Many businessowners may be missing out on opportunities to build wealth by not setting up their own Self Managed Super Fund (SMSF). Or they are not managing their existing SMSF to its maximum potential.
The difference between an SMSF and other types of superannuation funds is that the members of an SMSF are also the trustees. This means the members of the SMSF run the fund for their own benefit and are responsible for complying with the super and tax laws. An SMSF can provide greater flexibility and the ability to create tailored strategies to help grow and manage your wealth.
Budget changes make SMSF worth another look
The usefulness of an SMSF for businessowners is again in the spotlight after the most recent changes to superannuation in the Federal Budget. The main impact of the changes will be to reduce the amount of money people can contribute into Super over their lives.
For businessowners, there are more ways of getting money into superannuation than just contributions. For example, businessowners can rent their business premises from their SMSF, with the rental income not counting to their contribution caps. The proceeds from the sale of their business may be contributed (if certain criteria is met) in addition to the regular contribution limits.
Considerations when setting up an SMSF
If you are considering setting up an SMSF here are three key things to consider.
1. Get professional help running your SMSF so you can make money by spending more time doing what you are good at. It doesn’t make sense spending time out of your business to meet the obligations associated with running a SMSF. Super is complex and ever changing. Good help can make sure things don’t go wrong and cost you more in the long run.
2. Get advice from a licensed SMSF advisor. From 1 July 2016 all accountants must have an Australian Financial Services Licence (AFSL) to be able to provide clients with advice on SMSFs. The advice you get about your SMSF must be documented in a formal statement of advice (SOA) and you’ll need to formally accept it via an authority to proceed. If you are being recommended to set up a SMSF without a formal SOA you should question whether the recommendation is in your best interest.
3. Make sure your Trust Deed is high quality. The most vital part of setting up a SMSF is getting a high quality, robust Trust Deed. The Trust Deed sets out the rules you must abide by and the quality of these rules becomes really important when a dispute arises. More and more cases are coming before the courts where couples have split, or people have passed away and the lack of quality in the Deeds is very apparent.
FREE SMSF Seminar
Have you ever wondered whether a SMSF is right for you? My colleagues Michel Minter and Kate Chapman and I are running free seminars to provide an insight into the unique opportunities offered by SMSFs as well as some potential pitfalls of which to to be mindful.
Newcastle | Thursday 15 September, 5.30 pm – 7.00pm
Maitland | Wednesday 21 September, 5.30 pm – 7.00pm