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Providing insurance & financial advice for more than 40 years
(02) 8268 2900

Self-managed Super Funds (SMSF)

The Golden Rules of SMSF

A self-managed super fund (SMSF) is your own personal superannuation fund that can give you control of how your funds are invested for retirement.

 

Running your own Superannuation Fund is certainly not for everyone however if you would like to take control it is important to note that with control comes great responsibility. To take advantage over the traditional superannuation funds, you should set up a SMSF only when you have accumulated at least $150,000.

 

There are 10 Golden Rules to keep in mind:

 

1.  Ensure that it is the best option for you

Choosing an SMSF is a very important decision, so we recommend you seek a qualified and licensed professional to help you decide if it’s the right super fund for you.

 

2.  Trustee’s Roles and Responsibilities

An SMSF must have four or less members. Being a member of the fund also means you must be a trustee. The trustees need to comply with the superannuation and taxation laws to ensure the fund retains it complying status and is entitled to the superannuation tax concessions

 

3.  Ultimate responsibility and accountability

Even though trustees can engage the services of professionals, they are bound to retain control over the funds and will have ultimate responsibility and accountability for the fund.

 

4.  SMSF must be a complying Australian Super Fund

The fund must satisfy three tests to be classified as an Australian superannuation fund. The fund must have:

  • been established in Australia or the assets of the fund are located in Australia
  • satisfied the central control and management test
  • satisfied the active member test.

 

5.  Choose a retirement planning strategy

An SMSF can allow you to use many different retirement planning strategies in order to reach your goals and objectives. It is essential to seek professional advice from a financial adviser to ensure your maximise your SMSF and retirement planning goals and objectives.

 

6.  Set and define your investment strategy

A trustee of an SMSF is required to prepare and implement an investment strategy for the fund. An appropriate strategy will establish investment objectives and detail the investment methods the fund will adopt in order to achieve these objectives.

 

7.  Do not break any rules

The trustee must be aware of relevant restrictions that prevent SMSFs from making certain investments. Examples include borrowing in particular circumstances and lending money or providing financial assistance using fund resources to a member or a relative.

 

8.  Remember the sole purpose test

The sole purpose test for an SMSF aims at ensuring investments are maintained for the purpose of providing benefits to fund members upon their retirement and not sure for any other purpose.

 

9.  Keep things separate

The trustees of an SMSF must ensure the assets of the fund are kept separate from the personal financial affairs. This means you need separate bank accounts and investments.

 

10.  Follow the rules

An SMSF is a trust and the trust provides the governing and operating rules of the funds. An SMSF must also adhere to other regulatory requirements such as superannuation and taxation laws which need to be consulted in conjunction with the trust deed.

 

There are costs involved in setting up your SMSF as well as significant administrative and reporting responsibilities.

 

To find out more call (02) 8268 2900 and speak to one of our Advisors, obligation free.

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