Self-Managed Super Fund-(SMSF) is becoming popular amidst Australians.
The aim of this Video to give a snap shot about what are the benefits and risks of SMSFs. If correctly evaluated one’s financial circumstances and objectives, SMSF can act as a great Retirement Plan.
Through SMSF, you could invest directly in property and accumulates wealth when the property appreciates. If it is your business premises, your business could occupy the premises and pay a rent to SMSF.
SMSF can be created by 4 or less people. This will bring down the overall establishment cost and running cost compared to a large Commercial Fund.
The lowest tax rate in Australia is applied SMSF. The income in SMSF including the capital gain when selling property, shares and other assets are taxed at 15%. Interestingly, if the asset pays a pension, all earnings including capital gain is taxed at zero.
Unlike in a commercial funds, you could boost your super assets through Borrowings. In terms of Estate Planning, SMSF is a flexible option.
As any financial scheme, SMSFs also have its inherited risks and disadvantages.
Unlike large commercial funds, SMSF needs your time and focus on managing and adhering to compliance requirements
The SMSF attracts a high establishment cost. You need to pay an Accountant to Audit and lodge SMSF tax returns on a yearly basis. On certain occasions, running costs of SMSF could be higher than a commercial Superfund.
If the SMSF is not compliant due to breaching certain rules, ATO could tax the SMSF as high as 45%.
You cannot live in the residential property owned by your SMSF. There are exemptions, if the property is a business property.
Unlike an investment property outside SMSF, the earnings and capital growth in investment property owned by SMSF, cannot be accessed until you are retired.
To avoid SMSF pitfalls, it is important to ensure proper analysis of your needs and objectives, establish an investment strategy, review your objectives and investment strategy regularly, engage an Accountant to manage the administration of the SMSF.
If you need to check whether SMSF is right for you, you could contact us at Rands Financial Services. We
offer SMSF advice, SMSF set up, SMSF loans and SMSF tax returns. Discuss your options in relaxed environment, make an appointment.