What is a Self-Managed Superannuation Fund (SMSF)?
A SMSF has no more than four members, each individual trustee of the fund is a fund member, each member of the fund is a trustee, no member of the fund is an employee of another member of the fund unless those members are related. The requirement that all members be trustees ensures that each member is fully involved in the decision-making process.
Why a Self-Managed Superannuation Fund may be for you.
Self-Managed Superannuation Funds (SMSF’s) are currently the fastest growing sector within the superannuation industry. They are rapidly becoming popular amongst those who wish to increase their level of control over their superannuation funds, reduce complexity of their superannuation, minimise costs for management and administration expenses, and work purposefully toward fulfilling their financial retirement and lifestyle goals.
It has the lowest tax rate available and is a great tax planning vehicle whilst maintaining control.
At retirement upon switching to pension phase, the income earned by the Superfund is tax free and the allocated pension paid by the Superfund is taxed concessionally giving tremendous tax planning benefits to the recipients.
Taking a more active role in managing your retirement funds and investment choices can be a rewarding experience, however you should discuss your superannuation needs with a qualified financial planner to determine if a SMSF is suited to your overall situation.
Positive benefits of a SMSF.
- Control – the members, as trustees, can have complete control over how, when, and where superannuation funds are invested.
- Flexibility – the accumulated wealth of the superannuation fund can be invested in a wide range of assets, both domestic and international, provided the Trustees comply with the relevant regulations and an appropriate written investment strategy.
- Tax Concessions – both accumulation and drawdown of retirement benefits are taxed at concessional rates per current Government policy and legislation. Imputation credits attached to any franked dividends can be used to partially or completely offset taxation liabilities of the superannuation fund.
- Investment Returns – effective tax planning and management of your own superannuation fund can potentially have a significant impact on the bottom line upon retirement.
- Protection – superannuation assets are generally protected in the event of bankruptcy with certain assets not being accessible to satisfy outstanding creditor debts.
- Accumulation to Pension Phase – upon switching from an accumulation to a pension phase upon retirement of a member of the fund, capital gains tax on assets attributed to that member are effectively wiped out as assets don’t need to be sold down.*
- Portability – the SMSF can continue indefinitely for future generations.
- Savings – as Trustees act as funds manager, fees can potentially be reduced to transaction and administration costs only.
- Deceased Estate Structuring – potentially a better vehicle than the traditional testamentary Trust in respect to deceased estates and estate planning.
- Cryptocurrency Investments – can purchase alternative investments like cryptocurrencies not currently available on retail platforms.
Disadvantages of a SMSF.
- Somewhat extensive set up procedure as per above.
- BAS/IAS must be completed monthly or quarterly (if applicable).
- Tax Return must be completed annually.
- Must keep accurate financial statements – Balance Sheet, Profit and Loss, and Member’s Balances.
- Annual audit must be conducted by an approved Auditor.
- Must have a written Investment Strategy.
- Set up procedure as per above.
- BAS/IAS monthly or quarterly (if applicable).
- Tax Return completed annually.
- Financial statements recorded – Balance Sheet, Profit and Loss, and Member’s Balances.
- Annual audit by an approved Auditor.
- Written Investment Strategy.
If you need more help choosing and establishing the right structure for your cryptocurrency activities, myself and my team are available to assist.
Cryptotax, a division of Paris Financial, was the first tax accounting firm established solely for the cryptocurrency community. You can contact us on 0456 BITCOIN.