ICare Wealth Management
Self-managed super funds (SMSFs) are now the largest and fastest growing segment of the super industry. According to the latest ATO SMSF statistical report, around 30,000 new funds have been established post 2007 super changes, and the number of SMSFs have now reached 488,576, with total assets of approxiamately $458 billion, also there were approximately 932,000 members in the SMSF sectors. Since July 2004, the number of SMSF members has been growing at the rate of about 7% per year. If this rate continues, then the 1 million SMSF members mark should be reached in 2015.
For trustees of SMSFs, managing your own fund and getting it right is very important. Without complying with those rules and regulations in the various laws that govern super may incur a substantial loss, we have SMSF specialist advisor (licensed by SMSF Professional’s Association of Australia) able to give advice on the appropriateness of setting up Self Managed Super Fund account for buliding up your wealth, and assist you to achieve financial freedom.
Frequently asked questions about Self Managed Super Fund:
Q: What is a Self-Managed Super Fund (SMSF)?
SMSF is a type of instrument that allows individuals to have more control over their superannuation in terms of accumulation method, investment strategy, asset allocation and selection.
Q: Are SMSFs common?
“SMSFs are now the largest and fastest growing segment of the super industry.” – Michael D’Ascenzo – Commissioner of Taxation
SMSF Statistics:488,576 SMSFs (Sep 2012) 36,270 new SMSFs (2011/12) 932,198 - Total members of SMSFs (Sep 2012) $963,002 – Average assets per SMSF (Jun 2011) $36,300m – Contributions and rollovers (2009/10)
(Source: ATO SMSF Statistical Report December 2012)
Q: Who can have a SMSF?
Generally, as long as you are over 18, and have not been a bankrupt you can become a trustee of your SMSF. There is minimum balance that requires to be considered along with the set up cost and administration fees, financial adviser is the person to help you to see whether the set up of SMSF would be appropriate to your situation and align with your long term objective.
Q: Why would you want choose an SMSF over a normal super fund?
Due to liquidity and regulatory issues, most of the open funds are restricted to or prefer to invest in highly liquid assets – such as exchange traded shares, bonds and funds. This greatly restricted the range of investment and may not suit the situation of individual.
- SMSFs are generally suited to people who like to invest directly and make their own decisions about when and where to invest
- Allows members to exercise a high level of control over fund issues such as: Fund membership; Structure of the investment portfolio; Timing of investments
- Greater range of direct and indirect investment opportunities, many of which are unique to SMSFs, e.g. Commercial/Residential property; Collectibles
- Ability to make in-specie contributions of personally owned assets such as: Direct shares; Managed funds; Commercial Property
Q: What are the benefits in using SMSF?
1. Asset Protection
- Super benefits are protected from litigation and bankruptcy
2. Tax Benefit
- Increased ability to buy and sell fund investments to obtain tax efficiency
- Inside Super
Income and Capital Gain (in Accumulation phase – before retired)
Max. 15% versus Marginal Tax Rate – 34%, 38.5%, 46.5%
Income and Capital Gain (in Pension phase – after retired and preservation age)
Tax-free versus Marginal Tax Rate – 34%, 38.5%, 46.5%
- Going into Super
Tax Concession on Contribution
15% versus Marginal Tax Rate – 34%, 38.5%, 46.5%
Q: Is there any requirement or restriction in SMSF?
- Contribution rules
Concessional Contribution (incl. 9% employer contribution)
$150,000 or $450,000 – over a 3-year period
- SMSF trustee requirements
- No more than 4 members
- No member of the fund is an employee of another member of the fund, unless they are related
- No trustee is receiving remuneration for their services
- Each member is a trustee of the fund, or for a corporate trustee, all members of the fund are directors of the trustee company
- Who can be trustee: age over 18
Note: Requires corporate trustee for borrowing
The beauty of SMSF is the ability to pool resources and is allowed to gear up for investment.
Q: What about the management support?
We understand that some may fear to manage SMSF due to its complexity, yet attracted to its potential benefit. Our firm provides services in:
- Set Up – Individuals/Corporate trustee; nomination of beneficiaries
- Contribution strategies (Tax efficiently builds your wealth within super)
- Administration e.g. Rolling/Consolidating Super Funds, set up bank account etc (Less hassle for you and can be completed more quickly)
- Ongoing advice – Changes in legislation & strategies; avoid the traps; ongoing administration of the fund
- Personal Insurance – Protecting you and your family
Our Objective: “Assist you to achieve Financial Freedom”