When deciding whether a self managed super fund (SMSF) may be right for you, you should consider both the advantages and the responsibilities.
Advantages of an SMSF
Depending on your situation, the advantages of SMSFs can include:
- greater control and flexibility over your investments
- tax concessions
- the ability to pool your resources with family members
- estate planning benefits, and
- lower management costs.
Control over your retirement savings
As a trustee of your SMSF, you can make your own investment and strategic decisions for your retirement savings.
Greater investment flexibility
- SMSFs provide greater flexibility in how you can invest your retirement savings. Members can choose to hold direct assets such as property, cash and listed shares.
- As a trustee of your SMSF, you can determine the investment choices and asset allocation of your SMSF.
- SMSFs can also directly acquire listed shares, business real property and managed funds from members.
Lower costs of managing SMSFs
For SMSFs with pooled assets of $200,000 or more, the average cost of your fund can drop below 1.0% pa. This is generally lower than many retail and industry funds.
Tax concessions
- Earnings in your SMSF are taxed at concessional rates of 15%.
- Capital gains on investments held in your SMSF are taxed at an effective rate of 10% if held for longer than 12 months.
- Contribution tax payments in SMSFs are deferred until after the annual tax return is lodged unlike many industry and retail super funds where the 15% contribution tax is deducted when the contribution is paid into your super.
- Other strategies may also be available to help reduce the overall tax liability of your SMSF.
Pooling resources for greater cost effectiveness
Unlike other types of super, with an SMSF members (up to 4 and usually family members) can combine their assets to accumulate funds for retirement. This provides access to more cost effective and efficient investment strategies.
Estate planning options
The flexible structure of an SMSF allows members to take advantage of estate planning strategies to effectively transfer wealth from one generation to the next with minimum tax liability and maximum asset protection.
Learn about what you need to consider to determine whether an SMSF is right for you.
Learn how Dixon Advisory can help you with self managed super funds.
Contact Dixon Advisory about self managed super funds.