A
self-managed superannuation fund (SMSF) is a separate
entity structure for the provision of retirement benefits
of the members.
Self
Managed Superannuation Funds represent the most tax
effective and flexible retirement provision structure
available. In addition they represent both an effective
form of creditor protection and a unique opportunity
for estate planning by allowing the provision of pensions
and lump sum benefits in retirement.
The
trustee(s) bear the ultimate responsibility of the operation
of the superannuation fund. The trustee(s) may employ
administrators, accountants and investment advisers
to help assist in the management of the fund. |
For
further information regarding self managed superannuation
visit the Australian Taxation Office website at www.ato.gov.au/super
Sole
Purpose Test
The sole purpose test underpins all investment decisions made
within the fund. It states that a regulated fund must be maintained
for at least one of the following purposes:
-
Retirement
from gainful employment, or
-
Attainment
of an age not less than 65, and
-
On
the death of the member - the provision for benefits to
be passed on to a member's dependants or legal representative.
When
investing the Trustees must always bear in mind that the fund
is to be utilised for the provision of accumulating benefits
for retirement.
Trustee
Requirements
A SMSF must have four or less individual members with all
members being trustees of the fund. In the case where there
is only one member there must be two individuals as trustees
OR a corporate trustee with the member being the sole director
of the trustee company.
A
trustee must not be an undischarged bankrupt, have been convicted
in the past of an offence involving dishonesty, have committed
a serious breach of the Superannuation Industry (Supervision)
Act 1993, be a minor (under 18) or be mentally impaired.
A
minor (generally under 18) or mentally impaired person can
be a member however they cannot be a trustee of the fund.
In this instance a legal personal representative must take
this role. A parent can act as trustee on the member's behalf
and still be a member and trustee of the fund in their own
right.
Investments
The fund can invest in a wide range of assets
both in Australia and overseas including:
All
investments should form part of the funds documented Investment
Strategy. There are specific rules when purchasing investments
from members, trustees and/or associates and strict rules
around non-standard investments Collectibles and Instalment
Warrant Trusts. Professional advice should be sought prior
to undertaking such transactions.
Who can contribute to a self managed fund?
Anyone
who can contribute to an Australian superannuation fund can
contribute to a self managed fund. Depending on the employment
situation a contribution may be tax deductible. There are
limits to the levels of contribution which can be made. The
fund is also able to accept rollovers from other funds or
contributions of certain assets in specie.
What
type of benefits can a self managed fund provide?
Benefits are payable on retirement, disablement or death of
the member in the form of lump sums or pensions. Benefits
may be payable in cash or in specie.
In
addition to investments the fund may also include insurance
policies to cover a member for Death, Total & Permanent
Disability or Income Protection.
At
retirement there is no need to wind up the fund. The member
simply draws a pension. The pensions available are currently
an Account Based Pension or a Transition to Retirement Income
Stream. Grandfathered (pensions already in place which may
remain) include Allocated Pensions, Complying Lifetime Pensions,
Fixed-Term Complying Pension and Commutable Complying Pensions.
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