Licensing options can be broadly classified into two categories. The first is the limited license and the second is a full Australian Financial Services License (AFSL). The former, the limited license, does allow practitioners to talk about setting up or winding an SMSF. With a limited license, accountants can also talk about a product class. But, they do not have the go ahead to discuss a specific product belonging to that class.
A self-managed super fund is a surefire way of gaining greater control over your investments. It also offers you more flexibility (till the time you abide to your investment strategy). This said, there are various responsibilities on the shoulders of an SMSF trustee, and what’s more, you must tick many right boxes before entering into the SMSF space. Let us find out if the SMSF is for you; if yes then why and if not, then what may be the single biggest reason hindering you. Read along.
While the marginal tax rate can get as high as 46.5% for an individual, the rental income for properties purchased through your SMSF is generally taxed at a concessional rate of 15%. It gets even better when you talk about the CGT rebate. You may have to pay 10% in the accumulation phase and nothing in the pension phase. In comparison, rates run close to 23.25% for properties outside Super.
So, are SMSF-financed properties a great idea? I wouldn’t place my neck on the line and say so. They can certainly turn out to be smart investments but unless you show diligence, they can turn sour just as easily.
Here are 12 key aspects to using your SMSF for property investing that you will do well to consider before taking the plunge. Some of these may surprise you and may just save you a fortune.
As an SMSF trustee, your top priority should be to get your fund audited by one of the approved auditors each year. For the purpose of such audits, it is important to formally appoint the auditors and there is a timeframe attached to doing so.
This is just the visible part of the audit ‘iceberg’. There is so much more that you have to understand about the process and which remains hidden from common view till a professional helps you with them. Let me talk about all the possible aspects of SMSF audits here and I can put a small wager that some of them will really surprise you.
The self managed super fund is the strongest performing Superannuation sector in Australia. In a very short time, it has created a space for itself. The amount of flexibility and control it offers to you is next to none. I’m sure we all are aware of the advantages of self managed super funds.
However, it is also critical that you understand the rules governing your self managed super fund or you may end up wasting all the advantages.
Listed below are the most important rules for SMSF funds that you absolutely must know to keep your fund safe and growing. Ignore these and risk potentially hefty fines.
There are definitely a few auditors who go about auditing a large number of SMSFs with paltry number of staffs. This and a lot more will be on the radar of the ATO as it begins to monitor the SMSF auditors.
Law firms working in the SMSF industry have cited key compliance issues, failing which can levy strict penalties on SMSF members. 1 July and beyond are not going to be as easy days to wade through as have been the days before 30 June. Learn more about the compliance guidelines change that will be implemented after 1 July.