Superannuation is a complex area and the law imposes some responsibilities and duties on Trustees. To ensure your SMSF continuously complies with the legislation, it is recommended that you, as Trustee appoint a professional to assist with the administration of your fund.
Whilst there are costs associated with this, the cost of non-compliance can be significant with tax rates of 45% being levied against certain income that is deemed “non-arms length” or if a fund is determined to be non-complying.
The best strategy is to ensure you seek advice before entering into any investments such as property, collectibles and other unusual investments.
Effort of Running a SMSF
Some effort is required on the part of Trustees, particularly in the initial set-up stages of establishing and initially investing the Superannuation fund’s monies. Your retirement funds are too important to just leave without periodically reviewing your investments.
However all these issues can be assisted by experienced professionals who can guide you through the set-up process and the ongoing investment and compliance process.
We are an independent family owned business that has specialised in Self Managed Superannuation (SMSF) for more than 30 years.
This is one of the most important benefits of a SMSF. Because the members of the fund are also the trustees, the members control and run the Superannuation Fund. Being in control of your Superannuation is especially important because Superannuation can help you to achieve financial independence. With a SMSF you can control the investment decisions and can more easily monitor how these investments are performing for you.
All Superannuation Funds incur fees and charges. The amount of fee charged over a long period of time can make a real difference to your retirement income.
Many Superannuation funds charge clients a percentage based on their assets held. The resulting dollar amount of fees charged on a large Superannuation benefit can be very significant. For example, on a superannuation balance of $250,000, being charged 1.5%, translates to fees of $3750.
SMSF’s are very cost efficient for funds with assets over $100,000 and can be cheaper than the cost of using a fund manager. Because the fees charged to SMSF’s are generally fixed costs, (i.e. not based on a percentage of assets) running a SMSF becomes more cost effective the higher the assets of the SMSF are.
Your SMSF’s portfolio can be tailored to suit your individual requirements and risk profile. You can achieve the right balance between income and growth assets.
Full knowledge of Investments Held
Because the members, in their capacity as trustees are controlling the investment decisions of the fund, you know exactly where your money is invested. Subject to having a properly formulated and documented investment strategy, you can consider a broad range of investments. If you perceive investment opportunities within the market place, you have the flexibility to take advantage of these as they arise (assuming your fund has the necessary liquidity and the asset is an allowable asset of the fund).
Whilst there are certain restrictions on investing in SMSFs, provided trustees have a well formulated investment strategy, a broad range of investment options are available. Funds can invest in managed funds, direct shares – Australian and overseas, unit trusts, fixed interest and bonds. They can also invest in instalment warrants, options and other derivative products.
Unlike other Superannuation structures, a SMSF can also invest in Business Real Property, and certain other real estate property. (Proper advice on such investment should be sought before entering into any purchase contract for these investments.)
Life insurance, Total and Permanent Disability (TPD) and Trauma insurance are all possible within a SMSF. One real advantage of this is that the insurance premiums are paid for by the fund and are largely tax deductible to the fund.
The Alan Skerritt Consultancy
Windsor Holdings Pty Ltd (ACN 010 018 041 ABN 12 862 040 559)
(Incorporated in Queensland) Trustee
Whilst there are some disadvantages to having a SMSF, if you engage professionals, such as The Alan Skerritt Consultancy, to administer your fund, we can relieve you of some of the administrative issues associated with having a SMSF.