The tax specialists
Self-Managed Superannuation Fund
Self-managed super funds (SMSFs) are a way of saving for your retirement. The difference between an SMSF and other types of funds is that the members of an SMSF are usually also the trustees. This means the members of the SMSF run it for their benefit and are responsible for complying with the super and tax laws.
If you set up a self-managed super fund (SMSF), you're in charge – you make the investment decisions for the fund and you're held responsible for complying with the super and tax laws.
It's a major financial decision and you need to have the time and skills to do it. There may be better options for your super savings.
It's best to see a qualiﬁed, licensed professional to help you decide. The Australian Securities and Investments. A SMSF must be run for the sole purpose of providing retirement benefits for the members or their dependants. Don't set up an SMSF to try to get early access to your super, or to buy a holiday home or artworks to decorate your house. These things are illegal.
|Individual trustees||Corporate trustees|
|Maximum of four members||Maximum of four members|
|Each member of the fund must be a trustee, and each trustee must be a member of the fund (except for single-member funds – see below).||Each member of the fund must be a director of the company, and each director of the corporate trustee must be a member of the fund (except for single-member funds – see below).|
|A member cannot be an employee of another member (unless they are relatives).||A member cannot be an employee of another member (unless they are relatives).|
|There must be two trustees. One trustee must be a fund member.||The trustee company can have one or two directors, but no more. The fund member must be either the sole director or one of the two directors.|
|If the fund member is an employee of the other trustee, the fund member and the other trustee must be relatives.||If there are two directors and the fund member is an employee of the other director, the fund member and the other director must be relatives.|
Rollover existing super funds / Investment / Insurance
1. Rollover existing super funds
A SMSF trustee, you can accept contributions and rollovers for your members from various sources but there are some restrictions, mostly depending on the member’s age and the contribution caps. You need to properly document contributions and rollovers, including the amount, type and breakdown of components, and allocate them to the members’ accounts within 28 days of the end of the month in which you received them.
All investments by your SMSF must be made on a commercial ‘arm’s length’ basis. The purchase and sale price of fund assets should always reﬂect true market value, and the income from fund assets should always reﬂect a true market rate of return.
Tax deductible insurance policies can also be purchased to protect members. The self managed superfund can obtain the following tax deductible cover for members:
- life and TPD insurance, and
- income protection insurance
Tax / Tax return and audit
The income of your SMSF is generally taxed at a concessional rate of 15%. To be entitled to this rate, your fund has to be a ‘complying fund’ that follows the laws and rules for SMSFs. For a non-complying fund, the rate is the highest marginal tax rate. Capital gains will be taxed at rate between 10%~15%. When your SMSF is funding your pension (in pension phase), all income and capital gains on the pension account will be subject to zero tax.
2. Tax return and Audit
As an SMSF auditor, it's your role to carry out the annual financial and compliance audit of an SMSF's operations.
The trustees must appoint you as their SMSF auditor no later than 45 days before the annual return is due to be lodged and provide you with all relevant documentation to conduct and finalise the audit. If you request more information from the trustees, they must provide it to you within 14 days of your written request.
You're required to complete the audit and provide the Independent auditor’s report (IAR) to the trustees within 28 days of receiving all relevant documentation.
A financial and compliance audit must be completed before a fund's SMSF annual return can be lodged.
You can engage other SMSF professionals, such as accountants and SMSF financial advisers, to help you set up and run your fund. An accountant can help prepare your fund’s accounts and its annual financial position and operating statements. A tax agent can complete and lodge your SMSF annual return, provide tax advice and represent you in your dealings with us.
The Declaration of Custody Trust (Bare trust) for the SMSF borrowing needs a company as its trustee. That company must be a different company from the one that is the SMSF trustee for bank loan.
Normally banks loan amounts from $200,000 to $2,000,000, giving you the potential to acquire property worth more than your SMSF’s available cash funds. You can use rental income and employee/employer/personal contributions to assist with repayments. Borrow up to 70% of the property value.
You need to lodge an annual return once the audit of your SMSF has been finalised. The SMSF annual return is more than an income tax return. It is also used to report super regulatory information, member contributions and pay the SMSF supervisory levy.
You must appoint an approved SMSF auditor to audit your fund each year, not later than 45 days before you need to lodge your SMSF annual return. The auditor examines your fund’s financial statements and assesses your fund’s compliance with super law. Approved SMSF auditors have a critical role in helping to maintain the health and integrity of the SMSF sector through the annual audit of each SMSF.
|Individual SMSF Setup||$880|
|Corporate SMSF Setup (Company trustee)||$1890|
|Bare Trust Setup (Custodian company trustee)||$1750|
|Annual SMSF Tax Return + Audit by auditor||$650 – $1200 (simple only)|
|Annual SMSF Tax Return + Audit by auditor||$1000 – $1800 (1 investment property)|
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