Tips And Tricks To Manage Your SMSF Effectively

January 4, 2022    Accountant Perthwa

The Australian compulsory super system proves to be highly beneficial for the aging population who are nearing their retirement age. This is the reason every Australian wants to invest in superannuation funds. However, one of the main worries of these people is the performance of some industry and retail super funds that fail to meet their expectations. That is why self-managed super funds or SMSF have become increasingly popular in recent times. 

As an SMSF provides an effective way to gain control of your future and retirement finances, you can consult an SMSF accountant Perth for the necessary financial advice.

Basic Features Of An SMSF

A self-managed super fund setup consists of the following features.

  • There can be a maximum of 4 members in the fund.
  • All members have to be trustees. However, if there is a corporate trustee, all members will automatically become the director of the trustee. 
  • You can use the fund’s money only after you retire.

Over the last one and a half decades, significant growth has been witnessed in this field. The number of funds has increased from 187000 to over 500000 in 15 years, and the assets under the control of these funds are more than $500 billion. This asset figure is almost one-third of all assets controlled by the super system.

Setting up an SMSF can be a great option to gain control and flexibility over your retirement. However, at the same time, it will involve lots of responsibilities, too, and you have to invest ample time and effort in its management.

Basics You Must Know About Setting Up An SMSF

If you want to know how to set up SMSF, you must keep in mind the following basics. 

  • First, you must decide the right trustee structure for you. Depending on your requirements, it can either be a corporate or an individual trustee structure.
  • A maximum of four members can be included in the SMSF, all of whom must be trustees if you choose an individual trustee structure. On the other hand, if you appoint a corporate trustee, the members should be directors.
  • You must think about various expenses associated with setting up and running an SMSF. Usually, these costs are fixed. Even though you are not required to have a minimum balance to start an SMSF officially, having a balance of $250000 can be beneficial.
  • When you run a self-managed superannuation fund, the annual supervisory levy should be paid regularly to the Australian Taxation Office. Your SMSF accountant can prepare your tax return and financial statements and perform an independent audit.

Useful Tips For Managing Your SMSF

Managing an SMSF involves lots of responsibilities. However, you can choose your financial advisor or personal tax accountant to manage all the important tasks on your behalf.

We discuss some useful SMSF management tips, which financial experts usually suggest. These tips focus on key administration considerations you must be aware of. However, it is better to take professional advice for the specific situation you are in.


Understanding Fund Income And Tax Returns

Whenever you decide to open a self-managed superannuation fund, you must fully understand the SMSF annual return. This annual return combines regulatory return and fund income tax and must be lodged with the Australian Taxation Office each year.


Valuing Fund Assets

Valuations are important to complete some crucial aspects like the financial statement, annual SMSF returns, and the members benefit reporting tasks. Make sure the valuation becomes effective at the reporting date, which is usually 30 June every year.


Engaging An Auditor

Having an approved auditor in your fund is also important. As professionals, approved auditors carry out annual audits for SMSFs, thus playing a vital role in keeping the SMSF legally compliant. 


Accepting Contributions

Superannuation law involves some standards that you must meet to take your fund to a position where it can accept a superannuation contribution. As a trustee, it will be your responsibility to look after this obligation.


Notifying The ATO Of Change In Fund Details

In Australia, every SMSF must notify the ATO if any change occurs in their fund details. These changes may include name, address, contact details, membership and trustees. Make sure the ATO is informed within 28 days of making the change.


Record Keeping

Like any business structure, trustees of an SMSF must also keep superannuation and tax records properly and accurately. This accurate record-keeping contributes to efficient fund management.


Understanding Rollovers Out Of The Fund

Sometimes, a member in the SMSF may want to transfer their benefits to another super fund, completely or partly. If such a rollover of benefits occurs, the concerned trustee must provide a Rollover Benefits Statement to confirm that the rollover is made to a valid super fund.


Making Benefit Payments

One of the essential duties of the trustee is paying superannuation benefits to all the members. These benefits can be paid either as an income stream or a one-time lump sum.


Paying Benefits ‘in-specie’

If you prefer giving lump-sum payments to your trustees, in-specie transfer of a fund asset can be a method. You have to make sure that the asset has a market value when you are paying it.


Payg Withholding

As an SMSF trustee, you must withhold PAYG (Pay As You Go) withholding tax. In this case, you have to pay a taxable benefit to a member if their age is under 60 years and they receive a lump sum member benefit or an income stream.


How An Expert Can Help You

Setting up a new SMSF and managing it can be challenging. You will need help from knowledgeable financial advisors. Otherwise, you may make mistakes and face penalties issued by the Australian Taxation Office.

Tax Accountant Perth WA is a Perth-based financial advisory firm that has provided authentic and reliable services over many years—experts associated with us work closely with their clients and help them make effective decisions. The best part is that we will give you advice based on your personal situation.

We have a separate division that deals with SMSF setup and management. If you want to set up SMSF online or need any other help, you can contact us anytime.

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