FAQ

The benefits of operating a SMSF include:

• Control – a SMSF provides you with an opportunity to make the decisions as to how your funds are invested, and how the fund is to operate. You have the flexibility to alter the fund’s investment strategy when required, to meet the changing needs of the members or any changes in the economic climate.
• Investment Choice – your fund can invest in a large range of investments including property, shares, cash or any other asset you feel suits the investment objectives of the fund (provided it meets the sole purpose test).
• Low taxation – tax concessions are available for an SMSF, consequently SMSF funds have become a powerful wealth creation vehicle enabling ordinary Australians to maximise their income and lifestyle in retirement.
• Protection – the assets of the SMSF may be protected from bankruptcy and other legal claims. This can be a relief when unfortunate events occur.

Changes to the superannuation rules mean that superannuation funds can borrow directly providing the purchase of the investment is done in a special way as an instalment warrant (also known as a Holding Trust).

Holding Trusts are not a new invention and have been around with the large institutional banks for many years. What these new rules mean is that you can arrange via your SMSF to finance the purchase of investments, as part of your superannuation wealth building strategy.

The main benefit of using borrowings is that you can bring forward the purchase of investment, like property. This means that you don’t need to wait until your super fund has enough funds to purchase the investment outright. You can now use this option as part of your long term retirement savings strategy.

Confused? Don’t be. Call us now and we’ll be more than happy to explain further.

There are certain regulatory responsibilities placed on trustees of SMSF’s, therefore when setting up a fund it is important to consider various issues including:

• Will I have the time to manage and administer the SMSF?
• Will there be sufficient funds in the SMSF to make the administrative costs worthwhile?
• Will the other trustees of the fund be suitable co-investors?

A SMSF is a unique superannuation fund, where control is kept in the hands of the Trustee’s (you, the member). The Trustee’s decide how the fund will operate and what investments the fund will invest in.

Once your signed application is received by us, it generally takes around 1 week for the documentation to be completed. Upon receipt of signed documentation, the paperwork to establish an Australian Business Number and a Tax File Number is lodged with the Austalian Taxation Office (ATO). The ATO can take up to 28 working days to issue the ABN and TFN at which stage the Fund is fully operational.

Ideally, when setting up a SMSF a minimum of $100,000 is required. If you have more than one member, the total combined assets can be transferred to meet the minimum requirements. If you decide to set up a SMSF with less than $100,000, you need to weigh up the ongoing administrative costs to see if it will be worthwhile.

We charge a flat fee of $880 (including GST) to support you in establishing a fund with up to four members, the support includes assisting in Rollovers, setting-up the funds bank account, obtaining a TFN and ABN for the fund etc. An additional charge of $695 is applicable for a corporate trustee.

The trustee can be either an individual or a trustee company.

Corporate trustees are generally the most common. Generally, where the individual option is chosen every member must also be a trustee. A fund cannot have a sole individual as a trustee, there must be more than one person as trustee if the individual option is chosen.

To overcome this, a single member fund can appoint a second trustee provided that the new trustee is not an employee of the other trustee (unless they are relatives), or you can simply appoint a company as trustee. Where a trustee company is appointed, all members must be directors of the trustee company.

There are 2 ways of transferring money or assets into a fund:

• Make a contribution to the fund in the form of cash and/or an approved asset
• Roll over existing superannuation benefits into the fund

Another benefit of a SMSF is the ability to consolidate your superannuation (particularly if you have a range of super funds). Consolidating your funds can save on the high fees you pay for managed funds to manage your money.

A SMSF cannot have more than 4 members and all members must be Trustees of the fund. Therefore, you have a choice as to who becomes a member of the fund which may include your partner, members of your family, a business partner or friends. This means that the super balances of each member can be consolidated into the one SMSF.

Yes. With the introduction of superannuation choice, most Australians can instruct their employer to pay their SG superannuation contributions into the SMSF.

The range of investments that a fund can invest in is quite broad including listed shares, cash, term deposits, managed investments, widely held unit trusts, direct property, artwork and other collectable’s. It is important to understand that there are certain regulatory limitations placed on SMSF’s; for example, a fund cannot borrow money to invest in assets such as property or shares unless the borrowed funds are provided through a Holding Trust.

A fund cannot acquire certain assets from related parties of the fund or invest in in-house assets; for example the fund could not purchase your assets (such as your house) from you but it can purchase a commercial property from you. Confused?? Don’t worry, as part of our service, we can provide you with strategies and information that’s not only relevant for your circumstances but understandable.

Yes, with a SMSF you can organise life, total and permanent disablement and income protection cover to insure the members of the fund. The SMSF pays the cost of the insurance and claims it as a tax deduction, which makes the costs of insurance more tax effective. We can assist you in selecting the best insurance options for your SMSF.

• Costs might be more expensive
• Ongoing obligations to manage the fund including meeting all legislative obligations
• No rights to access an external complaints resolution service such as the Financial Services Ombudsman or the Superannuation Complaints Tribunal etc.