A Self-Managed Super Fund (SMSF) is a form of trust whose main purpose is to provide retirement income in future or a death benefit for its members. It is a superannuation trust where funds or assets are held and managed on behalf of a family (maximum of four individuals), who intends to control their retirement savings.
If you need guidance from an SMSF specialist advisor in Melbourne, the leading SMSF providers at iCare Super can provide the assistance you need.
How does an SMSF work?
SMSF is designed in such a way that members can have direct control over their retirement savings and investments. It differs from the normal super fund in a way that all the member of trust act as trustees and have authority to make day to day decision regarding operations of the fund and its investment subject to applicable laws in force. The trust formation requires a trust deed, a legal document that sets out the rules for establishing and operating fund. The trust deed and superannuation law form the fund’s governing rules.
Who can be a Member/Trustee of an SMSF?
SMSF generally consist of a Husband/Wife and potentially children. Each member of the fund is also a Trustee. Where there is only one-member fund, there must be two or more persons to act as trustees on behalf of the fund. Under this situation, the member must appoint a second person who can act as a trustee or deem a company to act as a trustee. Also, anyone 18 years of age and over, who is not under a legal disability, can be a trustee of a superannuation fund, unless they are a disqualified person.
It increases the member’s level of control, as well as provide investment choice and flexibility. Member becomes the trustee of own fund and therefore make decisions most opt decision on fund’s investment strategy and the type of assets that are held within the fund.
One important benefit for the member is that they can also invest in investments not usually available in a public super fund. Hence member can customise fund’s investment as per their requirement and investment and retirement goals.
An SMSF is taxed at a concessional rate. As per the latest tax law, the maximum tax rate for investment earnings from SMSF is 15 per cent. This tax concession, however, is only available for complying funds i.e. which are maintained as per the rules set out by the governing authorities.
This Super offer a wider range of investment options. Except to some limited exceptions, the member can invest in virtually anything providing that this also meets the sole purpose test and adheres to the regulations.
SMSFs are much attractive to small business owners or the self-employed as commercial property can be purchased by their SMSF. This property can then be rented to their business providing the same purchase at prevailing market rates.
iCare Super is one of the major independent SMSF services providers in Australia, they have extensive knowledge and most advanced administration system to ensure your fund is being well looked after.