Self Managed Superannuation Funds (SMSF)
Self managed superannuation funds are tailored to the specific and changing needs of a family, and this flexibility has made this investment structure essential for managing personal wealth of more than $500,000 dollars. In Australia SMSFs have the tax benefits of superannuation (i.e. 0-15% tax rates) but with added benefits of the family and testamentary trusts.
The Benefits are:
- SMSFs are family funds built for the lifetime of the members and their children. They can provide long-term estate planning solutions for future generations
- One of the benefits of a SMSF is control – like a family trust, a SMSF is closely controlled by the fund trustees for the benefit of the members
- It allows trustees to select a wide range of investments, including small business premises and farms
- Assets in a SMSF are protected from creditors of the members
- SMSFs offer a low tax environment (0-15%) in Australia
- Simple to administer with the assistance of professional advisers and administrators
- The drawbacks are relatively few including:
- SMSFs are a retirement vehicle so funds are not accessible until after 55 years of age
- The penalties for non-compliance are substantial
- There are costs in establishment ($2,000AUD - $4,000AUD)
- Residual income streams can only be paid to dependants