Self Managed Super Funds

“SMSF” is a short for “Self Managed Superannuation Fund”, also known as a "Do It Yourself (DIY) Super". While it may sound complex, in fact it is a way of creating clarity within your Superannuation. Our team of experienced Accountants can help you see if this is the option for you and assist in the set up and manage of your Do It Yourself Superannuation Fund.

Why would you do this? ·

An SMSF is perfect for the DIY Investor who prefers to make their own Investment Choices for their retirement rather than leave their Superannuation to be invested by others.

The Trustees of a SMSF (ie you) control the SMSF and make all the Investment decisions for the SMSF however you must meet all the responsibilities of the Trustees. Once your SMSF has been established you can apply to your current Superfund to transfer your existing Superannuation Benefit to your new SMSF. Once the SMSF has been established you can also commence making Contributions to the SMSF. Each Contribution and Contribution Type must be allocated to a specific Member. SMSF contributions don’t have to be cash, you can transfer personally held assets such as Australian Stock Exchange listed shares and trusts.

 

Common Investments
within a SMSF:
Investments to avoid or
not allowed in a SMSF:
  • Shares
  • Cash
  • Term Deposits
  • Bonds
  • Online Savings Accounts
  • Residential Property Investment
  • Commercial Property Investment
  • Investments in Private Companies or Private Trusts
  • Loans to any person
  • Collectables

 

 

Pensions

When you reach age 55 you have the option of commencing a Pension Income Stream from your SMSF. A Pension simply means that periodically (eg each month or other period you nominate) cash is transferred from your SMSF Bank Account to your personal Bank Account to fund your living expenses. The Benefit in commencing a Pension in your SMSF is that after commencing a Pension you will never pay tax on the SMSF income (eg interest and dividends) and realised capital gains made by your SMSF again. This is truly an amazing taxation concession and makes commencing a Pension in your SMSF the perfect investment vehicle to hold your assets however you will need to consult your Taxation Professional prior to commencing this as getting it wrong is costly.

There are two types of Pensions you can commence in a SMSF as follows:

Simple Account Based Pension:

A Simple Account Based Pension is an income stream that you receive from your SMSF when you reach age 65 or alternatively when you are aged between 55 and 64 and "Retired".

Transition to Retirement Pension (TRAP):

A Transition to Retirement Pension (TRAP) is an income stream that you receive from your SMSF when you are aged between 55 and 64 and NOT "Retired". If you cease employment after age 60, "Retirement" means you simply cease your employment. In this case the intention to return to the workforce is irrelevant If you cease employment between age 55 and 59, "Retirement" means that at the time you ceased employment you never intended to work again either on a full-time or part-time basis (defined as more than 10 hours per week). This declaration must be made to your SMSF and is made at the time you cease employment. It is noted that whilst a person who ceases employment when aged between 55 and 59 never intends to work again, they may actually go back to work. This will not alter the person's status as being retired enabling them to have access to their Super Benefit although they have returned to work. A "Retirement" Declaration that must be signed if you cease employment aged between age 55 and 59.

Pension Benefits

You can transition your retirement. You never pay tax on your investment's earnings in the SMSF (eg interest and dividends) You never pay tax on your investment's realised capital gains made by your SMSF. You receive a cheque from the ATO each year equal to any franking credits received by your SMSF. You can access any level of income from your SMSF subject to an aged based minimum amount. The Pension income you access is tax free if you are aged above 60. The Pension income you access is concessionally taxed if you are aged between 55 and 59. You do not have to change your SMSF Investments when you start a Pension

Pension Income Stream Requirements

The Nominated Pension payment can be paid either monthly, quarterly, half-yearly on an annual basis. You must take a Minimum Pension amount annually. With a Transition to Retirement Pension (TRAP), the maximum annual pension drawdown for a TRAP is 10%. This amount is not prorated if the Pension is commenced part way through the financial year. You can continue to contribute to your SMSF and rollover monies to your SMSF from another Superfund, after you commence a Pension A separate accumulation member account will be setup. Any concessional contributions & this proportion of the SMSF will be taxed at the non-pension super fund tax rate of 15%