Self-Managed Superannuation Funds (SMSF’s)
Self-managed superannuation funds (SMSFs) are a popular topic of conversation at barbeques around the nation and while they carry some considerable benefits over traditional retail or industry super funds, they also carry greater responsibilities and obligations.
The difference between an SMSF and other types of superannuation funds is that the members of an SMSF are usually the trustees. This means that the members of the SMSF run it for their own benefit and are responsible for complying with Australian superannuation and taxation laws.
There are three parts to an SMSF, the trustee who is appointed under the trust deed to hold and invest the fund’s assets for the benefit of fund members, the fund which is a type of trust established under the trust deed with the sole purpose of providing retirement benefits to the fund’s members and lastly, the members who are the beneficiaries of the trust.
Advantages of an SMSF include having flexibility in relation to transferring assets, having greater control over how your money is invested, an SMSF may offer potential cost savings in comparison to other types of superannuation funds as well as allowing members to transfer assets directly into the SMSF instead of cash, these are known as “in specie” contributions.
Disadvantages of an SMSF include members being liable for all the decisions made by the fund even if you get help from a professional or another member for that decision. SMSF members do not have access to the Superannuation Complaints Tribunal to resolve disputes, these must be done privately. SMSFs are also not entitled to claim a grant for financial assistance from the Government/Regulator in the event of a loss of funds through fraud or theft.
In recent times legislation has been changed to allow SMSF’s to borrow in certain circumstances. Revolution Financial Advisers are able to assist trustees to identify these circumstances and provide advice around borrowing within an SMSF.
There are two main contributions which trustees can make into their SMSF being Concessional Contributions and Non-Concessional Contributions. Revolution Financial Advisers can explain these contributions and advise trustees on strategies to ensure they make contributions in the most effective manner.