People are increasingly attracted to set up a Self-Managed super funds (SMSF) having considered – do the pros out-way the cons of running an SMSF? Having control and choice are the top advantages (and reasons) to have an SMSF. Then access and flexibility and choice of assets also rate high, as well as the ability to pool the super of up to 4 people/members to take advantage of large assets such as property. The main cons are the responsibility of maintaining compliance with the laws and regulator (ATO) – so let’s look at some major considerations –
1. Some PROS of SMSF:
- Control over investments – what type, when buy/sell
- Flexibility of investments – timing to buy and sell as required, asset choice
- Choice of investment spread – what proportion the trustees want of certain assets
- Protection from bankruptcy and other legal claims
- Low tax saving environment – 15% concessional tax & 10% Capital Gains (held over 12 mths) (Nil in Pension mode)
eg Dividend $100 Franked received
(ie – $142 less 30% Co. Tax paid ($42) leaves $100)
at tax time means – (some examples)
Life Stage Outside SMSF (your Tax Rate) Inside SMSF (15% tax)
Tax Rate 45% pay 15% tax $21 pay credit 15% $21 back
Pension 0% may affect aged pension, 0% credit 30% $42 back, Tax 0%
2. Some CONS of SMSF:
- Responsibility – Penalties: up to 46.5% tax, fines
- Administration involved
- Your suitability to manage investments – choice, diversity, experience and knowledge or availability of support
- Complaints – no access to Super Complaints Tribunal
- Commitment and work involved
- Hard if you do not seek assistance with investment knowledge and compliance responsibilities
Interested to know what self-managed super (SMSF) is all about, and if it is for you? Come to a FREE seminar with bonuses NEXT month – Self Managed Super Fund Roadmap (all you need to know) for the next monthly event, see SMSF – FREE Seminar or call us 0407 361 596.
Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and You – top right hand side above.
If you have any questions, why not give us a call – it’s FREE also! No obligation.
0407 361 596, Paul.