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What is an SMSF and Is SMSF Right for you?
If you need further information, please free to contact us (04 3439 1331) and our first consultation is totally free. We have the expertise to advice on SMSF, set up the SMSF, arrange a SMSF loan and also administer and lodge your Tax returns. Using our partner property advisers, we even could assist you to locate an Investment Property to invest through your Super.
What is SMSF?
The word “SMSF” stands for Self-Managed Super Fund. SMSFs are established by individuals subject to several compliance and statutory requirements.
Who can be part of SMSF?
You can be a member of SMSF if you are older than 18 years, no criminal conviction and dishonoured behaviour, not subject to undischarged bankruptcy, and have not committed a serious breach of the SIS Act.
You can be part of the SMSF as SMSF Trustees and/or SMSF Members or both.
What are the Trustee responsibilities?
SMSF trustee is expected to make sure an investment strategy is in place for the Super Fund and make investment decisions. The trustee is also responsible to ensure the SMSF is operated as per Superannuation law, Tax law and the Trust Deed.
As an SMSF trustee, you are responsible for making the investment decisions for the super fund, and are therefore responsible for ensuring the fund has an investment strategy in place.
Can I buy a residential investment property through my SMSF?
You can invest in a residential investment property or commercial investment property through an SMSF.
Your objective should be the investment return from the property through both rental income and capital growth and/ or to provide benefit to a member’s dependants if the member dies before retirement. You should not have other purpose such as living in the property.
The residential property cannot be acquired from a related party of the SMSF or rented out to a related party.
This rule is exempted for a business property which is used used wholly and exclusively in a business.
What is the benefit in using a Corporate Trustee as opposed to an individual Trustees?
A corporate trustee can offer you the following long term benefits which individual trustees cannot provide:
The corporate trustee (company) have the benefit of limited liability and if a corporate trustee suffers any liability, the individual directors will not suffer personal liability except in certain situations. In contrast, an individual trustee’s personal assets are exposed in the event of a liability as trustee of an SMSF.
The corporate trustee will continue even after the death of one of its directors and the control of an SMSF or other trust can continue even after the death of an individual SMSF member/director unlike an Individual trustee.
In the same manner, if a new member is introduced to an SMSF, the member can be appointed as the Director of the Corporate Trustee. On the other hand if the SMSF has individual trustees, a deed of appointment needs to executed and all the trust assets should be transferred into the new trustee’s name (or jointly with other trustees). Unlike an individual trustee, a corporate trustee could ensure that SMSF assets are kept separate from the personal assets of SMSF members.
If the SMSF needs to get a SMSF loan under the limited recourse borrowing arrangements, the lenders require the SMSF to have a corporate Trustee.
What are the maximum SMSF contributions I can make to my SMSF in the current financial year?
A member could make two types of contributions to its Super.
A concessional contribution is a before-tax super contribution and it could be an employer’s Superannuation Guarantee contribution, a salary sacrificed super contribution, or a tax-deductible super contribution. From 1 July 2017, a member can contribute upto $25,000 per annum as a concessional super contribution.
A Non-concessional superannuation contribution is made from your after tax income.
If you are under age 65, the Non Concessional Contributions limit for a Financial Year 2017/18 is $ 100,000 per annum. You could bring forward two years’ worth of Non Concessional Contributions and contribute to any amount of upto three years worth of non-concessional contributions. Ie. $ 300,000 in 2017/18.
If you’re over the age of 65, then you are subject only to the annual non-concessional cap, and you have to satisfy a work test before you can make super contributions.
However, If you have a total superannuation balance of $1.6 million or more on 30 June of the previous Financial Year you will not be eligible to make Non Concessional Contributions.
Many Australians see numerous benefits in establishing a SMSF. SMSF gives you the opportunity to manage your Income Tax on investment income and capital gains, and also it provides you with the freedom to make investment choices and the asset selection. You could involve 1- 4 members with similar financial goals to combine funds. You could transfer your shares and other listed securities directly into superannuation and also invest in your business’ commercial real property and assist your Business’ cash flow.
Importantly, SMSF could borrow via limited recourse borrowing arrangements (LRBAs), provided the asset is allowed under the rules of the SISA Act. SMSF Loans enables you to borrow to invest in property either residential or commercial.
Rands Financial Services can help you to SMSF set-up, arrange a SMSF Loan, SMSF Administration, SMSF Taxation and SMSF Audit.
We take care of the administration and deal with the ever changing Government regulations for you, leaving you free to focus on growing your Superannuation investment to the level you require for retirement.
- Set up of the SMSF including trust deeds, and all related documents, including completing all relevant registrations
- Set up of a company to act as a corporate trustee, and corporate secretarial services as required
- SMSF Loans to invest in property
- Administration and Establishment of SMSF
- Preparation of Accounts, Members Statements and Tax Returns and Audit of the Fund Accounts
- SMSF Audit (via Third Parties)
- Assistance with lump sum payments
- Assistance with the establishment and administration of pension payments