Self-Managed Super Fund: What you Need to Know.
It’s always a good idea to think about your retirement. Many people in Australia use a Super Fund to manage their retirement savings. But some people opt to do something a little different and set up a self-managed super fund (SMSF).
What is an SMSF?
At a basic level, setting up an SMSF means creating a trust which has either individual or corporate trustees. These trustees manage the fund assets and look after legal compliance, including auditing and reporting obligations.
For people prepared to look after the legal and financial elements of running a fund, entering into an SMSF can mean more control over how funds are invested, fees paid, and what insurance is taken out.
What is the purpose of an SMSF?
Any SMSF must have the same purpose. That is, to provide retirement benefits for fund members and their dependents. Any decisions made by trustees must be in line with this aim. Using the funds of an SMSF for anything else isn’t just unethical but is actually illegal.
An SMSF isn’t for:
- Early access to superannuation
- Investing in art or collectible for decorative purposes or personal use.
- Buying holiday homes.
Read more about starting an SMSF
Becoming a trustee
One of the main differences between an SMSF and other types of funds is that the members are also the trustees in an SMSF and assume the compliance risk. If the SMSF has breached the law, the trustees or the director can be personally fined.
In addition, if there are disputes between the members, the ATO will not become involved. If the situation is serious enough, mediation or court may be an avenue, but these routes will be at the members’ expense.
Understandably, the decision to become a trustee is a major one and needs careful consideration and professional consultation.
Updates to SMSF fund structures
Changes on 1 July 2021 mean that SMSFs can now have a maximum of six members, an increase from four. It’s important to note that as an SMSF is a type of trust, the number of trustees may still be restricted to less than six by existing state and territory laws. As always, it’s a good idea to seek professional advice before structuring your fund.
We recommend you speak to one of our advisors to help you determine whether a self-managed super fund might be right for you.