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Self Managed Superannuation Funds

It seems that everywhere you turn, somebody is talking about Self Managed Superannuation Funds (SMSF).

According to the Australian Taxation Office, funds held in SMSF’s have doubled in the past three years alone and now account for around one-third of all the funds held within the superannuation industry.

Australian’s are choosing to start taking control of their retirement incomes as many are beginning to find that the flexibility offered in a SMSF enables them to better control their financial futures.

Today, people are not only retiring earlier than ever before, they are also living longer. For many, retirement could represent 30 or more years!

The SMSF is formed by the Trust Deed. The trust deed provides the governing rules of the fund and you need to ensure that your superannuation funds’ trust deed does not prohibit borrowing so that you are not in breach as the trustee.

The Trustees of the SMSF are responsible for all decisions that are made in relation to the operation of the fund the Trustee of your SMSF is you or a trustee company that you control.

It is important that you understand the obligations and responsibilities of being the Trustee of your superannuation fund as serious penalties may be applied should the rules of operating a SMSF not be complied with.

When setting up your SMSF, all members of the SMSF must also be Trustees or, in the case were there is a Corporate Trustee, each member may also be a Director.

For example:

If ‘Mum and Dad’ were setting up the Mum and Dad Superannuation Fund then:

    1. Mum and Dad would both be Members of the SMSF;
      AND
    2. Mum and Dad would both be Trustees of the SMSF.

 

On the other hand, if Dad was setting up his own SMSF:

    1. Dad would be the sole Member;

and since Dad cannot be the sole Member and the sole Trustee, then either:

      • Dad and Mum would be the Trustees, or
      • Dad Pty Ltd would be a Corporate Trustee where Dad is the sole Director.