Setting up a Self Managed Super Fund
What is a self managed super fund?
Self managed super funds (SMSFs), also known as DIY funds are the fastest growing sector of the superannuation industry. Many individuals and families are actively seeking to manage their own superannuation to reduce costs, provide flexibility and increase control over the realisation of their retirement goals.
In general a super fund will be a SMSF where it meets the following conditions:
The fund has fewer than 5 members
Each member of the fund is a trustee
Each trustee is a fund member
No member of the fund is an employee of another member (unless related)
No trustee receives any remuneration for his or her services as a trustee
An SMSF can also have a corporate trustee where each member of the fund is a director of the corporate trustee and each director of the trustee is a member of the fund.
The trustee rules vary slightly for single member funds:
- The member can be an individual trustee together with another individual that does not employ the member (the employment test does not apply where the individuals are related) or
- The member is a sole director of the corporate trustee or
- The member is a director of a corporate trustee together with another person that does not employ the member (the employment test does not apply where the individuals are related related)
- Funds that meet the definition of an SMSF are regulated by the Australian Taxation Office.
How much superannuation do I need to have my own SMSF?
ASIC recommends a total minimum fund balance of $200,000 to be cost effective. You can start your fund with less than this amount provided you intend to make sufficient contributions to bring the fund balance up to $200,000 within the short term.
What are the benefits of a SMSF?
Some of the benefits of having your own SMSF include:
- Increased flexibility over investment choice and allocation
- Greater flexibility with regard to the structuring of life insurance
- Greater flexibility and control over lump sums and pensions on retirement
- Greater flexibility over estate planning
- Increased control
- Lower annual running costs where you have at least $200,000 in the fund
- Able to pool funds with other members to purchase a large asset such as property
- Ability to own your business property through the fund and lease to a related party
- Able to transfer personally owned listed shares into the fund
- Now able to borrow provided specific restrictions are complied with
- Contributions and income of the fund are taxed at the concessional tax rate of 15%. Income of the fund is tax free once a pension is being paid.
- Asset protection
SMSFs are subject to stringent regulatory requirements which means they aren’t suitable for everyone. Please contact our office if you would like to further discuss whether an SMSF might be suitable for you.
How much does it cost to set up?
The total cost to set up the fund is $495 including GST. This includes trust deeds, minutes and resolutions, member applications, trustee consents, investment strategy and Business registrations (ABN, TFN, Complying fund registration, GST and PAYG if applicable). We will also provide you with the forms and instructions for arranging rollovers from your existing funds.
We also provide you with copies of the ATO publications Roles and Responsibilities of Trustees and SMSF Key Messages for Trustees as part of your new SMSF Package.
We offer a complimentary 60 minute meeting with us to ensure your understand your responsibilities as a trustee with each new SMSF set up. Click here if you would like to arrange an appointment.
What are the ongoing running costs?
The ongoing costs of running the fund include the annual ATO SIS Levy of $150 plus annual administration and audit costs of $800 + depending on the size of the fund. Please refer to the fee structure section of our website for an estimate of the likely administration costs for your fund.
How to find out more
To find out more about SMSFs please do not hesitate to contact our office on (07) 3808 9990 or click here to contact us on line.
You should also read our Step By Step Guide to Setting Up an SMSF.
The information on this website is intended for general information only, contains general advice and has been prepared based on the current taxation and superannuation laws. No person should rely on the contents of this website without first obtaining advice specific to their circumstances from a qualified professional.