Self managed superannuation funds

In the right circumstances a SMSF can be a very effective vehicle for wealth creation; remember though that your core purpose must be to provide benefits for retirement.

Withani Consulting and Advisory in conjunction with its partners, provides a complete but flexible SMSF solution.  We are able to establish funds, arrange administration services as well as provide technical, strategic and investment advice - we can do any or all of these things but generally do not simply set up a fund for someone then walk away as this is not how we do business; we do though have clients who prefer to do the investment themselves but like to use us for technical assistance and sometimes simply as a sounding board.

Like all superannuation vehicles, SMSF's enjoy substantial tax concessions both in terms of getting money in and also when money is taken out.  However, and because of these concessions, there are restrictions on getting money in - how much, and in what circumstances tax deductions can be claimed for money contributed - and taking money out - mainly aged based limits which mean most people under 60 cannot take money out (there are some exceptions particularly for anyone born before 1 July 1964).

Contrary to popular perceptions we do not believe the reason to set up a SMSF is because "it gives you greater control over investments".  True, there are some investments particularly business real property (including your business premises), and residential property, where it is difficult, but not impossible, to invest in them through other superannuation vehicles, but for assets such as direct shares and managed funds other vehicles may be more suitable.  It depends on your personal circumstances, and getting good advice up front can save money and time later.  You may find this short video helpful in understanding some myths and realities of SMSFs.

If you would like to know more about investing in property using a SMSF have a look at our Investing in property article.

Some of the things we consider when asked to set up a fund are:

  • Are you, the client and prospective trustee of your fund, prepared to listen to, consider and take advice?  Questioning and testing the advice is a positive; ignoring it is a waste of your money and our time.
  • Are you prepared to establish the fund with a Corporate Trustee or do you just want the “low cost” option.  While there are some additional costs, particularly when setting up a fund we believe the benefits of a corporate trustee outweigh the relatively small up front cost involved.  For a good relatively non-technical explanation of why we favour a company as trustee over individuals, see this article.  You may also find this short video helpful in understanding the advantages and disadvantages of each type of trustee.
  • Do you understand or have the capacity to understand what is involved in running your own superannuation fund:
  • What is your investment competence?  Do you have the capability to participate actively in the investment process or are you simply looking for someone else to do this?
  • Can you handle the administration – contracting out is OK but do you appreciate what is required and how much doing this properly will cost in time and money.
  • Do you understand your legal obligations under SIS and as a trustee – refer to ATO “Self managed super fund trustee declaration” and “Self managed super funds – Key messages for trustees”.  While you can, and should, take advice to assist in operating your Fund, ultimately the regulator – the ATO – considers you, responsible.
  • Do you understand the difference between a DIY Fund and a SMSF?
  • Do you have the time to run a fund?
  • Do you have the knowledge – both legal and financial – to run a fund?
  • Do you have sufficient superannuation savings to justify your own fund?

Other questions for consideration include:

  • Are you aware of the benefits you will lose if you roll present superannuation savings into a self-managed fund?
  • Have you looked at any of the online trustee courses?
  • Do you realise that if any of the fund’s investments are lost through fraud, you will not automatically be covered for compensation?

If you believe a SMSF may be right for you, or even if you are not sure and would like some help to decide please contact us today.