An SMSF is considered as a type of trust. The primary purpose of the superannuation fund is to provide its members with an income upon retirement or as a death benefit. A self managed super fund comes with its own Australian Business Number and Tax File Number. It also has a bank account of its own.
If you become a member, you can direct your super fund contributions to the bank account of the SMSF. You’re also responsible for the investment strategies and decisions for your superannuation. You may ask for the assistance of an investment adviser to formulate your SMSF plan well.
Self-managed super funds offer two forms of trustee structures – company and individual trustees.
- Company Trustees. Usually, a company is used to be a trustee, mainly when there is only one single member fund. For example, you want to be the decision-maker, sole signatory, and fund member. Another reason is when you cannot find anybody willing to act as the second trustee. When you establish a company as a member of the SMSF, it acts as a director of the company.
An SMSF trustee will also establish a company trustee for the purpose of ease of administration. Consult with your investment adviser when planning to set up a company on your trustee structure, as this comes with additional paperwork and costs.
- Individual Trustees. In general, a self-managed super fund comprises a husband, wife, and children. All members of the superannuation become a trustee. On behalf of the single fund, there should be at least two persons to act as trustees. In this condition, you, as an SMSF member, should assign another individual to be your trustee. This involves considering a company to be your trustee as well.
The trustees you choose are legally responsible for making sure the super fund stays compliant, and they can make decisions on behalf of the superannuation. All trustees hold the fund assets effectively in their names on behalf of the SMSF.
Who Can Be a Trustee or a Member?
Basically, anyone who is 18 years old and above can become a trustee of an SMSF. They must have no legal disability and should be qualified as a trustee. A person may be disqualified if they have been disqualified by the regulator, an undischarged bankrupt, insolvent under administration, has been subject to an SIS Act civil penalty order, or has been convicted of a dishonesty offence.
What to Do With Your Current Self Managed Super Fund?
The balances in your current superannuation fund can betransferred to your self-managed super fund. You simply need to request for a roll-over form. After that, you pay your funds to the SMSF bank account, and these are available for your investing plans.
Is It Possible to Contribute Additional Money to Your SMSF?
The answer is yes. A lot of members use their superannuation funds as savings because of the tax effectiveness of the system. However, there are restrictions to the number of fund contributions. Also, you should know the rules and regulations regarding this. Discussing with your financial and investment adviser can be of great help.
Typically, a member of a self-managed super fund is automatically a trustee of the fund. In other words, you must be responsible for abiding the tax and superannuation laws, as well as on how to manage your fund. This is different from public super funds that usually have professional and licensed trustees who are responsible for legal compliance.