Get up to speed with Self Managed Super Funds
Having your own Self-Managed Superannuation Fund has never been easier
Self-managed superannuation funds (SMSF’s) are the fastest growing sector of the superannuation industry.
What Is A SMSF?
A self-managed super fund (SMSF) is a type of superannuation scheme that is set up to provide retirement income for the members of that fund.
A SMSF is a trust where the beneficiaries are also the members. A SMSF must pass the ‘sole purpose’ test, that is, it exists for the sole purpose of providing retirement funding.
A SMSF can have a maximum of four members. In reality, most self managed super funds are set up by a couple.
What are SMSF’s so popular?
Control- SMSF provides maximum control over your superannuation assets, allowing you the flexibility to decide how your funds are invested.
Investment Choice- A SMSF can be structured to meet the specific investment needs of members who can exert greater control over investment strategies.
The fund can invest in a wide range of investments including property, shares, cash or any other assets that suits the investment objectives of the fund.
- The earnings within your superannuation fund are taxed at a maximum of 15% and the earnings within the pension phase are tax free.
- Capital gains on assets held for longer than 12 months are discounted by one third before being added to the taxable income, which means an effective tax rate of only 10%.
- There is no tax paid on income or capital gains on assets that are backing a pension.
- Franking credits earned through investment in Australian companies are refundable to your fund. As these credits are earned at the company tax rate of 30% they help lower the effective rate of the fund even further.
- Concessional contributions you or your employer make to your fund are taxed at a maximum of 15% (for anyone earning up to $250,000 per year) and 30% (for anyone earning more than $250k per year). This level of tax is generally less than your marginal rate of tax.
- The premiums for some form of insurance can be a tax deduction for the fund. When combined with concessional contributions, this effectively allows you to pay for insurance with pre-tax dollars.
SMSF’s can give significant cost savings over time when compared to either retail or master trust funds because many of the ongoing cost are fixed, rather than increasing as the fund balance grows.
The establishment of a SMSF allows up to 4 people to put their super savings to buy costly assets such as direct property that may otherwise be beyond their reach.
At CHC Planning Solutions, we can help you explore the superannuation options available to you, manage your investment s and arrange your life insurance.