Self-Managed Super Funds (SMSFs) increased in popularity over the last two decades as a choice for those seeking more personalised control over their retirement savings. With over one million Australians embracing this financial avenue, SMSFs are now the fastest-growing superannuation sector, boasting a collective asset value of $550 billion. However, SMSFs can be far more complex and hands-on compared to traditional superannuation. Before deciding whether a SMSF is the correct decision for you, it’s vital to comprehend the fundamentals and consult with experts, advisor, and auditors if you are interested in using a self-managed super fund in Melbourne.
What is a Self-Managed Super Fund (SMSF) in Melbourne?
The key differentiator between SMSFs and conventional super funds is that SMSF members also serve as the trustees of the fund. This grants them unparalleled control over tailoring the fund to align with their individual needs and financial goals. In contrast, retail and industry super funds cater to a broader audience, with decisions driven by the fund managers. Traditional funds have asset allocation options available to their customers, such as indexed portfolios, managed funds, property, bonds etc. They allow users to allocate a percentage of their portfolio to each of these specific options. However, retail and industry super funds do not allow the precision of asset investing available from an SMSF.
Why Do People Choose an SMSF?
Investors who opt for SMSFs over traditional superannuation configurations typically seek a more hands-on approach to their investments. SMSFs empower members with direct control over their investment portfolios. Additionally, members can invest in various asset classes that aren’t allowed in traditional super funds, such as physical commodities, ASX-listed shares, residential and commercial properties, cash deposits, and even collectibles.
However, there are strict rules around the inclusion of residential and commercial property in an SMSF: who can live in the property or who it can be leased too. It is essential to speak to a Self Managed Super Fund advisor before including any property in your SMSF structural setup.
How Does an SMSF Work?
SMSFs are established with the primary objective of delivering financial benefits to members in their retirement years. They operate as independent entities with their Tax File Number (TFN), Australian Business Number (ABN), and a dedicated transactional bank account for contributions, rollovers, investments, and pension payouts.
SMSFs require trustees to function effectively. There are two trustee structure options:
In this setup, a company acts as the trustee, with each member serving as a director. This structure simplifies asset recording and registration, enhancing administration efficiency and membership flexibility. However, it involves initial company establishment and ongoing fees.
Individual trustee setups feature 2 to 6 members (some states dictate less than 6 members). Each member of the fund must be a trustee and vice versa. However, members can not employ/ be employees of other members unless they are relatives.
Responsibilities of an SMSF Trustee
SMSF trustees shoulder several crucial responsibilities, making informed investment decisions and implementing a robust investment strategy for their fund. Each fund trustee must sign a trustee declaration acknowledging their key responsibilities. These include:
- Ensuring the fund is run for the sole purpose of providing super to its members for retirement.
- Ensuring the fund is run appropriately, and the assets are protected.
- Making decisions in the interests of all members.
- Verifying that any actions are within all relevant all superannuation laws.
- Ensuring that all investments do not breach any restricted asset rules.
- Ensuring all contributions and benefit payments comply with laws.
Additionally, they must fulfil strict administrative obligations that include maintaining records, producing financial statements, filing tax returns, and arranging independent audits.
Given the weight of these responsibilities, many trustees seek the assistance of SMSF specialists to manage accounting, auditing, and tax reporting. These specialists also provide financial and investment guidance, although trustees retain ultimate responsibility for their fund’s decisions and administration.
How Our Self-Managed Super Fund Melbourne Advisory Can Help
Managing an SMSF comes with several obligations to ensure compliance. Key considerations include:
- Appointing an SMSF auditor.
- Valuing the fund’s assets.
- Lodging annual returns.
- Reporting transfer balance cap events.
- Filing Superannuation transfer balance account reports.
- Notifying the ATO of structural changes.
Our role as your Melbourne-based SMSF accountant is to assist you in maintaining SMSF compliance. We guide you through the intricate guidelines dictating what you can and cannot do within your fund. An audit and tax return for your fund’s transactions and assets are completed at the end of each financial year to ensure compliance with super and tax laws.
Additional Services from Centre Of Wealth
Beyond SMSF advisory, we offer a holistic suite of services:
- Tailored advice for individuals and business owners.
- Expert guidance on various tax matters, including GST, capital gains, Self-Managed Super Funds taxation, investment properties, and more.
- Specialised benchmarking services to mitigate ATO audit risks.
- Comprehensive support for business start-ups, from structuring to compliance.
- Navigational assistance for selling businesses, including Capital Gains Tax and Tax Concessions.
Centre Of Wealth – SMSF Advisors in Melbourne
Centre Of Wealth’s SMSF advisors in Melbourne are partners in your financial empowerment journey. With our guidance, self-managed super fund management transforms from a burden into a strategic advantage, propelling you toward a future of financial prosperity.
Speak to tax advisors in Melbourne today:
Upper Ferntree Gully: 03 9758 1202
Bentleigh East: 03 9570 4565