Reasons for setting up an SMSF
Most people invest their Superannuation in Retail or Industry Superfunds with their employers making contributions of Super guarantee contributions and sometimes salary sacrifice. Fund managers then make investment selection on behalf of members. This has greatly changed in the past ten years. Around 1.1 million Australians have moved from Retail or Industry Funds to SMSFs. Some of the reasons for making the change include gaining additional control over the investments and lower fees. Let’s look at the benefits that an SMSF can offer.
Take control of your super assets
An SMSF gives you control of your Super investments by allowing you to choose your Super investments. Some of our clients are disappointed with their Superfund’s performance or think that they can do better by managing their SMSF. Gaining total control allows the members of the SMSF to invest in a variety of investments. Including Term Deposits, Australian & International Shares, Residential & Commercial Property.
Save fees on management
An SMSF can also be a very cost-effective type of Superannuation Fund. Industry funds charge a percentage, and the dollar fee increases considerably as your balance grows. If you have $200,000 invested in that industry super fund, and your prices are 2.4%, the annual cost is $4,800. SMSF might save you fees. Talk to us for an independent assessment.
Transfer assets from your personal name to your SMSF
It can be possible for Members to make contributions of assets instead of cash like Shares, Managed Funds, and Commercial Property. These are called in-specie contributions and allow you to consolidate Family Assets under the one SMSF tax-advantaged structure. Please note that taxation and capital gains tax issues vary significantly between taxpayers. You should obtain advice particular to your circumstances before making any super contribution.
Accumulation and pension funds in one
With retail and industry funds, your account is generally invested in separate pension or accumulation accounts. When you wish to draw on some of your super benefit as a pension, your super benefit must transfer to a separate pension account, and any additional contributions you make after that time will be added to a completely different accumulation account balance. An SMSF can have pension and accumulation accounts in the same fund. You can start a pension and also contribute to the same SMSF with no need to separate your super into different funds. An SMSF can accommodate these as separate accounts within one fund.
Chan & Naylor is Australia’s leading property, business, tax-accounting & wealth advisory group with offices nationwide.