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Why have SMSF for your clients

"For many Australians, superannuation is their second largest investment after the family home."

The family home is generally not regarded as an 'investment' whereas, for many Australians, superannuation is their second largest investment after the family home. Therefore, it makes sense to place significance focus on superannuation.

The main difference between investment outside superannuation and superannuation investment is that superannuation investment can provide certain benefits. Self managed superfund can offer significant tax and other benefits.

Self managed superfund can help your clients achieve greater financial self-reliance for their retirement.

How self managed superfund can help your clients achieve greater financial self-reliance for their retirement?

Tax benefits

Self managed superfunds offer significant tax benefits to individuals who choose to save in this type of structure. As the rate of taxation is lower than personal income tax rates, money held in superannuation grows at a quicker rate.

When in accumulation phase:

If the self managed superfund holds Australian shares directly, any tax payable by the fund may be reduced by franking credits on dividends. For example, contributions and earnings taxes can be reduced or offset. If the franking credits exceed the tax payable, the excess amount is refundable.

When in pension phase (fund assets are held solely for the purpose of paying a current pension), all income earned and realised capital gains are exempt from tax within the superfund.

When in pension phase, as no tax is payable on income earned, the franking credits are refundable in full. Furthermore, as no tax is also payable on realised capital gains, capital gains from shares bought when you were in accumulation phase, then sold after you commence pension is tax free.

In addition, effective from 1 July 2007, superannuation benefits received by people aged 60 and over will be tax free.

Self managed superfund can also offer seamless transfer from accumulation phase to pension phase, including to transition to retirement income stream.

Investments for the self managed superfund

As an advisor, you are in a unique position to advise on a create a portfolio composition tailored to meet your clients' exact need.

Self managed superfund can investment in a wide range of assets and obtain full life and income protection insurance coverage.

Self managed superfund can invest in most investment products including managed funds and direct assets such as shares - listed and unlisted, Australian and overseas, listed and unlisted property trust, bonds and derivative products like warrants and options.

In addition to the wide choice above, some investments will only be available exclusively through self managed superfunds. These include real property and collectables.

Ancillary benefits


Members of self managed superfund are able to obtain both life and income protection insurance cover through the self managed superfund. The advantage of this approach is that the premium is paid by the superfund and is a tax-deductible expense to the superfund.

As Reasonable Benefit Limits have now been abolished, there is no longer a barrier for those members who need higher life insurance to obtain that cover through self managed superfund. Reasonable Benefit Limits are the maximum amount of retirement benefits a person can receive over that person's lifetime at a concessional tax rate.

As an advisor, you can advise on your clients' life and income protection insurance needs to ensure they are appropriately covered.

Effective transfer of wealth

For most people, superannuation savings is their largest asset or second largest asset after the family home. Hence, it is prudent to ensure your clients' superannuation savings can be transferred between generations effectively.

Self managed superfund's inherent flexibility allows you to design arrangements to facilitate effective wealth transfer.

Unrivalled security

As your clients are trustees, they 'manage' the self managed superfund. In managing the superfund, they will always protect their own interest. They will hold the superannuation assets.

All the above makes superannuation investment in a self managed superfund the most tax effective structure while also offering unprecedented flexibility.