When we say “Superannuation”, it means savings arrangement for retirement, operated primarily to provide income.
The superannuation fund (SMSF) in Australia, involves employers, the self-employed and employees making contributions over a period of time to a superannuation fund.
The Government offers lower taxes for all the superannuation fund complies, who follow certain conditions. A superannuation fund is a self-managed superannuation fund (SMSF) if it meets the following conditions:
– The SMSF should have less than 5 members and each individual trustee of the fund is actually a fund member;
– No trustee of the fund receives any remuneration for his or her services as a trustee;
– No member of the fund is an employee of another member of the fund and each member of the fund is a trustee.
People who run their own superannuation fund have some benefits. Here is list with few of their advantages:
– With SMSF you have greater investment freedom and you can feel the monies are safer being invested by them as trustees;
– With owning a SMSF you can actively participate in the management of the fund and there are reduced formal reporting requirements.
Why we need a SMSF?
There are more flexible retirement planning with owning a SMSF. Also there are estate planning options available for you as a trustee.
But not everybody can be a SMSF owner. There are some requiring at least a basic knowledge of the legislation that they as Trustees must comply with and the use of an experienced superannuation adviser. Trustees of SMSF’s are the ones who are ultimately responsible for the running of their fund. It is imperative that each trustee understands the duties, responsibilities and obligations of being a trustee. There are significant penalties imposed on trustees who fail to perform their duties. Key responsibilities A trustee of a SMSF must act in accordance with:
The clauses of the superannuation fund trust deed;
The provisions of the Superannuation Industry (Supervision) Act 1993 (SIS);
and other general rules, for example those imposed under tax law and trust law.