SMSFs & Superannuation

Superannuation was introduced by the Australian Federal Government in the early 1980s with the sole purpose to provide retirement benefits for working individuals. Initially employers paid contributions on behalf of the employees to their nominated sponsored super fund. Over time the compulsory employer superannuation guarantee (SG) has increased to 9.5% of wages or salary and will continue to rise to 12% in 2019-20.  Contribution cap limits currently are $30,000 for people aged below 49 years of age and $35,000 for those above (indexed annually).

In simplest terms it is a compulsory long-term saving strategy for retirement, and cannot be accessed until the individual reaches their preservation age, based on their respective birthday.  Super is a very powerful investment vehicle and has low tax thresholds.

There are numerous forms of super, commonly employer/personal/industry funds or self-managed super funds.  Generally, funds are invested across a range of shares, managed funds, property and cash.

Of the many different types of superannuation funds available, most people have a super fund into which their employer pays contributions.  Each has its own benefits but generally these types of funds offer the individual limited investment choice and are largely run by banks, financial institutions or other organisations.

Vault has developed an  extensive e-book library.  Simply send your enquiry here with any SMSF-related questions and we’ll be happy to forward the SMSF e-book to you, at no charge.

What is a Self-Managed Superannuation Fund?

A Self-Managed Superannuation Fund, or an SMSF, is known as “Do-It-Yourself (DIY) Super“

Self-managed superannuation funds allow people to control their own super investments for their retirement. If you set one up, you’ll be responsible for running it in accordance with the law and reporting to the ATO on its operation. Like other superannuation funds, SMSFs are a way of saving for your retirement. The difference between an SMSF and other types of funds is, generally, that members of an SMSF are the trustees who run the fund for their own benefit. There are significant tax benefits for SMSFs, but trustees need to follow the tax and super laws to receive the concessions. The assets and money in these funds are solely for retirement benefits, and are not to benefit the trustee/s or anyone else outside the fund.

The Benefits of an SMSF

  • Taxation concessions – the income of your SMSF is generally taxed at a concessional rate of 15%
  • Flexibility and control of investment choice
  • Your employer is able to make contributions on your behalf
  • You can consolidate other super amounts into a fund you control
  • You can run allocated pensions at retirement.

Vault can help you set up an SMSF and advise you on the establishment, operation, structuring and valuation of a compliant SMSF to benefit from the significant tax concessions available to members saving for their retirement.

To learn more contact us here or call us on (07) 3608 6800.

Investment Strategy and Financial Advice

The Vault team will work with you to ensure you have the right investment strategy for your circumstances.  In an SMSF all investments are to be held in the name/s of the trustees. The trustee must invest any assets of the fund that are not required for payment of benefits or other amounts under the trust deed. The trustee must do so in accordance with the current investment strategy. There are many types of asset that an SMSF can invest in but typically they are:

  • shares & securities in any company incorporated anywhere, whether carrying on business in Australia or not (e.g. Telstra, CBA etc.)
  • instalment warrants or other derivatives
  • deposits (whether secured or not) with a bank, friendly society, building society, credit co-operative, trustee company, or other registered financial institution (e.g. term deposits)
  • residential property, outright or by way of a limited-recourse borrowing arrangement in accordance with the Superannuation Industry (Supervision) Act 1993 (SIS Act)
  • a policy or annuity with an insurer, whether by proposal or purchase
  • any other investment allowed by superannuation law that the trustee thinks appropriate and as per the trust deed.

What’s involved in running an SMSF?

If you set up an SMSF, you become a trustee of the fund and are responsible for managing your SMSF according to its trust deed and the laws and rules that apply to SMSFs.

The key principle is that you run your SMSF for the sole purpose of providing retirement benefits to fund members. You need to manage your fund’s investments in the best interests of fund members and in accordance with the law. Your investments must be separate from the personal and business affairs of fund members, including yourself.

Administrative requirements include:

  • appointing trustee/s and establishing the trust deed
  • setting an investment strategy
  • holding investments
  • reporting and administration.

This represents considerable work but the good news is that Vault can assume much of your load.

Vault can assist with the administration & compliance of the SMSF’s investments by assuming the following tasks:

  • transfer & deposit of member funds
  • advise and lodge superannuation fund investments
  • manage and filter investment correspondence
  • manage super contributions
  • liaise with ASIC & the ATO as required
  • prepare annual reports, tax returns and independent audits.

Significant responsibilities come with acting as trustee for superannuation assets but with our help your SMSF will be compliant and serve its purpose of accruing member benefits for retirement.

Do you already have an SMSF?

The Vault team of accountants can arrange for the transfer of administration from your existing accountants and will inform ASIC and the ATO of the change. We understand that transfer requirements vary from client to client depending upon the agreement with existing accountants. We are flexible and will work with you to facilitate a smooth transfer.

To learn more contact us here or call us on (07) 3608 6800.