Self-managed superannuation is a significant financial decision and one of the smartest
long-term wealth-building strategies you can implement.
Our ActOn team of experienced financial advisors assists clients with an end-to-end solution that helps establish their self-funded super annuation and take control of their retirement.
Is an SMSF right
What is a self-managed super fund in Australia?
Typically speaking, the members of a
self-managed superannuation fund (sometimes known as SMSFs) are also the trustees. So, in other words, members have a vested interest in the fund’s positive outcome. However, it also means they are responsible for adhering to superannuation taxes and laws. Don’t let that deter you, as this is where our experience really kicks in!
Setting up a self-managed super fund
Going down this path requires a thorough understanding of Australian superannuation taxation law. As a result, most people tend to appoint a financial advisor. For instance, did you know it is illegal to cash in your super fund early or use it to purchase assets? Our team is fully aware of the dos and don’ts of self-managed superannuation, and we’re here to expertly guide you through them.
Very broadly speaking, we would help you to:
Appoint your trustees
Create a trust and deed
Register the trust
Obtain an ABN
Open a bank account (there are strict SMSF bank account rules)
As your long-term wealth builders, we oversee the account's health and report annually on its performance.
Think about your SMSF exit
What do we mean by this? In a nutshell - life. This is ultimately a wealth-building stream for you - a major one! - and no matter how well you plan, life can throw curveballs. No trustee is immune to death, and divorce can come out of the blue for many. We’re here to help you map out where this path might take you and other trustees and how you can accommodate or prepare for potential twists and turns along the way. Eyes wide open.
Is a self management super fund right for you?
This is a significant wealth-building strategy and a valuable one. It can be life-changing in terms of the quality of your retirement. We’re here for a no-cost, no-obligation chat about all the benefits potentially available to you, so let’s chat!
Structure personal insurance cover
Areas we can assist
Meet and maintain
Arrange trust deeds
Develop investment strategy
Why work with us?
Strong industry relationships
Access to our in-house specialised SMSF lending team
Live performance updates
Ongoing account keeping and management
Highly experienced and qualified advice team
Integrated reporting and accounting software
Access to our property research team
Highly experienced and specialised team
A self-managed super fund or SMSF is a self-managed private super fund, and vastly different to more common industry and retail super funds. It’s a great way of managing your retirement savings and investments effectively and with greater flexibility. When you open a self-managed super fund in Australia, you become a super fund trustee. An SMSF is now allowed to have up to six members, all of whom take on the role of trustees of the fund. You also have the option to get a corporate trustee.
As a trustee, you are responsible for adhering to self-managed super fund rules, including all legal and regulatory requirements. You also have control over all the assets of your SMSF, including investments and insurance.
Benefits of a self-managed super fund
With proper planning, there are several self-managed super fund benefits that can help build your net of future savings. These include:
Control of Investment
A key benefit of an SMSF is the freedom to choose which investments you’d like to invest your money in. As a trustee, this means you have total control over your super. There are a number of self-managed super funds for property investment and a range of other savings goals. These include direct shares, collectibles, term deposits and cash. Trustees can also make speedy changes to fund investments based on market conditions and sound financial advice.
invest in property
Trustees of an SMSF have the opportunity to borrow money through a limited recourse loan, which they can use to buy substantial single assets like commercial property. In general, SMSF members can get a limited recourse loan amounting to 60 to 70 percent of the investment property value.
A self-managed super fund provides you with a tax-effective means to accumulate assets for retirement while also funding your retirement. An SMSF also gives you more flexibility in terms of contributions compared to other superannuation structures. You can decide on the timing of contributions, allocation of earnings to certain members and setting aside ‘reserves’. With this kind of flexibility, you can minimise the overall amount of tax SMSF members need to pay within the fund based on their unique circumstances.
When the time comes for you to move from the accumulation phase to the pension or retirement phase, an SMSF allows for the seamless transition from one stage to another. There would be no need to sell down your super fund assets (which would trigger capital gains tax and other transaction fees) and repurchase new assets for your pension. What happens instead is that you keep your investments and simply start drawing down on your SMSF balance as a form of income. This way, you avoid or reduce various transactional expenses, such as brokerage fees, buy-sell costs and CGT.
While the Australian superannuation system already provides estate planning benefits, an SMSF offers more control and flexibility in a member’s estate plan. Super benefits are usually not considered part of your estate, so they are dealt with separately and are not subject to concerns or issues associated with estate administration. With an SMSF and the right strategy, you are assured that the funds you want to transfer to your dependents go to the right people in a tax-effective way, at the right time. Moreover, a complying SMSF technically has an unlimited life span. This means that both asset management and the payment of benefits to named beneficiaries can continue even after the death of the concerned original SMSF trustee or member.
For a lot of people, asset protection is a key consideration, particularly for business owners. Superannuation, in general, protects members from litigation and bankruptcy. For example, it would be a better, financially sound decision to buy an investment property within an SMSF rather than with your own personal name. Also, when your business venture fails, you may end up only with your superannuation balance because it is protected from litigious claims. However, you cannot use it to keep your struggling business afloat, as it is intended for your retirement.
How to set up a self-managed super fund
When setting up a self-managed super fund, you need to be aware of the following essential steps:
Get professional assistance
Although an SMSF is ‘self-managed’, you need the expertise of various professionals to set it up and running. This includes ensuring you adhere to reporting and administrative obligations with the Australian Taxation Office (ATO). You may need the help of a financial advisor, accountant, tax agent or administrator to help you stay on top of all SMSF-related tasks and responsibilities. As much as possible, choose to work with professionals or service providers with significant SMSF experience.
Consider your trustee structure
Will you be the only member of your SMSF? Do you want an individual or a corporate trustee structure? Individual trustee structures have SMSF assets registered in the name of each trustee or fund member. In a corporate trustee structure, the SMSF members act as directors, with all assets registered under a company acting as the trustee. Both structures have pros and cons, and you need to weigh these carefully to end up with the right structure.
Draft, sign and date a trust deed
The SMSF trust deed is a legal document outlining the guidelines or rules of managing the fund. It also lists all members or trustees who need to sign and date the final trust deed. You also need a trustee declaration, which highlights the obligations of all trustees as per ATO regulations.
Register your SMSF
Once all the required documents are ready, you can register your SMSF with the ATO. You must do this within 60 days. You’ll need to provide the name of your SMSF, its opening date and all trustee names. You can register for an Australian Business Number and Tax File Number. You should also elect the ATO to regulate your SMSF via the Australian Business Register.
Open an SMSF bank account
Lastly, you’ll need to open a bank account in the name of your SMSF, separate from any member’s personal bank account. You will use this account for cash flow transactions, such as paying for SMSF expenses and receiving returns on investment in the form of rental income from your self-managed super fund property.
Set up your self-managed super fund with ActOn Wealth
At ActOn Wealth, we’re experts in self-managed super funds with an understanding that each person's investments require a tailored approach. We have a great reputation with our clients, who trust our award-winning financial advice to create and manage their wealth. If you need assistance setting up a self-managed super fund, please contact ActOn Wealth and our team can provide guidance on how to diversify your investment portfolio. Give us a call or arrange an appointment online to book in a no-obligation consultation.