Looking to setup a self managed super account? We’d love to help!
Whether you are a near-retiree, or someone planning for retirement in advance, we'd love to help you with SMSF setup or SMSF accounting. We have a dedicated team here in house, ready to help you find the best SMSF setup for your situation.
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Self-Managed Super Fund is a superannuation fund controlled by the individual investor. It provides flexibility to the investor and allows them to choose their investment types.
It is easy to set up a Self-Managed Super Fund when you are dealing with professionals. There is a lot of regulation surrounding the superannuation environment and it something best left to those with experience in the field. Whilst you can be involved in the process it is imperative that your SMSF abides by specific regulations.
Ultimately the individual is responsible for their own SMSF. Nieuvision offers comprehensive services to make this process almost hands free for the investor. The compliance, maintenance, audits, tax returns and reviews of the SMSF can be done by us.
There is no minimum amount required before you can set up a SMSF. However, it’s often said that a balance of $200,000 or more makes the SMSF more viable.
Why $200,000? Because of the audits and other financial activities of the fund that often add up to a couple thousand dollars per year are fixed costs, no matter how much you have in your fund, the costs don’t change. Therefore, it becomes more cost effective to run the SMSF with a bigger starting balance. The common costs include trust deeds, bank fees, documentation of the company, fees for advice about financial planning etc.
For example, if you have a balance of $50,000 or less, the operating expenses will be about 12.55%. Whereas if you have a balance of $500,000, the operating expenses would be 1.43%. The more balance you have in your SMSF, the lower the operating expenses will be as a percentage of your balance.
There is an upfront cost to set up the SMSF which varies between $1,000 and $3,000 depending on circumstances. The ongoing fees are between $1,000 and $2,500 depending on SMSF investments and complexity.
The ongoing fees include:
These costs or charges can vary from one fund to the other. So, always choose the right option according to your financial circumstances.
Of course, cash is the most common way to invest in the Self-managed Super Fund. But if you do not possess enough cash but have other assets like property, shares, and artwork or antique which has a value equal to start an SMSF, it can be invested. ATO also says that shares and property are the chief growth investments and are tax-effective, which means that the worth of the investment will increase quicker than inflation, hence making real-money.
If you are starting out as an SMSF trustee, it is vital that you are aware of some of the common mistakes that trustees make, primarily as an SMSF novice. Mistakes are often inevitable; however, if you gain the necessary knowledge, errors will be less likely. Here is a list of some common SMSF mistakes to facilitate your SMSF experience.
Buying a property from a related party is forbidden; this is a common mistake when purchasing residential property through an SMSF. The property you are buying cannot be owned by someone related to a member of the fund. Violating this rule will often result in a significant penalty imposed by the ATO.
Trustees often make this mistake because they claim that their personal investment property will be used for their retirement. Because the SMSF is also for their retirement, they confuse the two. However, paying the mortgage for your personal investment property using SMSF money is not allowed. Once again, this type of mistake may result in a penalty being issued by the ATO.
Residential properties purchased using SMSF funds are not to be lived in or used by members of the fund. Although these mistakes are often difficult to detect, living in a property purchased using SMSF funds is a violation of SMSF rules and regulations.
When you purchase a property through an SMSF, it is the property of the SMSF. Therefore, any rental income should be paid into the fund rather than into a personal bank account.
The rules around non-compliant related party loans state that making a related party loan to your super fund is not allowed. This is a common mistake, using a party related loan to purchase an asset. You can personally lend money to the fund for commercial reasons; however, in cases like this, the single acquirable asset rules must be met.
If your SMSF takes out a loan to purchase an asset, the loan must be used for this purpose. Fund members often make the mistake of thinking that one loan can be used for multiple purposes. However, this is not the case, you should only purchase one asset per loan.
Purchasing house and land packages also break the single acquirable asset rule, purchasing the land and the house requires two separate contracts. Building a home with an SMSF loan is also not possible, because there are many different contracts associated with building a house; therefore, building a house would breach the single acquirable asset rules.
Purchasing properties in high-risk areas is a common mistake. For example, buying property in a mining town or beach towns close to unstable land. Before purchasing a property, conduct thorough research on the location, study market trends, or speak to a property expert before you commit.
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