When trying to wrap your head around all the ins and outs of superannuation, there wouldn’t be many people that would put their hand up to say “That’s something I could do myself”. However, now more than ever people are switching to self managed super funds (aka SMSF) so that they have control over their retirement fund.
Each and every country is different when it comes to superannuation. Some countries don’t even have mandatory employer paid superannuation - but the good news story is that Australia does! When you decide to switch from a superannuation account provider (one that does all the work for you) to a self managed super fund, it will put you in control of your superannuation but, on the flip side will also make you responsible for a huge sum of money that will determine how comfortably you’ll live in your retirement.
Before you decide to open your own SMSF, it’s recommended that you have roughly $100,000 to make setting up your account worthwhile because of the cost involved to run it. Because all super funds (including SMSF’s) are legally required to be audited each year, the cost to have this done, along with your tax return is around $1600. The tax office also charges an annual $45 fee for regulating your self managed super fund.
The first step to managing your own super fund is getting your lawyer (or buying a standard template version) to draw up a trust deed and then applying to the tax office for the fund to be regulated and issued with an Australian Business Number and Tax File Number.
When you’re setting up the account, you’ll need to be named and act as a trustee, as well as any other members on the fund. By law, all members of your self managed super fund must be trustees, none of the members of the fund can be employed by another member (unless they're related), and you can't have more than four members. However, you can nominate a company as a trustee as long as the company directors and fund members are the same and you still meet all the criteria of only having four members and no unrelated employees.
Whichever way you look at it, a self managed super fund isn’t for everybody – but can work really hard for you if you’re willing to put in the time and administration required. Before you sign up for anything, it’s best to consult your accountant and anyone you know that manages their own super. That way you’ll be armed with the right knowledge and tools to make the most of your SMSF.
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Self Managed Super Funds give you total control over how your superannuation is invested. Take control & establish your own SMSF today.
