Self-Managed Super Fund

What is a Self-Managed Super Fund?

A self-managed super fund (SMSF) allows members autonomy, versatility, and discretion over how they spend their retirement funds.

There are many Australians who are now members of such funds, and for good reasons. An individual may choose to adopt an SMSF due to their existing public fund performing poorly. They may also choose one if their financial planner’s or accountant’s advice isn’t quite cutting it anymore. 

So now, let’s delve a little deeper into what a self-managed super fund is all about. 

SMSF Rules

SMSFs exist to provide members with retirement benefits or benefits to dependents if members die.

Individuals can create a self-managed super fund by making a trust with either corporate or individual trustees. Trustees manage SMSF assets and are accountable for the fund’s continued compliance with tax laws and superannuation. Annual audits, reports, and tax obligations to the Australian Taxation Office (ATO) are all part of the compliance.

SMSF Membership

A self-managed super fund’s trustees must be all of its members. Every SMSF member becomes a company director if the fund decides to utilize a corporate trustee. You also need to register the company with the Australian Securities and Investments Commission (ASIC), and every director has to have membership of the SMSF to which it belongs.

An SMSF can have six members or trustees or fewer as of July 1, 2021. This is a change from a maximum of four previously.

An individual must consent to be a trustee, acknowledge their obligations, and sign a trustee declaration to qualify as a member. SMSF members and trustees are unable to:

  • Have bankruptcy status
  • Have a previous disqualification from an SMSF
  • Have employer or employee relationships with other members, unless they are family members
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Members younger than 18 years of age can join an SMSF if overseen by a trustee who pledges to act in their best interests. Often, this is a guardian or parent.

How Do SMSFs Work?

Trustees make investment choices on behalf of SMSF funds. Documented investment strategies are a regulatory requirement for an SMSF.

You must meet the sole purpose test with this investment plan. It should be utilized to drive trustee decisions.

SMSF Benefits

There are a number of benefits for anyone who is considering an SMSF, including:

  • More tax flexibility
  • Better control over investments
  • The possibility of lower fees for higher balances
  • More member death benefits 
  • Strong asset protection

There’s a lot more information on SMSF structure to look into if you are interested in the concept.

A Super Fund Might Be the Right Choice

For many Australians, a super fund is the path forward to meet their investment needs. If you follow the rules and are confident in your investment choosing abilities, a super fund is a liberating way of managing your money.

Thanks for checking out this quick guide. If you found it helpful, why not check out our blog for more insightful tips and advice?