9 Benefits of Setting Up A Self Managed Super Fund There are approximately ONE MILLION Australians who are currently managing their own SMSF. This figure is increasing dramatically each year and there is a reason for it. Why SMSF? A SMSF has a number of specific benefits that Industry Super funds do not provide. Let us have a closer look at the features of a SMSF. Benefit 1: Total Control A SMSF gives you total control of your Super by allowing you to choose where you invest your Super Benefit. Invest in Shares, Property, Term Deposits, Cash, CFDs and more! Many of our clients who are disappointed with their Superfunds performance or simply think that they can do a better job investing their Super Benefit themselves are choosing to establish and manage their own SMSF. Benefit 2: Lower Fees SMSFs can be the most cost effective type of Superannuation Fund by fixing your fees with investment managers and accountants irrespective of your Super balance. This is unique in comparison to other Superannuation Funds whose fees increase as your Super balance grows. For example, a Superannuation Fund charging 1% in fees will double their fees from $2,000 to $4,000 per annum when your Super Benefit doubles from $200,000 to $400,000. Benefit 3: Add thousands to your Final Super Payout Consider that an average retail Superfund can charge up to 2% p.a. in fees and that you will pay around $500,000 in fees over your working life. With fixed annual fees of $1,500 you can expect to pay closer to $90,000 in fees over your working life. Thats a fee saving and extra Super in Retirement of over $400,000! The earlier you start your Self Managed Super, the more you save towards your retirement life. It is really amazing! Benefit 4: Ownership A recent analysis indicated that sometime in the near future major Retail and Industry Superfunds will experience payout difficulties due to insufficient liquidity as baby boomers begin to retire and worker contributions are insufficient to meet retiree withdrawals. The reason that this can occur is that you are not the owner of the assets in a retail and industry Fund. You simply have an entitlement in the Fund assets as a Member. It may be that this risk is exaggerated but it is a risk nonetheless you can do without. A SMSF eliminates this risk entirely. Why? Because in a SMSF you are the owner of all SMSF assets and you decide when you can access your own Super Benefit. Benefit 5: Consolidate Multiple Member Accounts A SMSF can have up to 4 Members and each of these Members can contribute to the one SMSF. This means that instead of each Member paying separate fees in their Fund (or in multiple Funds) you can rollover and consolidate 4 persons Super Benefits, which can then be managed under the one SMSF. Importantly, whether your SMSF has 1,2,3 or 4 Members, your annual fee does not change! Benefit 6: Accumulation and Pension Fund in one With Retail and Industry Funds your benefit is typically invested separately in a Pension or Accumulation Account. This means that when you wish to drawdown your Super Benefit as a Pension your Super Benefit will need to be transferred to a separate Pension Account and any additional contributions you make will be added to a completely separate Accumulation Account. Each Account is managed separately with separate investments and a separate fee structure. Usually the more Funds you have the more fees you pay! A SMSF is a Pension and Accumulation Fund in one. You can commence a Pension and continue contributing to the same SMSF. There is no need to split your Super Benefit into multiple Funds. Benefit 7: Taxation Benefits When you commence a Simple Account Based Pension or Transition to Retirement Pension, the SMSF tax rate falls to NIL on earnings and capital gains. This means that you can generate unlimited income and capital gains and will pay NO tax on them after you commencing pension. This also means that your SMSF is entitled to receive any franking credits on Australian Share Dividends in cash from the ATO. Given that the company has paid 30% tax and your SMSF tax rate in pension mode is Nil, the entire 30% tax paid is refundable to your SMSF. This is not the same in Retail and Industry Superfunds that can decide how to allocate the tax refund or retain it if they choose. Benefit 8: Consolidate Investments It is possible for Members to make contributions of assets into a SMSF instead of cash (called in specie contributions). Importantly only certain assets listed in the super regulations can be transferred in specie by a Member to a SMSF, such as Shares, Managed Funds and Commercial Property. In specie transfers allow you to consolidate your Family Assets under the one SMSF tax advantaged umbrella. We note that taxation and capital gains tax issues should be considered. Benefit 9: Succession Planning A SMSF allows you to conveniently and legally pass a Members Super Benefit to their beneficiaries in the event of the Members death. This can keep your SMSF assets under the same SMSF tax advantaged umbrella even after a Members Death.
Posted on: Tue, 11 Mar 2014 06:01:34 +0000
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