Self-Managed Superannuation Funds (SMSF) are a type of superannuation fund where individuals take control of their own retirement savings. They are the only type of superannuation fund where individuals can make decisions about how their superannuation is invested, managed, and spent. This involves setting up a trust to hold the assets and appointing members as trustees (or directors) to manage the trust.
A self managed superannuation fund involves a number of steps, including obtaining an Australian Business Number, establishing a trust deed, appointing trustees, and obtaining necessary licenses. Once the SMSF is set up, trustees will need to create an investment strategy, manage contributions and withdrawals, and ensure the SMSF is compliant with the Superannuation Industry (Supervision) Act 1993.
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When it comes to investment considerations, trustees must ensure that their investments are within the trust deed and comply with the sole purpose test. Trustees are also required to keep records and display reasonable care, skill and diligence when making decisions.
When it comes to taxation considerations, trustees should ensure that they are aware of their obligations to the Australian Tax Office (ATO). This includes meeting reporting and lodgement obligations, being aware of contribution and withdrawal limits, and ensuring that the SMSF remains compliant with the law.
Finally, trustees should also be aware of the risks associated with running an SMSF. These can include conflicts of interest, and legal and financial risks. Trustees must ensure they have a good understanding of the responsibilities associated with running an SMSF, and how to manage them.