take more control of their retirement savings.
Briefly, a SMSF is defined in the following way:
- has 4 members or less;
- all members must be trustees and all trustees must be members (except for single member funds);
- where the trustee is a company, all members must be directors of the trustee company and all directors must be members of the fund (except for single member funds);
- no member of the fund can be an employee of another member unless they are related; and
- the trustee cannot receive any remuneration for fulfilling his or her duties as a trustee of the fund.
What are the advantages of establishing a SMSF?
For many people the greatest advantage of a SMSF is the greater control, flexibility and investment choice they provide. Through a SMSF you have:
- Greater control over the investment strategy for the fund
- A wider range of investment options such as direct property, small businesses and even art.
- A SMSF can be tailored to meet your own personal cicumstances in relation to estate planning.
- The ability to borrow via the SMSF to purchase an allowable asset.
- Member superannuation accounts can be taxed at a member level rather than at a fund level, compared to many retail master trusts and industry superannuation funds.
