SMSF’s fortunes have seen quite an upswing after the global financial crisis turned away investors somewhat from the traditional Supers. Not without reasons though have they made their place in the hearts of millions. It is well known that they offer tremendous amount of flexibility even as they offer you a degree of control not equalled by any other form of Super. After all, you are managing your own affairs here.
Great degree of control and flexibility
When I talk about the degree of control at disposal, I want you all to think about the number of options in hand. You can invest in properties, shares, bonds and collectables, among other things.
Investing and borrowing power
You can choose to engage three more members, and in doing so, consolidate your Super funds’ balances further. This way, it will be possible for you to invest in funds of greater value. Imagine you want to buy a residential property. Now, your SMSF not only facilitates a greater amount of cash pour-in into the property of your choice, but also allows you to borrow against it. This said, I must also refer to the misuse of SMSF’s borrowing powers and various regulations put in place to curb unethical borrowing.
Managing taxes made easy
You can time your taxes pretty well with SMSFs. For instance, at the time your Super assets move from the accumulation phase to the pension phase, you can get a pension commenced without being imposed with the burden of capital gains tax.
Sole Purpose test
The SMSFs vouch for the golden rule — the Sole Purpose test. SMSFs, in all situations, should only be set up with the sole purpose of meeting needs of post-retirement living. It must also abide by norms like not aiding other members of the funds, not borrowing except as being guided, and not mixing business assets with personal assets.
When is SMSF not right for you?
All said, if you think your self-managed super fund kitty will be really short on resources, do not go for it because the fees and annual costs will dent your aspirations in a big way. Same is true if you just do not find enough time to manage your own affairs. In such cases, Supers managed by others may prove to be a better trick.
There may be a lot you want to know about. SMSF, after all, is a relatively new thing. Feel free to get in touch with me to figure out anything about SMSFs that’s working on your mind.