SCC Chartered Accountants

SMSFs keep growing in number

Over the last decade, what started as a trickle of interest in self-managed super funds (SMSF’s) has become a torrent.

Thanks to changes such as the introduction of Choice of Fund legislation, SMSF’s are becoming more prevalent.

SMSFs are now responsible for well over $100 billion in people’s retirement savings and, by 2013, this is expected to grow to well over around $150 billion. Currently, there are over 300,000 separate SMSFs, holding the superannuation assets of more the half a million Australians. And this growth phenomenon is widely tipped to continue.

Why all the fuss?

Many people have now accumulated a reasonably large amount of superannuation — typically upwards of more than $150,000 — SMSFs can provide greater control and more flexibility than traditional superannuation funds. SMSFs can also be more cost-effective than their institutional equivalents. Other advantages include:

• greater investment choice, opening-up opportunities for investment in direct shares and commercial property
• control over your tax situation; allowing for the maximal use of funds throughout the financial year
• greater estate planning control and insurance options
• control over the timing of asset sales and selection.

SMSFs are subject to rigorous governance with more than 2,500 pages of relevant legislation. The trustee of a SMSF is ultimately responsible for the investment decisions and outcomes of the fund.

A trustee needs to understand the rules, and keep up-to-date with legislative changes to ensure they continue to meet the responsibilities and obligations of what it is to be a trustee. Trustees also need to arrange for regular auditing and account reporting so as to comply with government regulations.

Want more information?

Historically, accountants have been the first port of call for people looking to set up an SMSF. This is because they offer services from an auditing, compliance and tax perspective.

However, accountants are not always legally qualified to offer investment advice and so the SMSF trustee is needs to be sure they have access to resources that assists in making investment decisions and implementing investment arrangements.

Not surprisingly, the SMSF landscape is changing. Financial advisers are now stepping in and offering services that combine all the necessary elements for running a successful SMSF.

To determine if you would benefit from establishing your own SMSF, speak with your accountant and/or your financial adviser.