SMSF is a self managed super fund or, as the ATO (Australian Tax Office) puts it, the best possible way to max out your retirement savings. It is a long-term arrangement that operates generally to provide income for retirement. Superannuation includes self-employed, employees and employers making contributions to a superannuation fund. All employees in Australia must have a super fund, into which their employers will deposit contributions that will become fruitful retirement savings. Fund members decide how, when and where contributions will be invested to increase the assets of the fund. Fund assets are used to provide income to the members when they retire or in case of a serious disability, and to family members in case a fund member dies.
Members make investments. However, all investments must be done according to previously set investment strategy of the fund; to the agreement of the trustees; and according to superannuation laws in Australia. All super fund investments must be maintained and made on commercial basis, which means the sale and purchase prices must reflect the real value on the market. This means, no deals between the members of the family. Also, just because your super fund is running well and is worth a great sum, it does not mean you can use the assets. Of course not. This is a retirement plan and you can not access it until you reach preservation age. The retirement money is generally paid out as an income stream at retirement age or as a lump sum.
The key difference between a superannuation fund and other types of funds is that the members of the SMSF are also trustees. What’s more important, it is the members who run, manage and control the superannuation fund in order to save for their retirement. Even though SMSF members have full control over fund, they still have to comply with certain regulations set by the ATO. In fact, every SMSF must always be in compliance with ATO laws and regulations, regardless of how often they change. For this reason, ATO advises members to hire an SMSF expert who will explain them how to set up a SMSF. Of course, if you know how to set up SMSF, do it yourself. But if you have no accounting or financial knowledge, it is best to have someone explain in detail how to set up SMSF and more importantly, how to run it to max out your retirement savings.
Learning how to set up SMSF is not all involved. You will also need to appoint trustees of the fund. Together you will manage the super fund and invest the assets wisely. Remember, there are numerous factors involved in the management of SMSF and each requires, dedication, knowledge and above all, time. If you are not 100% sure you can manage the fund properly, meaning in the best interest of all members, then hire a professional. Professional accountant will provide you with all important documents such as: annual reporting requirements, investment strategy, trust deed. He/She will also ensure the super fund meets lawful requirements.
The service fee vary from one accountant to another. For some people the no-advice and no-frills service of less expensive providers are quite suitable. Others, who want to have their hand held, demand high level of service and want to be bombarded with advices, are more than happy to pay higher fees. In the end, it is up to the trustees of the fund to decide who they are most comfortable to work with.
