Self Managed Super Funds
A SMSF must meet a number of requirements, including these basic ones:
◊ has four members or less; and
◊ all members are trustees.
◊ no member of the fund is an employee of another member of the fund, unless they are relatives; and
◊ no trustee receives any remuneration as trustee of the fund.
A SMSF can have a company as the trustee if:
◊ all members of the fund are directors of the company
◊ the fund has four members or less; and
Different rules and additional conditions apply for a single member fund, due to the basic legal principle that a sole beneficiary (member) cannot be the sole trustee of the (fund).
◊ a corporate trustee (of which the member is either the sole director, or one of two directors and the other director is either related to the member or is not the member’s employer); or
◊ two individual trustees (one of whom is the member, and the other of whom is either related to the member or is not the member’s employer).
General advantages of using a SMSF could include:
◊ Greater investment options (including access to direct investments and property)
◊ Direct control over type and timing of investments
◊ Potentially more cost-effective on larger balances (eg, over $200,000), as the costs are often fixed dollar amounts, compared with managed fund’s charging fees as a percentage of funds under management
◊ Flexible benefit payment options
◊ Tax management benefits
◊ Estate planning benefits
◊ Insurance benefits
SMSF can benefit the following parties:
◊ small or family businesses;
◊ people who like to have day-to-day control over their investment decisions; or
◊ people who would like to have their superannuation customised to play a key role in family wealth and estate planning.
◊ Time, knowledge and skills required to manage the fund
◊ Taxation and compliance obligations
◊ Administration costs may be costly
Please note many other specific considerations may be applicable depending on the client.