Select Page

What is a Self Managed Super Fund?

A Self Managed Super Fund often referred to as an SMSF or DIY Super is a private superannuation fund whose members are also the Trustees of the fund, meaning that its management and control is in the hands of the members. It is for this reason that it is a viable option for many Australians who want more control over their retirement balances.

An SMSF gives members full autonomy over how their retirement savings are invested and they are often an attractive option as a result of poor performance in a retail or industry fund or in order to take advantage of the multiple investment options that exist within a self-managed fund that are not available in other fund types.

Recent statistics from the Australian tax office inform us that more than 600,000 SMSF exist in Australia with over a million Australians participated in such funds.

What Are The Rules of an SMSF? 

An SMSF needs to be set up solely for the purpose of providing the time and benefits to it’s members.  In order to set up an SMSF a legal tax structure known as a trust must be setup with either corporate or individual trustees. The trust there’s who are usually also members of the SMSF are responsible for managing the assets and ensuring that all tax and legal compliance is abided by this would include annual reporting ordered in and taxation of legations to the Australian tax office.

How Does an SMSF Work?

In an SMSF investment, decisions are managed by the trustees and are required legally to have a documented investment strategy that needs to satisfy the sole purpose test and serves the purpose of guiding the investment decisions of trustees.

When developing an SMSF investment strategy it is important to consider the following factors:

  • The existing insurance needs of members ensuring appropriate coverage is taken care of
  • The ease in which assets can be converted to cash in order to pay future member benefits as required
  • The characteristics of fund members including current financial situation their risk profile and their age in order to influence appropriate investment decisions
  • How the funds investments should be diversified in order to have a suitable level of risk including but not limited to property, shares or fixed interest products