SMSF Guide
Important information about Self-Managed Super Funds.
“If you set up a self-managed super fund (SMSF), you’re in charge – you make the investment decisions for the fund and you’re held responsible for complying with the super and tax laws. It’s a major financial decision and you need to have the time and skills to do it. There may be better options for your super savings.”
What is a Self-Managed Super Fund (SMSF)?
A self-managed super fund (SMSF) is a private super fund that you manage yourself, where the members are also usually the trustees. When you manage your own super, you put the money you would normally put in a retail or industry super fund into your own SMSF, and you are in charge of the investments and the insurance.
Considering an SMSF?
There are a number of things to consider before you set up a Self-Managed Super Fund (SMSF). It must be run for the sole purpose of providing retirement benefits for the members or their dependents. You must ensure that you have an investment strategy that aligns with your goals and that all decisions are made in the best financial interests of the members. Running an SMSF requires a certain level of knowledge, time and money that many people may not be aware of. The best first step is to seek advice from a financial advisor - it is worth the money to ensure that your strategy aligns with both your current and future needs.
Is there another option that might better suit your needs?
Ask yourself, what are you hoping to achieve by setting up an SMSF? What is your risk appetite? An SMSF is not the right option for all people. There are many other options available to you, for example, a super fund that allows you to manage your own investments or funds offering exchange-traded funds (ETFs). Ask your financial advisor about other ways you can invest for your future.
What will it cost you?
Have you considered the costs of setting up and maintaining your fund? Several costs are involved with the initial establishment and ongoing compliance of SMSFs - including, but not limited to, ASIC, auditor and accountancy fees. Other costs might include investment fees and legal or financial advice.
Do you have the time to manage your SMSF?
An SMSF takes time to set up and maintain. Some activities to consider include research and investment transactions, preparing material for compliance, and arranging and attending meetings with the appropriate professionals. Have you considered this as part of your decision-making process?
Are you aware of your responsibilities?
Do you know what is involved to ensure that your fund is compliant? SMSFs have strict guidelines and many rules and regulations that you must be aware of before you commit to setting one up. More information about running an SMSF is available here on the ATO’s website.
You have set up an SMSF, so now what?
Set up a bank account for your SMSF.
Ensure the bank account has enough money in it to pay any debts if and when they fall due (this is an ongoing requirement).
If you haven’t met with a financial advisor yet, make an appointment.
Make sure that you have a documented investment strategy in place.
Prepare an exit strategy - if you haven’t already!
Before you roll over your funds:
Get your insurance in order. Your industry or retail super fund may have insurance you want to keep. You may consider keeping your super fund open with a small balance to maintain your insurance coverage. If you’re not sure, ask your accountant or financial advisor for advice before you transfer the funds over.
Crypto Assets
What do you need to remember?
Trustees and members also need to ensure that investments in cryptocurrency are allowed under the SMSF’s deed.
Ensure the Fund's Investment Strategy allows the investment.
Ensure the Investment is not breaching the Sole Purpose Test.
Ensure the Investment is held in the name of the Trustee/Fund.
For the purpose of calculating member balances at 30 June, the ATO will accept the 30 June closing value published on the website of a cryptocurrency exchange that reports on historical cryptocurrency values.
Ensure the key audit assertions of ownership, existence and valuation can be satisfied.
Cryptocurrencies such as bitcoin are not ‘listed securities' so do not fall within the exceptions. They therefore cannot be acquired from a related party.
The current maximum amount of decimal places available when entering securities is six.