Firstly let’s understand what a Superannuation Fund is. Quite simply, it is a trust fund made up of money and/or assets that are set aside solely to provide retirement and other superannuation benefits.
In a nutshell:
Superannuation is a tax advantaged way of saving for retirement.
A fund will invest in various assets including shares, properties and fixed-interest deposits.
These Funds are typically either Retail Funds run directly by professional investment managers, or Industry Funds run by Trustees that represent employer and employee organisations in that industry.
WHAT IS SMSF?
A Self-Managed Superannuation Fund is a fund run by you, for you.
A Self-Managed Superannuation Fund (SMSF) is a superannuation fund with less than five members. SMSFs are generally established by family members wishing to consolidate their family’s superannuation savings.
An SMSF is still governed by superannuation laws in the Superannuation Supervision Industry (SIS) Act and taxation legislation that relates to superannuation. These funds are regulated by the Australian Taxation Office (ATO).
The main difference from Retail or Industry Funds is that you are in control of the fund, and therefore your financial destiny. You can choose what to invest in, monitor how those investments are going, and make decisions based on your knowledge. You can invest in domestic and international shares, investment properties, term deposits, etc.
If having direct control of your super investments and a real understanding of where you money is invested then a Self-Managed SMSF may be an option for you.
You should always seek professional advice first to explore whether an SMSF is for you.
The ATO has produced a range of publications and other information to help trustees of SMSFs.
Trustees are encouraged to access this information and review it. It can be accessed from the ATO’s website (www.ato.gov.au). We specifically draw your attention to the ATO’s publication ‘Self-managed super funds – key messages for trustees’ (NAT 71128) which can be downloaded as a PDF document. This is vital reading for all trustees, and particularly new trustees who need to complete the Trustee Declaration.