Counting Together: The Benefit of Visiting an Accountant

Should You Consider an SMSF to Safeguard Your Future?

Many people today are worried about their financial future, as there seems to be so much uncertainty in the world. Some of those people who are determined to take control of their future are considering whether or not to set up a self-managed superannuation fund. If you've been thinking along these lines, what should you know before proceeding?

What Is an SMSF?

The idea behind a self-managed superannuation fund, or SMSF for short, is to give you enhanced control over your retirement planning. You need to have a sufficient amount of money for the fund already in hand or be ready to contribute to the fund quite significantly in the near future if you are to justify the costs associated with doing this.

Can You Handle It?

You also need to ask yourself if you have available time and resources to be able to establish yourself as a trustee of your own fund. There are a lot of tasks involved, because you have to ensure that the investment strategies are monitored and that you meet all necessary deadlines when it comes to statutory reports. You will also be responsible for keeping up-to-date with the various laws that govern superannuation in Australia, and you need to know what strategies are best in your case, if that means changing direction and adaptation.

Can You Pass the Sole Purpose Test?

Fundamentally, you need to pass what is known as a "sole purpose test" to qualify to proceed under the laws of the state. This test essentially dictates that the entire fund and its assets are to be used only to give you and other members of the fund specific benefits during retirement. You will be able to bequeath these benefits to dependents in a will or should you become disabled for any reason.

Are You Eligible?

You should know that certain people are ineligible to be a trustee of an SMSF. Specifically, if you've been found guilty of certain criminal offences, deemed to be mentally incompetent, or have an undischarged bankruptcy against your name, then you may not be eligible.

What Do You Need to Know About Residency?

Finally, there are certain rules regarding the residency of trustees and where funds may be lodged or controlled. The fund has to be established in Australia and ordinarily must be controlled by trustees who live in the country. At least half of the assets have to be held by residents of Australia, as well.

As you can see, there is quite a lot involved in not only managing the fund, but deciding whether it's a right "fit" for you in the first place. This is why it's a good idea to consult with an accountant specialising in these funds.