It is important to understand what an SMSF, a self-managed superannuation fund, is before establishing an SMSF. This knowledge allows for an educated decision to be made, as SMSFs are not for everyone
It is important for you to understand what a self-managed superannuation fund (SMSF) is, what the on-going requirements of running an SMSF are and what is required of you prior to establishing an SMSF.
An SMSF is a trust that is set up for the sole and primary purpose of providing retirement benefits to the SMSF’s members. This trust is established through a trust deed that needs to be prepared by a qualified lawyer to ensure it is compliant with all governing legislation. A trustee is required to be appointed to the trust, individual trustees or a corporate trustee. The SMSF holds and owns the superannuation balances of the SMSF member(s) and the trustee acting on behalf of the SMSF is responsible for making decisions. Within the Create SMSF App all trust deeds and establishment documentation have been prepared by an Australian law firm.
An SMSF provides people control over their retirement investments as you as the trustee of an SMSF are in charge of making investment decisions. However, you as the trustee of an SMSF are also responsible in ensuring that the SMSF complies with superannuation and tax laws. When the relevant laws are not complied with there are financial, tax and personal consequences. Therefore, understanding your obligations and responsibilities as an SMSF trustee prior to establishing an SMSF is a must.
Lastly, establishing an SMSF and running an SMSF costs money and these need to be considered prior to establishment. Typical annual running costs of an SMSF may include the following:
· Appointment of an SMSF administrator/tax agent to enable preparation of financial statements and annual return
· Appointment of an independent auditor to undertake the annual audit
· Supervisory levy
· Financial advice fees
· Legal fees
· Insurance
· Actuarial certificates, if applicable
