Benefits of an SMSF

1. Control

For most Australians, superannuation is one of the largest assets we hold and naturally we want to control it. As a trustee of an SMSF you have full control over your SMSF. That means you decide how to invest your retirement savings but it also means you are responsible for making key decisions like who can join the fund, what insurance is in place and how to deal with death benefits paid from the fund. Heffron helps with making sure you meet all your responsibilities as trustee.

2. Investment Choice

SMSFs allow you to invest in a range of assets, including investments which are unavailable in other types of super funds. These include:

  • investment properties
  • listed and unlisted Australian and international shares
  • term deposits
  • collectibles, such as artwork

For example, an SMSF can acquire the premises of a small business operator and lease it back to the business.

3. Cost

Most super funds charge administration fees calculated as a percentage of your superannuation balance, so as your super grows so do your fees. SMSFs, generally incur fixed administration fees regardless of the value of your super benefit. This means as your super grows your fees as a percentage of your super balance fall. Since you can have up to four members in the fund, the fixed administration fees can be shared across members to further reduce your administration costs.

4. Tax Benefits

While all super funds are subject to the same tax rules, there are some tax benefits that large funds choose not to take advantage of because it is not practical for them, requires expensive system changes or disadvantages other members. In your SMSF you can make tax choices that are right for you. Heffron can help you understand the tax advantages that may be available in your SMSF.

5. Borrowing

In 2007 new rules were introduced which allows super funds to borrow money for certain assets. Being able to borrow in your SMSF allows you to invest in larger assets such as an investment property.

6. Portability

Your SMSF is your lifetime retirement savings fund. You can switch service providers while retaining the same fund and investments. With retail and industry super funds, changing service providers usually involves switching from one super fund to another. Not only is this time consuming, it can also mean taxes like a capital gains tax are paid on your balance, reducing your retirement savings.

7. Estate Planning

An SMSF gives you greater flexibility and control in how you pass your wealth on to your family or other beneficiaries when you die. You can create a strategy to accomplish exactly what you are after, taking advantage of all available tax benefits.