Australian Taxation Office

5 Things You Should Know Before Setting Up Your SMSF

With lacking returns last year from most super funds, people are looking to put their money elsewhere, mainly to self-managed super funds (SMSF). However, before you go transferring all of your retirement funds into a SMSF because of a bad superannuation return statement, there are many things to consider.

1. Will an SMSF really benefit your returns? Many people rant and rave about the fees superannuation funds charge, but, the truth is, if you don’t have the time, focus or knowledge to manage your own super fund, an SMSF may not be for you. Alternatively, if you do have all of these things, then you could be looking at far higher yearly returns on your retirement fund.

2. What is your investment strategy? When you open a SMSF you effectively become your own fund manager. For the technical and administrative component (which is about 10%), it will often be outsourced to accountants. The part of a self managed super fund that will take up the most time is sourcing and managing places to invest your money. Developing a sound investment strategy will allow you to reap the benefits of a SMSF and ultimately take control of your money. Reviewing your self managed super fund investment strategy should be a regular occurrence to keep up with market trends and changes.

3. Who will be the nominated trustees on your SMSF? Before setting up your account, aside from your own name, you’ll need to understand who else will be trustees of your self-managed super fund. You can have up to four names on the account, but they cannot be your employees (unless they’re related). Alternatively, you can nominate a company as the trustee so long as the company directors and fund members are one and the same. However, you still must have only four names on the fund and they cannot be employed by you.get more details from

4. Do you understand your trustee obligations? The Australian Taxation Office has made many attempts over the last few years to help instruct trustees on what their roles and responsibilities are in the management of a SMSF through various publications. If you receive any communications from the tax office, be sure to thoroughly read everything. If you have any questions call the ATO or your accountant.

Australian Taxation Office5. Is your deed current and correct? A deed is the bible by which you’ll run your self-managed super fund, so if the deed is unclear as to what you should do in certain situations or isn’t up to date with legislation, then it is not a good guide. For instance, some people have misunderstood that the blanket statement in most deeds which says “if the deed is inconsistent with the legislation, then the legislation will prevail”, will cover any future changes in the law. This is actually not true.

With lacking returns last year from most super funds, people are looking to put their money elsewhere, mainly to self-managed super funds (SMSF). Before you go transferring all of your retirement fund to a SMSF, there are many things to consider.…