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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.
A self-managed super fund setup consists of the following features.
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.
If you want to know how to set up SMSF, you must keep in mind the following basics.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.