What is a SMSF
A Self Managed Superannuation Fund (SMSF) is a specialised retirement savings vehicle, used to accumulate superannuation monies for retirement benefits for members.
SMSFs operate in the same way as any other superannuation fund however with SMSFs, the responsibility of managing the fund rests with the trustee. With a SMSF, you can be both a member and a trustee, therefore, establishing a SMSF can be a major decision for you.
Benefits of a SMSF
There are many benefits that a SMSF enjoys over alternative and more traditional retirement savings options. These benefits include:
- Increased control
- Taxation Benefits
- Options for Investments
- Increased Control for trustees
By opting to use a SMSF for their retirement savings, trustees are able to enjoy all the above benefits. Trustees are able to invest in assets of their choice and recover excess franking credits from the Australian Taxation Office each financial year. The ability to control their superannuation interests is a major factor for individuals looking to establish their own SMSF.
How does it work?
SMSFs are established through the signing of a trust deed, which outlines the rules and regulations of the fund. The funds are governed by the Superannuation Industry (Supervision) Act 1993 and by the various regulations included in this legislation.
Each SMSF has between 1 and 4 members and is operated by a trustee or trustees. A choice is available for members for the trustee operation for specific details on trustee arrangements, please contact Sequoia for an obligation free discussion.
Once the deed has been signed, the fund is required to operate as a totally separate entity, hold meetings at least annually and ensure that the fund is complying for the entire financial year.
How about Taxes?
SMSFs receive the same tax concessions as any other super funds and any concessional contributions made to your fund will be taxed at 15 percent.
Any capital gain incurred by the fund will also receive tax concessions - where the asset is owned for more than 12 months, a one third discount will be applied to the total capital gain.
What are your options?
There are two options when establishing your SMSF. Will you be the trustee? or will you appoint a company to act as trustee? This will depend on your individual circumstances and we recommend consulting a Sequoia representative for advice on this.
Sequoia and your SMSF
Sequoia can advise on the best structure for setting up your SMSF and once you have established your fund, Sequoia can take care of your monthly administration, reporting, taxation and audit requirements to ensure your SMSF complies with the associated legislation.