If you set up a self-managed super fund (SMSF),
you're in charge – you make the investment decisions for the fund and you're held responsible for complying with the super and tax laws.
It's a major financial decision and you need to have the time and skills to do it. There may be better options for your super savings.
An SMSF must be run for the sole purpose of providing retirement benefits for the members or their dependants, and additionally, all decisions you make as trustee of your SMSF must be in the best financial interests of the members.
Well how does it work?
Generally your SMSF must meet the sole purpose text when it comes to investment decision.
Don't set up an SMSF to try to get early access to your super, or to buy a holiday home or artworks to decorate your house.
Before 1 July 2021, SMSFs could have a maximum of four members.
After 1 July 2021, SMSFs can have a maximum of six members.
Although some State and Territory laws restrict the number of trustees a trust can have to less than six.
When you setup SMSF, it will setup as a type of trust, and all members are either individual trustees or directors of a corporate trustee of the fund.
As a trustee of an SMSF you'll be responsible for operating your fund within the law.
it is important that clients seek professional advice to help understand if their SMSF is impacted by these restrictions.
You need to have the time and skills to manage your Self managed super fund, and there are ongoing running costs.
You'll also need to make investment decisions for the SMSF that are in the best financial interests of all member and to formulate and give effect to an investment strategy that you review and update regularly,
while also understanding and complying with the restrictions on the investments an SMSF can make.
The SMSF can accept contributions and rollovers for your members from various sources but there are some restrictions, mostly depending on the member’s age and the contribution caps.
Every year that you have an SMSF, you'll need to pay for an independent audit, and lodge report to the ATO.
for every transaction you need to properly document contributions and rollovers, including the amount, type and breakdown of components,
and allocate them to the members’ accounts within 28 days of the end of the month in which you received them.
Refer to ATO website for more information.
(https://www.ato.gov.au/Super/Self-managed-super-funds/)