Financial Advice Blog

Financial planning – Why Establish An SMSF

A Self Managed Super Fund (SMSF) is a great alternative retirement savings vehicle. Super is an excellent way to save money for your retirement because of a number of reasons. The following are some of the benefits of an SMSF:-

  • Get Control and Flexibility
    As an SMSF member, you can choose where your retirement savings are invested, how your funds are invested and how the SMSF in general is operated. What’s more? You can choose to adjust your portfolio in accordance with the prevailing industry and market changes.
  • Pay Lower Fees And Still Get Better Performance
    A report released in December 2009 based on ATO and APRA data revealed that SMSF members generally paid lower fees than members of other super funds. Moreover, SMSF investments outperformed other super funds between 2006 and 2008.
  • Enjoy An Array Of Investment Choices
    You can invest in a wide variety of investments such as shares, bonds, residential property, rural property, commercial property and cash among other assets through your SMSF. You get to decide which asset you feel best suits your investment objectives.
  • Get Tax Concessions
    There are various tax concessions available for SMSFs. Indeed SMSFs are formidable wealth creation tools that allow you to maximize your income for your desired lifestyle when you finally retire.
  • Use SMSFs For Tax Planning
    The primary purpose of an SMSF is to accumulate retirement benefits. SMSFs are the ideal tools for creating tax deductions since some contributions to SMSFs are tax deductible. Moreover, SMSFS protect potentially high returning assets from painfully high taxation since the maximum tax rate for SMSF assets is 15%.
  • Get To Acquire Assets With Ease
    Certain limitations notwithstanding, it is possible to purchase assets from a member of from his or her company or trust.
  • Transfer Assets With Ease
    Except for some limitations, you can transfer existing assets directly into a fund and in some cases, claim tax deduction on them.
  • An SMSF Can Be Converted To A Private Pension Fund
    Why convert to a private pension fund? You might pose. When you convert an SMSF to a private pension fund, assets with capital gains tax can be transferred into an allocated pension account and subsequently sold without incurring capital gains tax. This is because the tax rate in an allocated pension account is 0%. All investment returns in the account are also subject to a zero tax rate. Instead, members pay marginal tax rates on actual amounts of pension they receive. Allocated pension payments to under 60 year olds attract a 15% tax rebate while those to over 60 year olds are absolutely tax free.
  • Develop You Own Annuity
    An annuity has similar advantages to a private pension fund. In addition to these advantages, annuities will ensure that inheritance and capital gains tax complications are avoided. This is because when a member receiving the annuity dies, the funds stay in the super fund.
  • SMSFs Can Maintain Multiple Members
    This is arguably one of if not the greatest advantage of SMSFs. An SMSF can have up to 4 members. Some could be on pension while others such as kids could still be accumulating benefits by contribution. This structure allows assets to be moved from account to account for the most favorable tax treatment.
  • Non Compulsory Withdrawal
    A member who has attained the age of 65 and wishes to continue working can retain his or her funds in an SMSF until he or she eventually retires. For some funds on the contrary, such members will be required to withdraw from the funds.

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