SMSF (self-managed super fund) refers to a fund with a maximum of 4 members. They act as the trustees and direct the overall investment strategy.
Any trustee who breaches the rules of the SMSF can be fined and face criminal penalties in extreme cases.
Each individual member can be a trustee or a company can act as the trustee.
With the latter scenario, all the company directors must be members of the SMSF to act as trustees.
SMSFs are some of the most important assets to most people with their homes following closely second.
With this fund, you can plan for your retirement accordingly with the benefit of some generous tax breaks.
Basically, you can put away as much money as you want for your retirement.
However, to achieve the benefits of the SMSF you need to know the asset being invested in, where it is and how crucial it is.
That means you need to have a fair amount of control over your SMSF so that you can understand where your money is being invested.
SMSFs will also help you save on administration fees compared to a lot of other retirement funds that are on the market.
Remember that a lot of corporate and retail funds might not let you know where your money is invested.
Additionally, they will offer categories of risk that might not be specific enough for your individual investment needs.
The idea behind an SMSF is that it provides you with control so that you can decide exactly how and where the money is to be invested.
For instance, SMSFs can now borrow money to purchase property. Therefore, when the members become pensionable, they can take control of the property.
It's a unique idea that's not available with any other type of fund.
There are some circumstances where the SMSF can purchase your business premises and the business can lease the property from the fund.
Here, members will contribute money to the fund which in turn is invested.
The role of the SMSF is to manage the contributions from each member and the subsequent earnings from any investment.
The fund is also responsible for paying taxes according to the law and paying the retired members in terms of pension payments and lump sums.
Additionally, there is accounting and administration that should be completed to make sure the member's records are correct and all the taxes are paid.
Also, the fund needs to be compliant with the relevant regulations and laws in the country.
Note that, there should be an investment strategy in place to describe the assets the fund can invest in.
This includes shares, property, managed funds, business real property, cash and fixed interest among many more.
There are some activities that the fund shouldn’t do such as loaning money to members or their relatives.
If you are looking to establish a Self Managed Super Fund, or need to have your Self Managed Super Fund audited, then look no further than SMSF Pro.
SMSF Pro has years of expertise in the Self Managed Super Fund arena and is able to conduct quick and independent SMSF audits for a flat fee.
Please call us today on 1300 023 374 or message us through our website https://smsf-auditor.com.au/contact/ for all your Self Managed Super Fund requirements.