Frequently asked questions

Can I set up a self managed super fund?

You can set up a SMSF if you are over the age of 18 and not a disqualified person.

A disqualified person is a person that:

• has been convicted of an offence involving dishonesty,
• has been subject to civil penalties under the superannuation laws, or
• is insolvent under administration - undischarged bankrupt.

How much do I need to start a SMSF?

You will need to determine whether you have enough in superannuation for a SMSF to be cost-effective and if you want to achieve investment diversification. Opinions vary as to how much superannuation money you need to make a SMSF effective. It can be the sum of superannuation from up to 4 members. As your fund balance increases, it reduces the relative costs as the fees for SMSF financial and tax compliance and reporting is charged for the SMSF, not on per member basis.

How many members can a SMSF have?

The maximum number of members that can be part of a SMSF is 4. The members of the SMSF need not be related. You can establish a SMSF with your spouse, partner, children, other family members, relatives, friends or a mixture. Each of the individual member balances are tracked and member statements are prepared for each member to satisfy reporting requirements.

Is it possible to have only 1 member?

Yes. A SMSF can have only 1 member. The most common arrangements are:

• two individual trustees, one is the member and the other is a related person, e.g. spouse/ partner.
• a company acting as trustee, where the member is the sole director of the company. No other person is involved.
• a company acting as trustee, where the member is one of only two directors of the company, and the member and the other director are related, e.g. spouse/ partner.

What contributions can be accepted by my SMSF?

A self managed superfund can accept contributions from all sources including:

• superannuation guarantee contributions (employer compulsory contributions),
• from your employer where you have salary sacrificed,
• your personal contributions,
• Government (Government co-contributions, Low Income Super Contribution, Low Income Superannuation Tax Offset),
• transfer/ roll-over from other superannuation fund.

Can contributions from my employer be paid into my SMSF?

Yes. Most Australians can now instruct their employer to pay their compulsory superannuation contributions into their SMSF.

You will require an Electronic Service Address (ESA). Please contact us to obtain the ESA for your SMSF.

Can I rollover my existing superannuation into my SMSF?

You can rollover your existing superannuation into your SMSF. You can either request a form from your existing superannuation fund or use the Standard rollover form available from the ATO to make this request to rollover.

You should review any life insurance benefits that you are receiving and paying for in your existing super fund. If you rollout your benefits, you may lose your life insurence benefits. You should seek financial advise on the consequences of the rollover.

Can I obtain life insurance through my SMSF?

Yes, it is possible to purchase life insurance to cover members through SMSF. However, it is also prudent to seek advise from a life insurance specialist prior to changing any insurance arrangement.

What happens if I am currently in a defined benefit fund?

You can rollover you benefits from a defined benefit fund into your SMSF. Prior to any rollover, it is important to seek financial advice on the consequences of the rollover - as you may be worse off.

What are the costs associated with having my own SMSF?

There is a once-off set up cost, and ongoing cost for the SMSF's accounting and tax reporting. A SMSF can have up to 4 members and therefore, the costs are shared and depending on the value of the SMSF's assets, it may be cost effective relative to the SMSF's total asset value.

What can SMSF invest in?

You as a trustee formulate the investment strategy for the SMSF and invest accordingly. SMSF can invest in any asset not prohibited by superannuation laws. This includes managed investments, direct assets such as shares – listed and unlisted companies in Australian and overseas, listed and unlisted property trust, bonds and derivative products like warrants and options, real property with or without borrowings, and other assets, such as precious metal, cryptocurrency, collectables.

Can SMSF invest in real property?

Yes. SMSF can invest in real property, residential and commercial property.

Can I invest alongside my SMSF in real property?

Yes, you can invest alongside your SMSF in real property. It is important to ensure that property is held 'tenant in common' and the SMSF's ownership is clearly evidenced. You should seek professional advice to ensure it is correctly structured. See Acquire the property as tenants in common.

How is a SMSF taxed?

As with other other superannuation funds, concessional contributions to SMSF and earnings of SMSF are taxed at 15 per cent.

Capital gains realised on assets held for less than 12 months are taxed at 15 per cent. Capital gains realised on assets held for 12 months or more are taxed at 10 per cent.

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

What is the effect of franking credits?

If the SMSF holds Australian shares directly, tax payable by the SMSF 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 the SMSF is in retirement phase, as no tax is payable on income earned or realised capital gains, the franking credits are refundable in full to the SMSF.

Can SMSF pay lump-sum payments to members?

Yes. SMSF can pay lump-sum benefits payment to members who have satisfied a condition of release.

Can SMSF pay member benefits in the form of a pension/ income stream?

Yes, subject to the SMSF's Trust deed - all modern Trust deeds will allow for benefits to be paid as a pension/ income stream. A member can seamlessly transfer from accumulation phase to pension phase, including to commence a transition to retirement income stream. There is no taxation event on commencement of the pension/ income stream.

It also means paying no capital gains tax on subsequent disposal - subject to the transfer balance cap, for example, capital gains from assets bought when you were in accumulation phase, then sold after you commence pension is tax free (including any unrealised capital gains accumulated whilst in accumulation phase).

Which Government department supervises and regulates SMSF?

Australian Taxation Office supervises and regulates SMSFs.

What are the minimum reporting requirements for SMSF?

The minimum reporting annually are:

• prepare financial reports, including member benefits statement, for each financial year ending 30 June,
• audited by and independent SMSF auditor,
• prepare and lodge Annual Return (SMSF's tax return)

Superannuation Accounting Services provides these services. See SMSF accounting and tax lodgement.

What is the Supervisory Levy?

All SMSFs are levied a supervisory levy for supervision by the ATO. The levy is currently $259 per annum (2018).

Can I wind-up my SMSF?

In the circumstances where a SMSF is no longer required or suitable, Superannuation Accounting Services can wind-up the SMSF. If you required further information on winding-up of a SMSF or intend to wind-up your SMSF, contact us to find out about the process.