A Self Managed Super Fund (SMSF) is a type of superannuation fund that works like any other super fund, with the crucial difference that the responsibility of managing the fund, (including its investment decisions and legal responsibilities) rests solely with the trustee (member).
Self Managed Super Funds offer the greatest amount of control and flexibility compared with other kinds of superannuation funds. However, setting up and operating a Self Managed Super Fund is a major financial decision, and it requires your time, skills, and a significant amount of capital given the annual costs (financial advice, accounting, and auditing) associated with maintaining the fund and ensuring it complies with all the legal and tax requirements.
For more information about the rules around what an SMSF can and can't invest in get in touch with an experienced accountant today.
Is an SMSF right for me?
While there is no legally mandated minimum balance required to set up an SMSF, given the costs associated with SMSF setup and annual compliance, it is usually recommended that you have a balance of at least $250,000 or more before you setup one. You will need to pay the annual supervisory levy to the ATO and arrange for an accountant to prepare the financial statements and tax return, and conduct an independent audit in addition to any financial advisory costs.
Deciding whether an SMSF is right for you can be difficult. It's best to seek a qualified licensed financial advisor to help you as our advisory services are limited to taxation advice. We have strategic relationships with several of Sydney's foremost Financial Planning firms and can put you in touch with the one that we think is right for you.
SMSF setup and administration
You will need a good SMSF accountant to set up your SMSF correctly. An SMSF accountant will be able to help you setup the fund so that is eligible for tax concessions and can receive contributions and ensure it will be as easy as possible to administer.
Given the heavy time costs associated with running an SMSF, a good SMSF accountant will be able to alleviate as much of the burden as possible and ensure your fund complies.
SMSF Accounting responsibilities
To effectively manage an SMSF, you need a TFN, ABN, and a dedicated bank account. This account facilitates the fund's ability to invest, accept contributions, and manage payouts such as pensions and lump sum distributions. Furthermore, the intricate accounting responsibilities of an SMSF, guided by the superannuation legislation (The SIS Act), demands expertise. Partnering with an experienced accountant is crucial to ensure compliance and benefit from their advisory services throughout the whole process. Leveraging the expertise of such firms can streamline the complexities associated with SMSF management and taxation.
SETTING UP AN SMSF
You will need to do the following to set up an SMSF:
choose individual trustees or a corporate trustee
appoint your trustees or directors
create the trust and trust deed
check your fund is an Australian super fund
register your fund and obtain an ABN
setup a bank account
prepare an exit strategy
COMPLIANCE AND ADMINISTRATION OBLIGATIONS OF AN SMSF
As a trustee, you have several compliance and administrative responsibilities:
Appoint an SMSF auditor to conduct annual audits.
Value the fund's assets to ensure accurate annual returns.
Lodge an SMSF annual return with the Australian Tax Office (ATO).
Report any Superannuation transfer balance account events.
Maintain thorough records of the fund's operations.
Notify the ATO of any significant changes to your fund's structure or operations.
Effective SMSF management extends beyond compliance and accounting; it also encompasses a crucial aspect—taxation. A proficient SMSF accountant will assist you in navigating both these interconnected domains.
Typically, a complying SMSF enjoys a concessional tax rate of 15% on its income. This rate applies to various types of assessable income such as assessable contributions, net capital gains, interest, dividends, and rent. To qualify for this concessional rate, your SMSF must adhere to all the stipulated rules and regulations. Failure to comply renders your fund as a non-complying fund, subjecting it to taxation at the highest marginal tax rate.
That's why it's vital to work closely with a knowledgeable SMSF accountant who can guide you through the intricacies of compliance and taxation, ensuring your fund operates both legally and efficiently.
Specialist SMSF Accounting Solutions
We have looked after hundreds of SMSF clients over the last two decades and have many years of experience delivering quality SMSF accounting services. We can act as your end to end for the whole process of SMSF setup, making use of our strategic relationships with several financial advisory firms and a nationally recognised auditing firm who process the SMSF audits. If you are in need of an experienced accountant who can offer quality service to ensure annual return and tax compliance, look no further.
Being tech-savvy can help streamline the fund's management as there are several platforms that allow investors to efficiently track their stock gains and losses. SMSFs allow for a diverse portfolio of investments, which could include stocks and property, but investments must be made in the best interests of the fund's members. Given the annual costs for financial advice, accounting, and auditing services, expert advice is essential for effective fund management.
If you currently have an SMSF but are not happy with the level of expertise or support provided by your current SMSF accountant, or are thinking about setting up an SMSF, you need an SMSF accounting expert. Reach out to us today to set up an appointment. If you are looking for financial advisory services, we have strategic partnerships with several of Sydney's best Financial Advisory institutions.
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Any advice contained in this document is general advice only and does not take into consideration the reader’s personal circumstances. Any reference to the reader’s actual circumstances is coincidental. To avoid making a decision not appropriate to you, the content should not be relied upon or act as a substitute for receiving financial advice suitable to your circumstances.