Self Managed Superannuation Fund

What is a self managed superannuation fund?

A Self Managed Superannuation Fund is a vehicle used by many Australians to take control and manage their own retirement savings. The members are generally the trustees of the fund and this means the members of the SMSF operate the fund for their own benefit. A SMSF allows a for a wide range of investment choices. For example you can invest in direct shares, direct property, art work and even jewelry. However, you need to be very careful as the sole purpose of the investment must be to generate income in retirement for the members of the fund.

All superannuation funds in Australia operate as trusts. The deed (or in some cases, specific acts of Parliament) establishes the basis of calculating each member’s entitlement, and sometimes the contributions that have to be made for a member, while the trustee will usually retain discretion concerning such matters as the fund’s investments and the selection of a death benefit beneficiary. The Federal Government has legislated to establish certain standards that all funds (for which tax concessions are sought,) must comply (and which are called “complying funds”). For instance, the “preservation” conditions, under which a member’s benefit cannot be paid until a certain qualification has been reached (such as reaching age 65), are a notable example.

What constitutes a quality SMSF deed?

In order to ensure you and your clients are protected against legal risks, it is important that your trust deed documentation is reviewed and prepared by an actually qualified lawyer with experience in this area. This is exactly what you get when you order through abnaustralia.com.au. Not only do our lawyers ensure your documentation complies with the appropriate legislative and tax office requirements, they also ensure your documents are maintained in line with the latest industry innovations.

What are the conditions of a SMSF according to the SIS Act?

1. It must have 4 (or fewer) members;
2. Each individual trustee must also be a member;
3. Each director of a corporate trustee must also be a member;
4. No member can be an employee of another member - unless the two members are related; and
5. No trustee can receive payment from the fund for their services as trustee.

There are some limited exceptions to numbers 2 and 3 above.

Can fund members be non-Australian residents?

What are the conditions of single member SMSFs according to the SIS Act?

If the trustee is a company, then the member must be:

• the sole director; or
• one of only 2 directors who are relatives; or
• one of only 2 directors and the other director must not employ the member.

If the trustee is an individual:

• the member is one of only 2 trustees who are relatives; or
• the member is one of only 2 trustees, and the other trustee must not employ the member.

Remember, the law says that trustees of an SMSF cannot receive payment from the SMSF for duties or services performed in relation to the SMSF.

Does the SMSF have to apply for an ABN?

To obtain an ABN, your fund must have:

• at least 1 trustee;
• a trust deed;
• identifiable members; and
• assets put aside for the benefit of its members.

ABNAustralia.com.au is able to assist you with your superfunds ABN registration process.

For what purpose can a superannuation fund be created?

There are a number of different types of superannuation funds which may be created:

• funds established by an employer for its employees;
• a master fund or trust established by a life office or other financial institution for unrelated employers, employee and/or self employed persons;
• an industry fund created for employees by an industrial organisation and/or employer body;
• the establishment of a fund by a government or governmental or semi-government authorities;
• as well as Self Managed Superannuation Funds.

Self-managed Superannuation funds are the most common type of superannuation funds for small to medium businesses.