Self-managed super funds (SMSFs) are a way of saving for your retirement. It’s a superannuation fund with 6 members or less, most cases a SMSF will consist of family members. Managing your own super is a major financial decision, you need to be certain that you have knowledge, understanding, time and skills to do it. The trustees are responsible for the management of the SMSF, fund’s investment strategy, administrative requirements, and tax obligations.
SMSF provides greater investment, taxation, and estate planning flexibilities to retail or industry superannuation funds. It’s becoming increasingly popular and while more people are embracing the SMSF it’s worth noting that there are considerable number of rules and regulations. An SMSF has many benefits, but these benefits do come at cost.
SMSF can have either individual trustee or a corporate trustee, having individual trustees is a lower costs option, but then can expose the funds to greater asset protection risk, adding and removing members becomes more difficult. Having a corporate trustee provides makes the process of adding and removing members much easier, setup costs and ongoing costs are more expensive.
Advantages or benefits of having SMSF,
Become attractive to small business owners or the self-employed as a commercial property can be purchases by their SMSF. The property can be rented to their business. Also, as a member of the funds managing your own super investments directly allows you to make quick adjustments regarding the portfolio. Being both the trustee and member means you will be more aware of how your super monies are invested.
Disadvantages of SMSF,
When you ‘self-manage’ your retirement savings you take on the responsibility of all investment decisions. As a trustee need to make sure that there is a reasonable understanding of investment options and making good decision when it comes to retirement savings for yourself and other members of the SMSF.
If you considering establish SMSF, the best starting point is to consult qualified accountants as their experience and knowledge will help you to decide whether to take SMSF in future.
Feel free to contact Lana and her team at Matovic Business Accountants if you would like to discuss weather SMSF is for you.
Email us at info@matovicaccounting.com.au or call (07) 3557 5721.
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