Whether you’re an investor, a business owner or just looking to take control of your finances, you might be considering starting a self-managed superannuation fund (SMSF).
So what is an SMSF, and could it be right for you? We’ll dive deep into the topic so you don’t have to.
NOTE: The information below is not intended as individual financial advice. All SMSF-related decisions should be made in consultation with an AFS-licensed financial expert. MKG Wealth is an authorised Representative of KLI Accountants & Wealth Managers Pty Ltd AFSL: 452 054 ABN: 36 167 537 546 (Get in touch with us to find out how we can help!)
Self-managed super funds explained
Here, we’ll run through everything you need to know before getting started with an SMSF.
What is an SMSF?
An (SMSF) is a superannuation fund controlled by a corporate trustee or between two and six members. No member can be an employee of another member unless they are related.
Who should start an SMSF?
There are nearly 600,000 SMSFs in Australia as of June 2021, with over 1.1 million members.
Although this represents less than 5% of Australia’s population, SMSFs have accounted for $822 billion in assets or about 25% of the $3.3 trillion invested in superannuation.
An SMSF is ideal for:
- experienced investors looking to personalise their superannuation choices
- business owners looking to transfer ownership of their business premises to their superannuation fund (first, get financial advice on whether you fit the “business real property exemption”)
- anyone looking to gain more transparency over superannuation fees.
Why set up an SMSF?
SMSFs are becoming increasingly popular since they offer individuals more financial freedom, control and investment opportunities.
Consider an SMSF if:
- you want specific control over your investments
- you have the time to spend looking after your fund
- you believe you can achieve a better, more cost-effective return on your superannuation.
MKG Partners recommends that before setting up an SMSF, you ensure that:
- maintenance costs for the new fund will be less than you currently pay in fees
- you have at least $300,000 in superannuation balance to cover the annual compliance costs of accounting and audit
NOTE: Trustees can get assistance with management of investments and all compliance work, but ultimately they are responsible for the investment decisions of the fund.
And finally, the important question – What are the benefits of an SMSF?
SMSFs are a popular option because they offer:
- choice and flexibility
- low operating costs
- control over investments (you can invest in assets from real estate to cryptocurrency to rare art, as long as your strategy meets the ATO’s sole purpose test and does not breach ATO restrictions on SMSF investments — consult a financial expert for more information!)
- the ability to choose your specific insurance needs
- the ability to borrow within superannuation
- certainty in estate planning
- control over and responsibility for the fund.
If you’re worried about the compliance side of things, rest easy!
The law allows you to seek assistance with compliance work from trusted, AFS licensed financial professionals like MKG. (However, note that you still retain ultimate responsibility for all compliance matters.)
Get SMSF advice from the professionals at MKG Partners
So, you might be wondering: how do I get started?
In our next blog post, we’ll go into depth on the process of setting up an SMSF and how MKG Partners can help. Follow along to find out more!
At MKG Partners, we’re dedicated to helping you achieve your goals — you’ll be backed by a stellar team of financial experts.
If you’re wondering whether an SMSF is for you, why not get in touch and book a consultation?
To find out more from our team of accountants, get in touch with us on (08) 9354 6500 or book an appointment today!