SMSF is a Self-managed Superannuation Fund that offers a higher degree of flexibility and freedom than traditional Superannuation Funds. In layperson terms, SMSFs are a DIY Super that you or a maximum of six members can manage. In similarity to the traditional Supers, these funds are also set up for the sole purpose of maximising your retirement funds.
Setting up an SMSF comes with as much responsibility as it offers freedom. Individuals must create a trust account and are accountable for all the funds’ activities, including compliance with superannuation and taxation legislations. If you are contemplating whether the SMSFs are for you or not, here are a few advantages of getting an SMSF to give you a clearer understanding:
1. Higher Degree of Control
As the trustee or the Director of the Corporate, if a corporate trustee is in charge of the board, you have complete control over the investments. You can tap into direct shares, high-yielding cash accounts, term deposits, direct property, unlisted assets, and more. SMSFs allow the individual or multiple members to run the fund to suit all of them. This way, you can respond faster to changes in market conditions, super rules, or other circumstances.
2. Asset Protection
SMSFs offer exceptional asset protection even in the events of bankruptcy or litigation. As you aren’t purchasing all the assets in your name, the personal creditors cannot go after your SMSF properties. But do remember that you cannot use your SMSF to revive your business venture or for any other reason except retirement.
Controlling all the decisions related to your SMSFs, you can cut corners with Taxation and transactional costs wherever possible. Most of your industrial and retail funds require you to sell your assets during the end of your accumulation period and then repurchase them when you retire. These transactions come with several additional costs, like the CGT and brokerage fees.
Setting up an SMSF is a huge decision. While all the advantages, benefits, and the possibility of having control over your funds might sound alluring, remember that the accountability is also wholly yours. Hence, all the fines, penalties and troubles associated with the SMSF will be falling on your heads.
Whether or not you are an expert on finances, having a professional’s opinion never hurts when the stakes are so high. If you wish to ensure that you make the most of your SMSFs without causing any damage to your investments, get in touch with Zimsen Experts.