1. What is a Self Managed Super Fund (SMSF)?
A Self-Managed Superannuation Fund (SMSF) is basically a superannuation fund that is controlled by the trustees / directors who are also members of the fund. They allow people to control their own super investments for their retirement. The control of your investments is a big appeal factor in setting up your fund.
2. What are the advantages of SMSFs?
SMSFs have a number of advantages which include:

a) Control & Flexibility – This is gain in the areas of investment control, control over retirement benefits and control over death benefits.

b) Tax Savings

• No contributions tax or capital gains tax is payable until the SMSF tax return is complete; therefore your money is working for you for longer.
• Including contributions a concessional tax rate of 15% will be applied to the fund income.
• For investments kept more than 1 year will be taxed at an effective rate of 10% for realised capital gains.
• Using franking credits & offsetting your capital losses, tax can be reduced to much lower levels
• No tax is payable on earnings when the fund is paying pensions to members.

c) Cost Savings – With an SMSF you do not incur percentage based fees like other superannuation funds. Rather your fee is capped which means the more you have in super the more cost-effective it becomes.

d) Investment Choice – Through the SMSF vehicle you can obtain greater control over your retirement strategy. You can invest in cash, fixed interest, shares and property. Access to investment borrowing opportunities also exists. The ability to own business real property to assist your business cash flow is an attractive option.

e) Estate Planning – Another benefit of an SMSF is that it can be used for efficient estate planning and is a long term multi-generational family benefit.

3. How much do I need to set up an SMSF?
There is hard and fast rule as to how much you should have to establish an SMSF. These types of funds have fixed fees and with small balances may not be cost-effective. However, this depends on what you wish to use the SMSF for. SMSFs offer different strategies to other types of super funds.
4. What is a SMSF Specialist Advisor?
A number of practitioners in the Self Managed Super Fund (SMSF) area claim to be experts and specialists. However, only SMSF Association of Australia, SMSF Specialists have undertaken the required training to earn this title.
Professionals that have achieved accreditation with SMSF Association of Australia may be an SMSF Specialist Advisor™ (SSA™) and/or an SMSF Specialist Auditor (SSAud®). Learn more from SMSF Association.
Both David Watkins and Thomas Jacks are SMSF Specialist Advisors.
5. Why use a SMSF Specialist Advisor?
Not only have SMSF Specialists™ undergone relevant testing on their knowledge of SMSF regulatory requirements and legislation, their ethical practices and businesses have also been assessed to guarantee best practice standards are adhered to. Every SMSF Specialist Advisor™ has achieved the benchmark in professional standards set by SMSF Association, and are dedicated to maintaining their SMSF competence and expertise through ongoing professional development.
6. What can an SMSF Invest in?
Members of SMSFs can invest in a broad range of investments. There are rules and regulatory limitations placed on SMSF members, these include borrowing to invest in assets, investing in in-house assets or acquiring assets from related parties.
7. Who would not be suited to an SMSF?

a) People with only small superannuation balances as SMSFs usually occur a flat administration fee which therefore may not make them cost-effective.

b) People who do not wish to have a level of control over their retirement savings that they can’t already receive through a retail superannuation fund.

c) People who have relatively simple retirement and estate planning needs that can be achieved through the use of a retail, corporate super fund or industry funds.

8. Why buy my business premise through my SMSF?
Through the use of an SMSF a business owner can purchase their premises with their SMSF. This has a twofold effect. Rather than paying someone else rent a business owner can pay rent to their SMSF which at the same time will increase their overall retirement savings. Further, superannuation is protected from potential creditors in bankruptcy. Purchasing commercial premises from a fund member does not breach the related party rules.
9. How can I borrow through my superannuation?
There are a number of ways you can borrow through superannuation. You can borrow to invest in shares or property. The most common way to borrow to buy property is through a Limited Recourse Borrowing Arrangement (LBRA); however, a number of alternative options can be explored.
10. How many members can be in a SMSF?
An SMSF can have up to four members.
11. Can we both rollover our superannuation benefits into one SMSF?
Yes. Through the use of an SMSF partners/spouses can combine superannuation benefits into a single fund. This enables you to take advantage of one cost structure rather than paying two separate fees.
12. What are the two different structures of an SMSF?
There are two different structures an SMSF can undertake. The SMSF can either have at least two individual trustees or a company as a trustee. If you are the only member of the SMSF you must use a company as the trustee. We tend to recommend a company should act as a trustee of an SMSF.
13. What are some responsibilities of SMSF trustees?
The responsibilities of the management of SMSF members’ benefits are placed on the trustees of the fund. The trustees must ensure investment decisions are documented and the assets performances are closely monitored. Many trustees outsource this requirement to firms such as ours. We provide peace of mind to our clients, providing them with a service that they can trust.
For further information see http://www.ato.gov.au website.
14. What are the different insurance options available?
Life Insurance, Total & Permanent Disability (TPD) Insurance – ‘own’ or ‘any’ occupation, Income Protection Insurance and Trauma Insurance. Refer to article on insurance for more details on the benefits of holding some cover inside super and what cover must be held external to super.
15. I have a SMSF and plan to move overseas for more than two years
There are implications that you need to know about if you wish to move overseas for more than two years. You should consult professionals like us before taking off to prevent your retirement savings from incurring additional tax.
16. Can I keep my money separate to other members e.g. spouse?
Yes. You can split the SMSF so each members balances and investments are separate.
17. Who regulates SMSFs?
The Australian Taxation Office (ATO) is the key regulator for SMSFs. Other superannuation funds such as industry and retail superannuation funds are regulated by the Australian Prudential Regulation Authority (APRA).
18. How much tax do I pay inside Super?
All earnings and contributions in superannuation are taxed at 15%. However, unlike retail and corporate superannuation funds, no tax is payable inside an SMSF until the tax return is completed. Therefore, your money is working for you for longer.
When you commence a pension all earnings associated with the pension become tax-free.
19. What are Benefits and Risk to Borrowing through Super
Typically SMSFs are not allowed to borrow; however, there are certain exceptions to the rule. The most common exception is called a Limited Recourse Borrowing Arrangement (LRBA). This type of borrowing is considered a limited recourse loan. The rights of the lender in this type of arrangement against the SMSF trustee are limited if the SMSF defaults on the loan.
When used in the correct circumstances borrowing through superannuation can be an effective way for members to growth their retirement savings. Before commencing this strategy there are a number of issues that should be considered. Members of the SMSF must ensure that there is sufficient contributions coming into the fund and that the fund’s investment income is adequate to meet loan repayments and expenses. Members must also ensure that appropriate insurance arrangements are in place to provide the fund with necessary protection.
Due to the complex nature of SMSF Limited Recourse Borrowing, we have detailed a fact sheet to provide a greater insight in the how the arrangement works.