golden-eggSMSFs are private funds that – as the name suggests, funds that you can manage yourself. Of course, this type of funds are regulated and should follow rules set by the Australian Taxation Office. But, what exactly is a Self Managed Super Fund?

SMSFs at a glance

SMSFs are investment funds that should be established for the sole purpose of providing retirement benefits to its members. Each member of the fund is called a trustee, and are entrusted with legal duties governed by the ATO. SMSFs can have up to four members.

SMSFs vs. other Super Funds

Here’s a table comparing SMSFs with other Super Funds:

SMSFs Other Super Funds
Membership SMSFs can have a maximum of 4 members. All members have roles as either trustees with the responsibility of managing the Super Fund. Other Super Funds have no limit on the number of members. Licensed trustees are charged with the responsibility of managing the Fund.
Responsibilities Trustees of SMSFs are tasked with the sole responsibility of managing the fund and to make sure they comply SMSF laws. Trustees can be personally fined if their fund is deemed non – compliant. The licensed professional is responsible of managing the fund in accordance to Super laws.
Investments Since the fund is managed by the trustees, they can choose the fund’s investment strategy as well as the types of investments. Investment control is provided to trustees in choosing the risk level, but cannot choose what assets to invest in.
Governing Body SMSFs are governed by the Australian Taxation Office. Other Super Funds are governed by the Australian Prudential Regulation Authority.
Complaints Complaints are resolved through dispute resolution or in court. No compensation scheme is offered by the government for SMSFs. The Superannuation Complaints Tribunal handles issues that may arise for other Super Funds, and may be eligible for statutory compensation.

 

What can you invest in SMSFs?

SMSFs can be used to invest in a large number of assets including property, shares and options among others. You can even purchase artworks, wine and other collectibles using your SMSF! Asset types are usually restricted if it doesn’t meet the sole purpose test – which must serve to benefit all the members of the SMSF.

To determine if investing using SMSFs are for you, understand the risks and the laws involved in managing your own Super Fund. Do your research – or better yet,  get appropriate advise from a certified financial planner.

For more information about SMSFs, visit the ATO website here.

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Dorian Traill is the current Director of Grand Capital Finance Group and Fountain Property Group. He specialize in home loans for people as well as helping them build wealth through quality investment properties that ultimately lead to long term financial freedom.

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