There are many reasons why Self-Managed Super Funds are so popular – especially the control they provide for your investments and your retirement.
Members of Self-managed Super Funds (SMSFs) have overwhelmingly stated that having control over their superannuation is the number one reason they use a SMSF*. They want control over their investments and their retirement. Read on to discover the top 6 benefits of having your own SMSF.
With some exceptions, superannuation law doesn’t specify the investments in which superannuation funds can invest.
SMSFs have access to a broader range of investment assets than conventional superannuation funds. As well as the usual cash, fixed interest and managed funds, SMSFs also have access to investments such as residential and commercial property. Another popular investment is direct shares.
A successful SMSF needs an investment strategy that suits your retirement goals. Your Count Adviser can assist you in putting together a strategy that takes into account your needs now and in the future.
A SMSF is an excellent vehicle for holding death and disability insurance to ensure that you and your dependents are looked after.
There are two main advantages to holding insurance in an SMSF:
- The premiums are tax deductible to the SMSF
- The premiums can be funded from your superannuation contributions or account balance.
There are taxation differences between the various types of insurance which determines the appropriateness of holding the policy within a SMSF.
New rules introduced a few years ago allow SMSFs to borrow money to invest, subject to specific criteria. This makes it easier for SMSFs to acquire larger assets such as direct property, and hold the investment in the tax advantaged superannuation environment.
It is crucial that a borrowing arrangement is set up correctly to comply with the legislation. However it can be an effective strategy to boost your retirement savings through the benefits of leverage.
Once you start a pension in a SMSF, the investment assets that support that pension are subject to zero tax in the fund. This means that earnings and capital gains on those assets are tax free although you still receive the benefit of any franking credits from share holdings.
By timing the sale of assets in the fund, substantial tax savings can be achieved such as paying zero Capital Gains Tax.
It’s essential that the circumstances of the fund are reviewed to determine whether this strategy will be effective. For example, assets that support both accumulation and pension members may be only partly tax free. Your Count Adviser can assist with this process.
What will happen to your estate after you’re gone? Will your dependents be supported? These are important considerations.
Superannuation is likely to be a substantial asset, particularly for people with SMSFs who have higher average account balances. So it is essential to ensure that superannuation funds will be paid to your dependents in the most tax effective way.
Superannuation does not automatically get paid to your estate to be dispersed according to your will. How your superannuation benefits are paid on death depends on whether you have made a binding or non-binding nomination instructing how the death benefit will be paid or whether it is left up to the trustee to decide.
When determining the best way to pay your superannuation benefits on death you should take into account factors such as taxation, family circumstances and other estate assets. Your Count Adviser can help with this process.
Once you reach age 55 you can start a pension in your SMSF – even if you’re
still working.
This can be a dynamic strategy as pension payments are tax effective and can supplement your income, particularly if you are moving to part-time employment.
One of the greatest advantages of this strategy is that assets within the fund that support the pension are subject to zero tax.
This strategy can be enhanced by salary sacrificing your employment income while at the same time receiving pension payments from a transition to retirement pension. The advantages of this strategy are:
- Salary sacrifice contributions are taxed at 15% rather than your marginal tax rate
- Pension payments are tax free over age 60. Between ages 55 and 60 pension payments are taxable but receive a 15% rebate.
- Assets that support a pension are subject to zero tax in the fund.
The combination of these three advantages can result in substantial tax savings to help boost your retirement savings.
Enquire about setting up a Self-Managed Superfund!
