Get Your Retirement in Order with an Effective SMSF

Self-Managed Superannuation Funds (SMSFs), like other superannuation (super) funds allow us to save for our retirement. Unlike other super funds however, SMSFs can only have a maximum of 4 members all of whom must serve us trustees. This means that when you decide to form an SMSF, you will inevitably have to serve as its trustee. Serving as a trustee of a super fund comes with added responsibilities of ensuring that the fund complies with certain super and tax laws. Fortunately, you can outsource most of the onerous tasks of meeting administrative and compliance requirements to a superannuation an SMSF consultant Sydney.

How Much Should I Have To Start An SMSF?

Because SMSFs incur certain set up and ongoing costs such as the annual Australian Securities and Investments Commission (ASIC) fees, the Australian Tax Office (ATO) supervisory levies, accounting fees for preparing annual financial statements, annual audit fees and tax return lodging fees, it can be quite costly to  run an SMSF. An SMSF consultant Sydney can recommend on the optimal fund balance your SMSF ought to maintain to remain cost-effective. The industry consensus backed by the ATO is that SMSFs with fund balances of at least $200,000 are cost effective compared to other industry super fund offerings. With a fund balance of at least $200,000, your fund can afford to engage a superannuation adviser Sydney for quality advisory services.

Facts about SMSFs

Every year, the ATO and other bodies in the country publish reports and statistics on SMSFs that further show that SMSFs are becoming an increasingly popular fund used by people to save for retirement. A superannuation adviser Sydney can develop insight from such historical information about SMSFs. The following are some of the key facts about SMSFs published by the ATO:-

  • 566,735 SMSFs operated in Australia as at 31 December 2020
  • SMSFs control an estimated $600 billion in assets
  • The average SMSF has a fund balance of $1,049,168
  • SMSFs directly invested 83% of their assets mainly in cash and term deposits and in listed Australian shares
  • 64% of all SMSFs are based in Victoria and New South Wales
  • There are over 1 million trustees running SMSFs across the country
  • A typical SMSF has 2 fund members
  • 62.6% of all SMSF trustees are aged 55 or over
  • 64.9% of all SMSF trustees have a taxable income less than $80,000 a year
  • 52.7% of SMSF trustees are men while women constitute 42.3% of SMSF trustees
  • 7,260 SMSFs wound up in the 12 months to June 2015 mainly attributed to the rigorous work needed to run an SMSF.

Insights about SMSFs

There is a lot of data on SMSFs in the public domain and other resources. An SMSF consultant Sydney should be able to explain historical trends and anticipate the direction that SMSFs will take going forward. To stay in the know about insights affecting SMSFs and the other industry funds, it is a good idea to contact a superannuation adviser Sydney. The following are some of the advantages and disadvantages of SMSFs that stand out:-

The Benefits of Having an SMSF

You can maximize economies of scale- Granted, most of the ongoing costs of running an SMSF especially those incurred in complying with super and tax laws are fixed regardless of the size of the fund. Therefore, your fund is likely to be cost-effective if it has a sufficient asset base.
You can choose what asset to invest in- An SMSF can give you a lot of freedom when it comes to deploying funds. You can directly invest in cash management accounts, term deposits, listed Australian shares, overseas listed shares, commercial property, industrial property, property purchased under limited recourse borrowing, listed unit trusts, options, warrants and shares in private companies that are not related parties purchased on a commercial ‘arms-length’ basis.
You can maximize your tax benefits- Using an SMSF, you can structure the fund’s assets to reduce your tax liability. For example, investment earnings of SMSFs attract a maximum tax of 15% as opposed to attracting marginal tax rates that can be as high as 46.5%.
You can have control on the administrative duties relating to your SMSF- You can decide to actively take on the role of an administrator of your SMSF. Taking on administrative tasks such as book-keeping and preparation of financial statements can help your fund reduce its ongoing costs.
You can employ effective estate planning strategies using your SMSF- With the help of an SMSF consultant Sydney, you can put arrangements in place to decide to whom and how death benefits can be paid from the fund.

The Cons of Having an SMSF

You are tasked with significant administrative and compliance duties- Super and tax laws require that trustees make sure that the SMSF operates within the confines of the super and tax laws. Non-compliance with these laws often attract hefty fines and penalties. With the aid of as superannuation adviser Sydney, you can be certain that your SMSF will comply with all the relevant legislations.

About My Money SMSF Consultants Sydney

We at My Money SMSF Consultants Sydney offer comprehensive establishment, administration, management, investment advice to SMSFs. Our in-house team of professional financial advisers and accountants based in Sydney and Brisbane make sure that our clients comply with the relevant legislations hassle-free. We also offers advice on preparing and enforcing trust deeds, conducting annual SMSF audits and executing SMSF investment strategies among other matters to our clients in Melbourne. It is always a good idea to turn to a superannuation adviser Sydney to get clarity on your retirement and lifestyle goals through SMSFs.

Other Salient SMSF Matters

SMSF Trust Deed- SMSF laws require the preparation and execution of a trust deed by those wishing start an SMSF. It costs between $700 and $1,000 to register an SMSF with the ATO.
Trustees- SMSF laws require that a trustee(s) must be appointed to oversee the fund’s operations. A trustee can be an individual or a corporate entity. SMSFs with individual trustees must appoint at least 2 persons to act as trustees while those with corporate trustees can have at least one single-director company as a trustee with the director of the company overseeing the fund’s operations.
Advice Fees- Hiring an SMSF consultant Sydney will attract advice fees normally billed on an ongoing basis. These fees are often indicated in the Statement of Advice (SoA). The fees charged by a superannuation adviser Sydney depend on the fund’s size and the unique circumstances surrounding its operation.
Investment Options- SMSF laws allow you to invest in a huge variety of investment vehicles. These laws however restrict you to purchase assets for personal use; for example buying a beach house for your annual vacation using an SMSF is strictly forbidden. SMSF laws also allow you to borrow funds using your SMSF to purchase the fund’s assets such as property; this is known as a limited recourse borrowing. Limited recourse borrowing arrangements are however subject to certain conditions which can be elucidated by an SMSF consultant Sydney.


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