Self Managed Super Funds (SMSFs) are a growing, popular and significant sector in Australia’s superannuation industry – and here’s why!
You can be more engaged with your super
Many of Australia’s superannuants have little understanding what their superannuation balance is or even how their superannuation is performing. For many, superannuation continues to be a great mystery.
One of the key benefits of running an SMSF is you can be more engaged with your superannuation. SMSF trustees are accountable for the running of their fund. As a result of increased attention and engagement SMSFs could outperform other superannuation products.
You are in control!
As a trustee of your own fund, you have complete control over the decisions made in the fund.
- You choose when, how, what you want to invest your money in;
- You have access to a wider range of asset classes not available in public or industry funds (direct property, collectibles, private companies or unit trusts);
- You can have a portfolio tailored to suit your specific needs;
- You can select an Investment Adviser to partner with you or make decisions on your own;
- You can react more swiftly than fund managers or institutions to financial market fluctuation.
SMSFs provide the greatest range of investment opportunities
SMSFs can invest in traditional investments such as direct shares, international investments, bonds, cash and managed funds. Unlike other superannuation vehicles, SMSF’s provide the ability to invest in direct property or ‘business real property’. SMSFs can even invest in precious metal, collectibles or cryptocurrency.
SMSFs are one of Australia’s most tax effective vehicles
Members in accumulation mode are subject to 15% tax.
Members in pension mode enjoy an entirely tax-free environment on balances up to $1.6 million.
Further, by structuring your investment portfolio, you have the ability to access franking credits – enjoying a tax refund from the ATO for any excess imputation credits.
SMSFs can accept ‘in-specie’ contributions
SMSFs have the ability to accept ‘in-specie’ contributions which allows members to not only contribute cash to their SMSF, but also other investments they hold personally such as listed security and ‘business real property’.
For those in the highest income tax bracket of 47% (including medicare levy), the benefits of a 15% tax bracket in an SMSF is significant reason to establish an SMSF.
You can utilise Pension Strategies
You have the ultimate control and flexibility over the payment of pensions as the Trustees have direct control over the bank account.
Unlike some superannuation vehicles, you can move from accumulation mode to pension mode without the need to sell down assets and realise capital gains. SMSF members can run multiple pensions within their fund maximising strategic tax planning opportunities.
SMSFs can benefit from borrowing strategies
SMSFs are able to borrow funds to increase the overall amount for investing within the superannuation environment.
You can benefit from inter-generational transfer of investments and contribution splitting
SMSFs provide control and flexibility over estate planning, enabling members to ensure investments transfer from members to their beneficiaries in a tax effective manner. Further SMSFs provide the flexibility of splitting contributions between members.
SMSFs can provide cost savings
For balances above $300,000 running an SMSF can actually be most cost-effective than other superannuation vehicles. Even better – your children can utilise the SMSF for their superannuation savings splitting the cost up to 4 ways*.
Being in control is fun
Many SMSF Trustees enjoy the decision making that comes with running their own fund.
To find out more about if an SMSF is appropriate for you simply call us on 1800 370 734.
By Olivia Long, Managing Director – Strategy and Operations
* SMSFs can have up to 4 members
The information in this article contains general advice and is provided by ExpertSuper™ Pty Ltd as an authorised representative of Primestock Securities Ltd AFSL 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the Product Disclosure Statement (PDS) before making any decision to acquire any financial product referred to in this article. Please refer to the FSG (available here) for contact information and information about remuneration and associations with product issuers.This information should not be relied upon as a substitute for professional advice, and we encourage you to seek specific advice from your professional adviser before making a decision on the matters discussed in this article. Information in this article is current at the date of this article (3 Apr 2019) and we have no obligation to update or revise it as a result of any change in events, circumstances or conditions upon which it is based.