SMSF Benefits

Before considering a Self Managed Superannuation Fund (SMSF), please note the following restrictions relevant to SMSFs:

  • Lending to members and their relatives
  • Acquiring assets from 'related parties' of the fund
  • Borrowing apart from limited recourse borrowing arrangements
  • Investing in 'in-house' assets
  • All investments need to follow the two main rules: "sole purpose test" and "arms length"
  • It is the duty of the SMSF trustees to separate the SMSF assets from their own personal assets, or assets belonging to their business
  • There are maximum contributions limits to a DIY Super Fund
  • SMSF assets cannot be used for personal or business purpose, this representing the "sole purpose test" i.e. the funds in the SMSF are for retirement purposes only, and cannot be accessed generally until retirement

Money from the fund must not, under any circumstance, be used for personal or business purposes, as mentioned above. The fund's assets must not be viewed as a form of credit or emergency reserve, should the need arise! The main purpose of the superannuation investment is to generate and grow retirement benefits for the members.

There are risks, costs and charges in choosing to invest in superannuation and self managed superannuation in particular applicable laws may change! There are also risks associated with choosing particular investments – all investments are subject to varying risks and generally all change in value. Different asset classes perform differently at different times. You should speak to a licensed financial advisor before proceeding with any investment including the suitability of a SMSF!

Taxation rates of superannuation funds

DescriptionTax Rate
Exempt Current Pension IncomeNil
Complying Super Fund15%
No TFN Contributions Income47%
Non-Arm's Length Income45%*
Non-Complying Super Fund45%*
* Plus 2% Temporary Budget Repair Levy until 30 June 2017

There are numerous benefits of having your own DIY Super Fund. Here is a list of some of them:

  • Self Managed Super Funds are allowed to control the timing of disposal of assets. This means that if you acquire an asset today and it appreciates by X % by the time you retire, you can roll it over to your pension fund and you will pay 0% tax on the realised capital gain of that asset
  • 10% tax payable on earnings from a Super Fund applies to assets disposed after having them for a minimum of 12-month period
  • Maximum tax payable on earnings from a Super Fund is 15% (this can be offset by imputation credits, currently at 30%)
  • Minimum tax payable on earnings from a Super Fund can be 0%
  • DIY Super Funds' assets are in most cases protected from bankruptcy
  • DIY Super Funds' assets can invest up to 100% of the funds total assets in "Business Real Property" (fund members can use the money from the DIY Super Fund to obtain a real estate property for their own business)
  • Limited Recourse Borrowing Arrangements
  • Super Funds allow for tax-deductible insurance premiums. Note: the insurance policy must be in the name of SMSF with a member/members named as the insured person/s.
    Type of PolicyDeduction
    Whole of life policy30%
    Endowment policy10%
    Term Life100%
    Any Occupation TPD*100%
    Own Occupation TPD67%
    Death & own Occupation TPD bundled together80%
    * TPD: Total and Permanent Disability
  • DIY Super Fund can generally invest in: - Share market
    - Money market
    - Managed funds
    - WRAP Accounts
    - Ventures
    - Real estate
  • DIY Super Fund can invest in / or with other Super Funds, Fund Managers and Master Trusts
  • DIY Super Fund can bank with any bank
  • DIY Super Fund can use any share trading institution
  • DIY Super Fund can have insurance with any insurance company
  • DIY Super Fund can use any independently selected financial planner, accountant or tax planner/agent

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