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Having just recently set up a SMSF I thought I would give you a few basic pointers on what it’s all about.
A SMSF is a special type of trust set up and maintained for the sole purpose of providing retirement benefits to its members.
Running your own SMSF is an alternative to putting your super into a retail or industry super fund. The main benefit of doing this is to give you greater control and flexibility over your super. You get to decide where you want to invest your money.
You can have up to 4 members in a SMSF, comprising of either individual trustees or a company serving as a corporate trustee. The Trustee/s do not own the SMSF assets but are simply responsible for administering the SMSF. This includes maintaining records, establishing an investment strategy, complying with super laws and lodging tax and regulatory returns.
You can set up a SMSF and its Trustee yourself through websites such as esuperfund.com.au or through companies such as AMP. However, you may prefer (like I did) to have your accountant do it for you.
To have an accountant set up a SMSF and its Trustee will cost in the vicinity of $3,500. This will include registering it through the Australian Business Register, and establishing the Trust Deed, Trustee declaration and providing all the necessary documents for you to set up your SMSF bank account.
Once you have opened your new bank account you can arrange to have your super rolled over from your current fund to your new SMSF bank account. You may also need to sign up with a SMSF messaging provider before your fund can receive contributions from your employer.
If you are borrowing a portion of the purchase price of a property you will need to set up a bare trust and trustee. This will cost you around $2,000 if you have your accountant do this for you.
Once you are set up and have purchased your asset there are also ongoing obligations and requirements. Each year you need to value assets, prepare accounts and financial statements, appoint a registered SMSF auditor, lodge the annual return, pay the SMSF levy and any taxes due.
When you set up a SMSF you are responsible for running the fund in accordance with the Trust Deed and the ATO rules and reporting requirements. So make sure you do as much research as possible and ensure you are fully aware of your obligations.
It does all seem complicated, however, if you get a good accountant then most of the work is done for you. There are costs involved, as mentioned above, however, the returns you will receive on an investment in property do appear to exceed any returns you would earn with a retail or industry superfund.
This is just a general summary of what you can expect. The ATO website is also a good source of info. I wish you well with your SMSF journey!