What is involved in self managed super funds?
If you are asking this question the chances are you know what a Super fund is. The chances are you are Australian also because for the rest of the World Super funds sound like a really boring superhero.
Self managed super funds or SMSF’s are just a Super fund where the trustee has the sole responsibility of managing the fund. The trustee being you. This opens a whole world of investment opportunities and pitfalls. Being the member and trustee of the fund you answer for the management and legal responsibilities tied to a Super fund.
As all Super funds your Super fund will receive a tax concession. Any contribution deposited in the Super will be taxed at 15%. However being allowed to manage a Super does not mean you are qualified to do so. Managing a Super fund requires a good understanding of Super law and tax regulations.
So how can you manage your own Super fund? If you are a professional financial advisor you won’t be reading this How to guide so we will start from the very basics.
1.) The first thing you should do is contact a professional that can give you advice in managing your Super fund. A professional will be able to give you advice on how to setup the fund, what regulations you must follow and write out the documentation you need.
2.) Once you have setup the legal and paperwork side of your fund you will need to start investing in it. How can you decide what to invest in and how much to invest? You need to start by talking with a licensed financial planner. To find out more on financial planners in Australia, please visit www.asic.gov.au for more information and details and to check your financial planner has an up-to-date license.
3.) You will need to follow your administrative obligations which include speaking to a specialist administrator for help with running your fund.
4.) You must also carry out a yearly audit. If you need help in how to do it please contact any of the professional associations that control the Super fund sector.
The Australian Tax office supplies the necessary information to find out what regulations and requirements are needed. The Australian Tax Office provides with details about these regulations and will help you to follow them.
It cannot be emphasized enough the risk that is found in investing your own fund. Not everybody is best suited for making financial decisions of this kind and some do not fare very well. Think hard before making this move and if you do look for good advice before starting.