A self-managed super fund (SMSF) is a type of superannuation fund that is managed by its members. It is a private superannuation fund regulated by the Australian Taxation Office (ATO). SMSFs are established for the purpose of providing retirement benefits for the members, who are also the trustees of the fund.
SMSFs can have up to four members, and each member is a trustee or a director of the corporate trustee. The members of the SMSF have control over the investment decisions of the fund and are responsible for managing the compliance requirements of the fund.
SMSFs offer a wide range of investment options including cash, term deposits, property, and shares. However, with greater control and flexibility, comes greater responsibility for managing the fund and complying with regulatory requirements, such as the Superannuation Industry (Supervision) Act 1993 (SIS Act) and the SIS Regulations. As such, it is important for SMSF trustees to seek professional advice and carefully consider whether this type of fund is appropriate for their financial situation and retirement goals.
Self-Managed Super Funds (SMSFs) have become increasingly popular in recent years due to the greater control and flexibility they offer over traditional superannuation funds. Some of the benefits of an SMSF include:
1 – Greater control: With an SMSF, you have greater control over the investment strategy, asset allocation, and investment decisions. This can be particularly appealing to those with a keen interest or expertise in investing.
2 – Flexibility: SMSFs provide greater flexibility in terms of investment choices, including the ability to invest in a broader range of assets such as property, direct shares, and even collectibles such as art or vintage cars.
3 – Cost-effectiveness: SMSFs can be more cost-effective for those with larger super balances, as the fees charged by traditional super funds can be relatively high, particularly when compared to the costs of running an SMSF.
4 – Estate planning: SMSFs offer greater flexibility and control over the distribution of assets upon the death of a member, which can be particularly important for those with complex family situations.
5 – Tax benefits: SMSFs can provide tax benefits, particularly for those with significant balances, as they offer greater control over the timing and structure of contributions and withdrawals, and potentially lower tax rates on investment income and capital gains.
However, it’s important to note that SMSFs also come with greater responsibility and require significant time and expertise to manage effectively. It’s important to seek professional advice and carefully consider the costs and benefits before deciding whether an SMSF is right for you.