A Self-Managed Super Fund (SMSF) can give you transparency, greater control, and autonomy over your investment choices. Greater control over your retirement decisions, and transparency of knowing where your money is invested. The investment choices through an SMSF are endless and the ability to make your own investment choices adds certain freedom that may be appealing to the savvy investor. To take advantage of this freedom of choice – you also need to understand the responsibilities of running your own fund.
As a trustee you are ultimately responsible for the fund being compliant, being invested for the sole purpose of the members’ retirement and making sure that you have complied with the vast array of legislative requirements. The ATO has an extensive guide on running an SMSF that you can download here.
In order to set up an SMSF, you will need to talk to a Financial Planner. A Financial Planner will guide you through the advantages, disadvantages, risks, and responsibilities to understand if an SMSF is right for you. The legislation changed in July 2016 and your Accountant can no longer give you personal advice around establishing an SMSF. Once you have decided to go ahead with an SMSF your Accountant can assist with setting up the structure and can provide the ongoing compliance support.
Here are the initial steps to consider when setting up an SMSF
- Choosing a structure – individual or corporate trustee
- Setting up a trust deed – the legal document that outlines the rules and objectives of the fund
- Sign trustee declarations, set up an ABN/ TFN and register with the ATO
- Open a bank account – the fund will need a cash account in order to receive contributions, rollovers and investment earnings
- Set up an investment strategy – outline the fund’s objectives by stipulating how much will be invested in each asset class – ie property, shares, cash. Ensure that the investments are within the guidelines set out by the ATO.
- Consider risk insurance – the trustees are required to consider if personal insurance is appropriate for its members
- Accept rollovers and contributions
- Appoint professional advisers – to adhere with compliance and legislative requirements the fund will need to appoint an Accountant and Auditor and for investment and strategic advice, a Financial Planner
- Death benefit nominations – how your benefits will be passed on to your spouse or children or beneficiary of choice
- Continue to review your investment strategy each year to ensure it remains relevant
Superannuation may be one of your biggest assets outside your family home. Gaining comfort around your financial future is crucial. Setting up an SMSF may, or may not, be the right option for you. It certainly isn’t the only option available. They key is to engage in the decision-making process and educate yourself, so you fully understand the role and responsibilities you take on when becoming a trustee. Talk to us for more information.
General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.
Aptus Financial Pty Ltd is an Authorised Representative of Count. ‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited, ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 (“Count”) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited.
Author: Simone Murad