Introduction

While self-managed super funds have long been the preserve of older Australians with time on their hands and large superannuation balances, new data suggests that younger Australians are increasingly choosing to take direct control of their superannuation savings.

According to the Self-managed Super Fund Quarterly Report for September 2022, published by the Australian Tax Office, more than one in ten members of a self-managed super fund are aged under 45 years.

Introduction

Investing in property seems part of every Australian’s DNA. No matter where you buy, prices appear to be on a permanent skyward march with none of the unnerving fluctuations seen in other investments, such as the share market.

Ask anyone over the age of fifty what their best ever investment was, and inevitably they will answer, buying their own home. Their biggest regret? Not buying the house next door at the same time.

So where better to invest your precious retirement savings but in property?

Introduction

Since the Australian Government introduced compulsory employer contributions to people's superannuation funds in 1992, Australia's funds invested in super have grown to $3 trillion. In this time, self-managed super funds (SMSFs) have grown in popularity too. There are currently just over 1.1 million members with $676 billion in SMSFs across Australia.

SMSFs can have between one and four members. While not yet legislated, the government has proposed allowing up to six members in an SMSF. Most SMSFs in Australia have two members (70%), with most other SMSFs having a single member (23%). According to the ATO, the average value of assets in people's SMSFs is $619,000. The general recommendation is to have a minimum balance of $200,000 in your SMSF. While it can be tempting to see the potential of being in complete control over your super balance, it may not always be a good idea to set up an SMSF.

Introduction

When you dispose of an asset and make a capital gain, you may be liable for extra tax. There is no separate tax rate for capital gains. Instead, some or all of the capital gain is added to your assessable income and taxed along with your other income at your marginal tax rate.

Capital Gains Tax (CGT) – generally speaking...

Introduction

There are now almost 600,000 Self-Managed Superannuation Funds (SMSFs) in Australia where the members of the fund are also the trustees. These trustees are responsible for running the fund according to the superannuation rules. If they get it wrong, the consequences can be dire. Each year, SMSFs lose their concessional tax allowance because the trustees recklessly or persistently ignore the rules.

The superannuation rules aim to ensure that superannuation is for your retirement and is not used for other purposes or invested recklessly. One rule bans a fund from giving financial assistance to members of the fund or their relatives. Whilst this sounds simple, it pays to understand how the rule works.

Introduction

An ‘in specie’ contribution may sound like something your doctor would ask you for, but it’s actually a way in which non-cash contributions can be made to your self-managed superannuation fund. The process is a bit complicated though, so it’s important to understand the basics.

1. What is an in specie contribution?

Introduction

Australians love to invest in property. And what’s not to love? It’s tangible, offers diversification and tax benefits, and can provide you with a good income and strong capital growth.

The benefits of investing in property can be amplified when held within super and with changes to borrowing within Self-Managed Super Funds (SMSFs) over the past few years, the ability to access property investment through super has widened significantly. This strategy however, is not for everyone.

Introduction

Self-Managed Super Funds are among the fastest growing superannuation vehicles in Australia and they’re not just for older investors – investment-savvy Millennials are catching on.

The Australian Taxation Office (ATO) reports that significant numbers of people below the age of 45 are investing through Self-managed Super Funds (SMSFs). The proportion of SMSF members in that cohort was around 14.4% over the twelve months to September 2020.

Historically, SMSFs were considered the province of only the rich. However, as set-up fees and running costs decrease, younger people are viewing SMSFs as a viable alternative to industry funds or off-the-shelf retail funds.

Introduction

When it comes to retirement funding, over one million Australians have established Self-Managed Super Funds (SMSFs) to take more control over this crucial stage of their lives. However, SMSF trustees take note – to protect your and your fellow members’ best interests, there are strict rules governing SMSFs which, if broken, attract strong penalties.

The basis of all superannuation law is that every super fund must meet the “Sole Purpose Test” – it exists solely to fund retirement (or to pass to dependents if the member dies).

SMSF trustees whose funds are not fully compliant will incur the financial wrath of the ATO as follows:

Introduction

A popular choice for managing superannuation is to take personal control via a self-managed superannuation fund (SMSF).

Although membership is limited to a maximum of four people per fund, the Australian Tax Office (ATO) reports there are over ....... million SMSFs, representing more than ... million members. It estimates the value of assets held within SMSFs is more than $.... billion!

So, what’s the attraction? Below are some key advantages of managing your own super:

Introduction

Self-Managed Super Funds (SMSFs) have become a popular way for Australians to control their superannuation. The basic requirements are that the fund must have between one and four members and these people are normally family or business related. All members need to be trustees (guardians of the money) and even if the fund is only for one person you still require two trustees, although a corporate trustee with only one director can be used.

This style of super fund will suit more experienced investors who may fall into the following categories: