Points to consider below before setting up a smsf
- Super fund is a long-term investment and its structure should be set taking a long-term view.
- Trustee responsibility – Normally, member of a smsf is also a trustee of the trust. Becoming a trustee comes with a lot of responsibility & obligation, they should understand the tax and operational issues while operating a fund. A trustee will be held liable by the ATO for any compliance breach and ATO can levy severe penalty for any breach. Further he needs time and resources to manage the responsibility of the fund. Negligence in fulfilling the responsibility will adversely affect investment return.
- Cost of running a smsf – Although you don’t pay investment fees while managing fund assets but there are costs associated with running a super fund trust. A trust will incur the below cost –
- Set up cost (one time only)
- Yearly audit fees
- Accounting and tax return fees
- Investment advisor fees (optional)
- ATO levy on the fund
- Investment fund – It is advisable to have a minimum amount of super saving before you start a super trust otherwise the cost of running a super will outweigh the benefit of having it. Some part of the fund must remain liquid to pay for the operating expenses. The trust can be funded by rolling over the balance from an existing super fund and/or by making contribution directly in to the fund.
- Legal issues – A maximum of 4 members are allowed in a super trust and the fund in the trust can only be used for retirement benefits. A withdrawal from the fund is not allowed before you reach a certain age or under exceptional circumstances subject to regulatory approval.
- Investment strategy –A trustee is free to invest in different assets the corpus of the fund. But you need to have a strategy in place to meet your investment goals. If you don’t have necessary skill to invest money you need to get advice from a certified financial planner.
We realise the above considerations can be overwhelming for a member or a trustee to think about, but the good news is that we are here to share your burden. We are a leading smsf accountants in Sydney with years of experience in setting up and running the fund. So don’t think too much and contact us today to clear your mind and setup smsf for a financially independent retirement life.