A self-managed super fund (SMSF) is a sort of private super fund that is created and managed by you having one to four members.Through SMSF, the contributions generated by you or received from your employer can go into your super fund and thereby eliminates need to opt for professionally managed super fund.
The SMSF members can contribute to the fund and benefit from the fund in retirement. SMSF is just like a trust run by trustees and can be started as per two SMSF trustee structures i.e. as a trust in which:
- Members are appointed as trustee in their individual capacity
- A company is appointed as the trustee, with all the members of SMSF becoming the directors of that company
In both cases the trustees whether individual or company, are not paid for carrying out their trustee duties.
Is a self managed super fund right for you?
Often people want to know whether SMSF is right for them or not. Setting up SMSF can be beneficial if you:
- Have sufficient knowledge and experience about investments
- Have a good understanding of financial markets.
- Have a large superannuation balance
- Wish to invest your superannuation in less conservative options
- Want to acquire full control over your superannuation investments
- Are willing to take or feel comfortable with a higher level of risk
- Can devote enough time to manage the fund
Responsibilities of SMSF trustee
A SMSF trustee is responsible for administration of fund, making investment decisions and implement investment strategies decided for the fund.As trustee, you will be required to maintain all necessary records of investments and provide financial statements for independent audit and tax return purposes.
Being a trustee, you will have complete freedom, flexibility and control over investments of your superannuation balance.A trustee will also be accountable for the day-to-day running of the fund so that you may benefit from the fund’s investment performance.
If SMSF is efficiently managed, you will be able to use the money generated through SMSF to help fund your retirement when you retire.
Who cannot be trustees?
For SMSF set up, you need between one to four members at any given time. Though not in all cases but more often than not, these members are usually from same family. SMSF can be started with members who are not employees of any member, unless related.
However, SMSF cannot have individual trustee or a director of a corporate trustee who have been:
- Convicted for an offence involving dishonest conduct
- Put through civil penalty under the superannuation legislation
- Insolvent or under administration for an un-discharged bankruptcy
- Officially disqualified from becoming a trustee
It is therefore necessary to have a check on the credentials and background of members planning to set up SMSF
Advantages of professional help for SMSF
Often SMSF trustees engage SMSF professional experts for helping them in the management of accounting, auditing and help provide proper financial and investment advice for tax reporting as per regulations.
There are many efficient SMSF professional companies that help in setting up and running of SMSF, administration, loans and borrowing tax reporting as per regulations, winding up of SMSF
When you need a professional help pertaining to the SMSF, please feel free in contacting iCare Super – the most experienced, dedicated and reliable company for setting up and managing SMSF.