Investing in SMSF has been proven to be a good way to save for the future. But is putting your eggs in a self-managed Super fund a path you should take? That is one question you need to mull over again and again before you make a decision. Better yet, seek the expertise of an SMSF financial adviser and see if investing in SMSF will suit you and your financial capabilities, as well as that of the other members.
Investing in SMSF: Who is it for?
You need to understand that engaging in SMSF is not for everyone. For those who want the hands-on control, extensive skills in financial and legal matters are often required. Plus, setting up and managing your own fund oblige you to strictly adhere to the regulations implemented by the Australian Taxation Office (ATO).
While anyone can set up and run their SMSF, engaging in SMSF typically suits the following:
- Individuals with high net worth
- Individuals who garnered at least $250,000 in superannuation
- Family members of these individuals
Another thing that you need to know is that all members must be trustees of the fund. If you are a trustee, then you need to act responsibly and honestly. All your actions as a trustee must be for the best interest of all your members.
As a trustee, you are obligated to perform the following:
- Use the funds ONLY to ensure and provide retirement benefits for all members;
- Devise and execute a viable investment strategy that has a high probability of meeting your retirement needs; and
- Record all financial activities and submit them for a yearly audit by a certified SMSF auditor
Setting up and managing an SMSF instrument can be complex and confusing, which is why you should consider getting the expertise of a certified SMSF adviser.
That being said, if you are the founder of the SMSF instrument, you also need to recognise that you are accountable for all the decisions made by the fund even if you have professional help or another trustee makes the decision.
Unfit for membership
Several individuals are deemed unfit for SMSF membership as categorised by the Superannuation Industry (Supervision) Act 1993. They are:
- Persons who have prior convictions involving dishonest conduct, wherever or whenever such conviction may have occurred.
- Persons who are insolvent, bankrupt, or have entered into arrangements, assignments or compositions with creditors under Part X of the Bankruptcy Act 1966 (Cth) or a similar foreign law.
- Persons in relation to whom a civil penalty order has been made under theSuperannuation Industry (Supervision) Act 1993.
- Persons expressly declared not to be “fit and proper” persons under section 120A(3) of the Superannuation Industry (Supervision) Act 1993.
If investing in SMSF is something you are very interested to do and you need assistance in making a sound decision, contact us and we can give you the best advice.