Self-managed Super funds have grabbed their day in the sun. With over $557 million in assets and over a million individuals expressing loyalty for the sector, it is only bound to grow from here on. The two things which SMSF has beautifully provided for are control and flexibility. SMSFs have attracted more than their fair share of criticism in the way, too.
Biased tax treatment
The industry funds it has harmed most have come out and demonstrated against biased tax treatment given to the SMSF sector. Some have also gone to the length of suggesting that dividend washing is an unethical thing to do. It requires being mentioned that despite lack of prudential regulations in the SMSF world, the ATO clearly believes that it is a level playing field for all the funds and no extra facility is being given to the ‘Self-managed’.
Financial System Inquiry
Of late, and especially after the recommendation of the Financial System Inquiry (FSI), SMSF borrowing for purpose of residential real estate purchase has come under the scanner. There is a school that feels that the move betrays the Sole Purpose test. In my opinion, SMSF borrowing is a great leverage and till the time you can avoid the fly-by-night practitioners, you can avail the opportunity to diversify assets.
Is SMSF for you?
Is SMSF for you? Experts feel that you should not give it a go unless you have in excess of $200,000 in the kitty to begin with. After all, you need nearly 1% of your fund value in SMSF costs and this comes down to a cool $2,000. The first counterpoint to this theory is that the costs are reducing even as we speak due to peer competition and secondly, the costs are well worth it because they are easily offset by the growth of the fund itself.
