An SMSF is a personal or family superannuation fund that is managed by the members of the fund, who are also the trustees.

They can tailor their own investment strategies and select specific assets such as listed securities, managed investments, cash and term deposits, international equities, instalment warrants and so on.

Generally an SMSF has the following features:

  • a personal or family super fund with no more than 6 members
  • each member of the fund is a trustee
  • no member of the fund is an employee of another member of the fund, unless those members are related
  • no trustee of the fund receives remuneration for his or her services as a trustee
  • the SMSF must have a written Trust Deed and Investment Strategy that meets all members' objectives

Advantages of SMSFs

  • greater investment choice – direct and indirect investing
  • greater control over investment strategies
  • access to investment gearing opportunities not available in retail super funds
  • cost effective over long term
  • offers preferable tax arrangements
  • allows you to look after your family

How an SMSF works

As the flow diagram below illustrates, the trustees of an SMSF are responsible for the operation of the fund, including; establishing the fund’s trust deed, arranging the ongoing administration/audit of the fund, managing the investments, receiving member contributions, paying member benefits, and reviewing the member's insurance policies. Life insurance polices may be tax deductible if certain criteria are met.

Is an SMSF right for you?

There is no doubt there are advantages to SMSFs, however you need to consider if an SMSF is appropriate for you. In trying to answer this question, consider these four questions:

  • Is the fund strictly for retirement benefits?
  • Do you have the time to manage your own fund?
  • Will the benefit be worth the cost?
  • How will switching to an SMSF affect your current superannuation benefits?

We have a number of services to assist with setting up and administering your SMSF. Contact your adviser or nearest office for an obligation-free discussion.

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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