What is a Self Managed Superannuation Fund?
A Self managed Superannuation fund (also referred to as a SMSF or DIY super fund) is a fund that allows all members to act in the capacity of trustees for the fund. Trustees are responsible for the administration of the fund and are incomplete control investment strategy. Being able to exert total strategic control over the fund is often what prompts people to set up this type of Superannuation option for themselves. Members, as trustees are ultimately responsible for everything that happens within the fund.
As with any type of investment vehicle, total control of a SMSF comes with total responsibility for the actions of the fund. There are obligations regarding compliance and administration that new trustees must embrace before establishing a new fund. The trustee of larger, commercial Superannuation ventures is usually someone with an abundance of industry specific experience; therefore the trustees of a SMSF should consider their own level of experience and knowledge prior to setting up a fund. The trustees are responsible for everything that happens within the fund.
In the past small business owners and the self employed have made up the bulk of SMSF trustees. This is because these people are traditionally familiar with taking on business roles and responsibilities that require compliance with specific regulations. Over time this has changed and a growing number of high income earners are realising that a SMSF is a cost effective way to manage their retirement finances, free from the escalating fees and charges of a commercial super fund. Since 01 July 2005 and the introduction of the Australian Government’s Choice of Superannuation fund initiative; it has become easier for employees to create their own SMSF to which their employers are able to contribute.
When is a Superannuation fund considered ‘Self Managed’ or ‘DIY’?
The following is a list of conditions to which a fund must adhere in order to be considered a SMSF
OR
Funds with only one member
Although it is possible for a SMSF to exist with a single member there are several rules which must be adhered to in order for this to happen. A SMSF may exist with only one member. The single member fund may have a corporate trustee and that member must comply with the following.
Alternatively a single member fund may have two individuals as trustees. In order for this to happen the trustees must comply with the following
OR
Is there anyone who is unable to participate in a SMSF?
There are some individuals who are unable to be members of a SMSF. ‘Disqualified’ persons are not permitted to be a trustee or director of a trustee company of a SMSF. The following is a list of reasons why a person may be considered ‘disqualified’
In addition to this a company may not act as a trustee if any of the following criteria apply
If you are the site owner, please renew your premium subscription or contact support.