Major Benefits of a Self Managed Superannuation Fund
Control – An SMSF provides you with an opportunity to make the decisions as to how your funds are invested and how the fund is to operate.
Flexibility – You have the flexibility to choose how contributions are treated in order to obtain the most tax effective outcome for the members.
Cost – Ongoing cost of running a Self managed superfund may deliver substantial savings when compared with other retail options like wrap services and master trusts, whose fees are most often calculated on a percentage of funds invested basis.
Establishing and SMSF – Costs
The establishment fee is a fixed fee of $1,892.00 (inclusive of GST) and includes the setup of a corporate trustee. As discussed, we recommend that all of our SMSF client’s use a corporate trustee structure when establishing a fund. We recommend this for a number of reasons:
Advantages of a Corporate Trustee
Longevity & Administration simplicity
A self managed superfund is not limited to the length of time it may operate, they can essentially last forever! Throughout this time, members may move in and out of the fund for a variety of reasons, Marriage, Divorce, Death, Disability or bankruptcy. This creates administrative burden for individual trustees. Under superannuation law, assets of the fund must be held in the names of the trustee, when a member either joins or leaves the fund, all documentation for the assets held by the fund must be changed to reflect any change in membership. In many cases this poses a large and time consuming administrative process involving share and unit registries, land title offices and other asset registries.
Having a corporate trustee in place allows for membership to change for the fund without this administrative burden. The Corporate trustee remains constant and changes to membership are reflected in change of directorship within the company.
In some instances, trustees may be faced with being sued should an event occur to an asset of the fund. An example of such a case may be a fund owns an investment property, and a tenant or visitor of that property has a serious accident. The person who has sustained an injury may sue the trustees under owners liability. If a corporate trustee is in place, the directors (members) are personally protected, if the fund has individual trustees they may be liable under this example.
Availability with Investment Options
In some instances, the trustees may find that certain financial products will only allow an account to be established if a corporate trustee is in place. Certain financial products feel the risk is too high if the trustees are indviduals. Having a corporate trustee in place means that the Fund has much more flexibility with investment options.
In order for a borrowing arrangement to be established for the Fund, the Fund must have a corporate trustee.