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Self Managed Super Fund

Self-managed super funds (SMSFs) are a way of saving for your retirement. In SMSF, trustee transfers money from a retail or industry super fund into his own SMSF and controls the investments and insurance option.

Why you choose a self-managed super fund?

Privately managed by you, setting up a self-managed superannuation fund gives you investment control over your retirement funds.
With members in self-managed superannuation funds now holding more assets under management than any other superannuation fund in Australia, there are many benefits to setting up an SMSF. These include:

  • The ability to watch your investments grow from inception
  • Control over how much you invest in each asset class
  • The flexibility to invest in a variety of assets, from property and term deposits through to shares
  • The capacity to borrow funds through your super to build retirement assets.
  • Control over your contribution levels and methods of contribution (whether they be employer or personal)
  • Greater flexibility in relation to estate planning and the distribution of death benefits to dependent beneficiaries.

When a SMSF might be suitable for you?

Some indicators that an SMSF might be suitable are:

  • you are willing to play an active part in managing your financial affairs
  • you have a good understanding of your role and responsibilities as an SMSF trustee
  • setting up an SMSF will help you achieve your goals and objectives, and
  • setting up an SMSF would be cost-effective for you.

We can help you to
A2Z Accountants can assist you in developing and managing an investment strategy that meets your risk tolerance, retirement needs, and legal requirements.
Choose us and you will be making a wise decision for your future.

  • Discover the alternatives to gain control of your super
  • Find out the pros and cons of using an SMSF
  • Setup your SMSF
  • Setup investment strategies
  • Administration / accounting
  • SMSF audit

A Self-Managed Super Fund (SMSF) is a super fund with no more than four members where each member is a trustee (or director, if a corporate trustee).
Unlike other super funds, SMSFs are regulated by the Australian Taxation Office (ATO). SMSFs may have an individual or corporate trustee. 

SMSFs may have a corporate or individual trustee. It is possible to set up an SMSF with only one member as well as multiple members.

To comply with the law an SMSF must meet the following criteria:

  • Have four or less members
  • Each member of the fund must be either an individual trustee, or a director of the corporate trustee
  • If the trustee of the fund is a company, also known as a ‘corporate trustee’, then each director of the company must be a member
  • No member of the fund can be employed by another member of the fund unless those two people are related
  • The trustees of an SMSF are responsible for running the fund and cannot receive any remuneration for performing this role.

Advantages and risks of self-managed super funds

SMSFs have a number of possible advantages. These include:

  • Pooled family assets
  • Control and flexibility
  • Investment control and choice
  • Estate Planning
  • Tax control
  • Asset protection

Requirements
Who is eligible to become an SMSF trustee?
To be eligible to become an SMSF trustee, a person must be age 18 years or older and generally not:
•be under a legal disability
•have been convicted of an offence involving dishonesty
•have been subject to a civil penalty order under the SIS Act
•be insolvent under administration e.g. an undischarged bankrupt
•or have been disqualified by a regulator previously to act as a trustee.

Where the trustee of the SMSF is a company, the company must not:
•know or suspect that a responsible officer of the company is a disqualified person
•have had a receiver, official manager, administrator or provisional liquidator appointed
•or have had action taken to wind up the company.

WARNING
Persons who knowingly act as a trustee of a super fund while disqualified can be subject to severe penalties, such as imprisonment.
Other trustee requirements
other requirements of trustees include:

  • Each trustee of an SMSF must be a member of the fund and vice versa, except under the circumstances listed above (there are separate rules for single member funds)
  • No member of the fund can be an employee of another member of the fund unless they are related
  • No trustee of the fund can receive any remuneration for their services as trustee
  • Trustees must consent to their appointment as trustee in writing
  • New trustees must sign a declaration acknowledging their roles and responsibilities.

Regulation of self-managed super funds
While the Australian Taxation Office (ATO) is the primary regulator of SMSFs, other government organizations, such as the Australian Securities & Investments Commission (ASIC) and the Australian Prudential Regulatory Authority (APRA), also have regulatory responsibilities in relation to SMSFs to the extent that the legislation they oversee contains provisions that are pertinent to SMSFs and the provision of SMSF advice.

Australian super fund
The SMSF must meet the definition of an ‘Australian super fund’ at all times in the income year to remain complying and so receive the taxation concessions afforded to super funds.  The three tests to determine if a fund meets the definition of an Australian super fund are: 

  1. The fund was established in Australia or any asset of the fund is situated in Australia.
  2. The central management and control of the fund is ordinarily in Australia.
  3. The fund meets the ‘active member’ test. An active member is one who contributes to the fund or an individual on whose behalf contributions have been made.

Australian Taxation Office (ATO)
The ATO is the principal regulator of SMSFs, aiming to:

  • Ensure SMSFs comply with the relevant provisions of the super rules, legislation and regulations
  • Provide information and forms to assist with set up and ongoing management of SMSFs
  • Take enforcement action where required for breaches of the super laws/ rules
  • Ensure SMSF auditors are undertaking their checks on funds to the required standard.

However, the ATO does not focus on the prudential regulation of SMSFs as the members, being trustees, are responsible for protecting their own interest in their fund.

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FAQ

What is a Self Managed Super Fund (SMSF) and how does it work in Australia?

A Self Managed Super Fund (SMSF) is a type of superannuation fund in Australia that is managed by the members themselves. It allows individuals to have greater control over their retirement savings and make investment decisions on their own. SMSFs are regulated by the Australian Taxation Office (ATO) and have specific rules and regulations that need to be followed. Our accounting firm can provide expert advice on SMSF establishment, ongoing administration, compliance requirements, investment strategies, and retirement planning to ensure that you are fully informed and compliant with Australian laws.

What are the benefits of setting up a Self Managed Super Fund (SMSF) in Australia?

Setting up an SMSF in Australia can offer various benefits, including flexibility and control over investment decisions, potential tax advantages, ability to invest in a wide range of assets, estate planning advantages, and potential cost savings compared to other superannuation funds. However, SMSFs also come with additional responsibilities, compliance requirements, and risks. Our accounting firm can help you understand the benefits and risks associated with SMSFs and provide expert guidance in setting up and managing your SMSF in compliance with Australian laws.

What are the compliance requirements for Self Managed Super Funds (SMSFs) in Australia?

SMSFs in Australia are subject to strict compliance requirements set by the ATO. These requirements include annual financial reporting, audit, and tax lodgment, investment restrictions, contribution limits, trustee responsibilities, and other regulatory obligations. Failure to comply with these requirements can result in penalties, fines, and potential loss of tax concessions. Our accounting firm can assist you in meeting your compliance obligations, preparing financial statements, conducting SMSF audits, and ensuring that your SMSF operates in compliance with Australian rules and regulations.