Ask an SMSF accountant: is self-managed super right for you?
At Bruce Edmunds & Associates, we’re focused on getting you where you want to be in 5, 10 or 20 years time.
And a key part of that is your super.
Superannuation is a crucial part of your wealth planning – as such, it’s little surprise that many opt to avoid super providers and instead choose to self-manage their super.
Managing your own super can pay dividends (often literally) – however, it also comes with a lot of responsibility and work. Our SMSF accountant helps many Australians to get to the places they want to be by helping them manage their super.
What is SMSF?
Exactly what it says on the tin – it’s super, your way!
With most retail or industry super funds, you’ll choose what sort of portfolio you want.
You may be able to choose between a low-risk, conservative portfolio – alternatively, you may opt for a high-risk, high return portfolio.
Some funds are going even further and offering additional portfolios for those who want their super investments to go towards ethical and sustainable businesses.
Asides from this decision however, your input over your super will be limited, to say the least.
Instead of being forced to rely on an ill-defined portfolio, SMSFs give control back to you.
They allow individuals to maximise their portfolio’s performance and tailor their investments to achieve their specific goals, instead of having to use a generic portfolio.
Many have partnered up with our SMSF accountants to enjoy greater returns on their super compared to a traditional super fund by implementing effective SMSF investment strategies.
Eager to join them? Learn the potential pros of going your own way with your super
1) More control
If we’re going to talk about the pros of choosing a SMSF, we may as well start with the obvious one!
When it comes to your finances, there’s nothing wrong with wanting to be in control.
After all, it’s your future that this affects – no surprise that so many feel uncomfortable leaving it in someone else’s hands.
With SMSF, individuals will have total control over how your super is invested. You can personally vet every company included in your portfolio if you want. Not to mention, you’ll be able to respond quicker to changes in the market.
It doesn’t even have to be restricted to financial assets such as shares, bonds, and managed funds, either.
With a SMSF, you’ll be able to invest in any sort of asset that may generate a return, including:
- Property and real estate
- Gold and other commodities
- Businesses
- Cryptocurrency
- Personal assets like cars and artwork
2) Pooling your super
Another advantage of SMSF is the ability to pool your resources. On your own, you may not be able to afford a certain type of asset – collectively, however? That’s a different story!
Current regulations allow for up to four members to pool their money together as part of a SMSF. This may open up investment opportunities that otherwise would prove too expensive for any of you to access individually.
3) Better tax management
In addition to affecting your retirement income, super also affects your tax status.
It can have an impact on your tax obligation, and can open you up to a range of different exemptions.
Many tax minimisation schemes involve shunting assets into superannuation – something that can only be done if your fund is self-managed.
For example, capital gains (tax paid on the profit gained from the sale of a fixed asset) are taxed at a standard 30% rate.
However, earnings generated by SMSFs are taxed at a lower 15% rate – as such, any capital gains from assets held by your SMSF will be taxed at the lower rate (and we haven’t gotten started on the 33% discount either!)
4) Estate planning
Super isn’t the only way our SMSF accountants can help prepare you for the future – our estate planning services ensure your estate is managed and distributed equitably after after your passing.
What you may not have known however is that SMSF comes into play here as well!
SMSFs offer considerably more flexibility when mandling your estate compared to a traditional super fund.
That’s because super (both retail and self-managed) is administered as a trust, and is therefore not owned directly by you. As such, it typically falls out of the scope of a will.
The thing with SMSFs is that you have total control. We aren’t just talking about what your fund invests in – you’ll also have control over the trust deed.
As such, you can set up your trust deed in a way that includes binding death benefit nominations, as well as greater detail about how these benefits are to be paid.
The challenges of SMSF
While SMSFs come with a range of advantages, they also come with a host of unique challenges that those with retail super funds don’t need to worry about.
Our SMSF accountants have seen many struggle with these unique challenges, and as a result lose out when it comes to their super.
Now, we aren’t saying that these are reasons to avoid SMSFs altogether – that said, they’re important things to consider!
Laws and regulations
There are strict laws that come with superannuation. WIth a regular super fund, this isn’t something you’ll ever have to worry about, as your provider will look after all this.
With a self-managed fund however,you will be responsible for ensuring that your fund adheres to super laws and regulations, and that your investments comply with tax laws.
This is a lot of work – luckily, our experienced SMSF accountants are ready to help, lending their knowledge of superannuation regulations to ensure your SMSF is as stress-free as possible!
Reduced access to compensation schemes and dispute resolution mechanisms
When money is lost due to theft or fraud, SMSF members will not have access to special compensation schemes.
What’s more, certain dispute resolution bodies such as the Superannuation Complaints Tribunal do not assist with SMSF disputes. Depending on the nature of the dispute, your only viable option may be to take the issue to court – a lengthy and expensive endeavour.
It’s not for everyone
According to ASIC, not everyone will benefit from going independent with their super – in fact, for funds with balances below $500,000, you may very well be better off sticking with an industry or retail fund!
Our SMSF accountant can help. We’ll take a look at your circumstances and provide qualified advice, including whether or not you’re suited for a SMSF.
Need an SMSF accountant?
Call Bruce Edmunds & Associates!
Just because it’s a self-managed fund doesn’t mean that you have to personally oversee everything that goes on with your SMSF.
By appointing an experienced SMSF accountant to manage your super for you, you’ll be able to take all this extra work off your hands.
A lot of work goes into the financial side of planning for your future. Regular SMSF statements to keep track of your fund’s performance and managing your Superannuation are just a few of the tasks involved – you’ll also need to consider:
Luckily, our team of SMSF accountants also offer services for all of these areas too!
Since 1966, and with more than 50 years of experience, we’ve been helping Australians like you get where you want to be, and have tailored our personal accounting services with that goal in mind.
Whether you want super advice or one-off services like your tax return, give our team a call today on (03) 9589 5488.
Alternatively, click here to book an appointment online.
