A SMSF is a superannuation fund regulated by the ATO. It can have a maximum of four members, all of whom act as trustees and are responsible for running the fund, investing assets, paying benefits and meeting compliance requirements.

SMSF is quickly becoming one of the fastest growing sectors in the recent years. Running your own super fund can have some significant benefits but there are also a lot of compliance issues. Taking a wrong step can put your fund into an irreversible situation.

Pros & Cons of Setting Up Your Own SMSF

Pros:

  • Give you full control and greater flexibility of your fund’s investments
  • Access concessional tax rate
  • Reduced compliance & administration fees (conditions apply)
  • Choose a variety of insurance options, including life and trauma insurance.
  • The new borrowing rule makes it easier to acquire direct property within the fund
  • An effective saving tool for retirement

Cons:

  • Highly regulated and more compliance requirements
  • All trustees of the fund are responsible for decision making
  • Can be time consuming to research investments and manage the fund
  • Potential conflicts among fund members
  • Set up costs can be expensive depending on the size of the fund and investments

 

Despite the above benefits, managing your own SMSF is not necessarily suitable for everyone. We can explain to you in depth the pros and cons applied in your case and help you to decide. Factors you should also consider when deciding your decision:

  • Will your SMSF outperform your current public fund?
  • Even if you employ an advisor to help with the investment decision, as a trustee, will you have the skills and time in managing your own fund?
  • Do you have enough balance to start up your own fund? It’s usually recommended that you should have at least $200,000 to invest considering the costs involved.
  • Compare costs associated in running your own fund, eg. set up cost, investing, accounting and auditing costs, which can be much higher than your current public fund.
  • What if the relationship among fund members gets sour?
  • Choose your fellow trustees/members wisely and the right structure
  • What types of investments you want to invest, e.g. shares, term deposits, managed funds and property etc?
  • Do you have any other options available?

 

At Dynamic Account, we will help you to understand the rules and the constraints of SMSF, and stay within them. Use our experience and knowledge to enable you to take the full benefits of managing your own SMSF.

We also guide you through every step of the way––from the setup of SMSF, transfer from your existing public fund, annual super contributions and pension withdrawal.

Please refer to our SMSF Service