Can I set up a self managed superfund?
You can set up a self managed superfund if you are over the age of 18 and not a disqualified person.
A disqualified person is a person that:
- has been convicted of an offence involving dishonesty,
- has been subject to civil penalties under the Superannuation Industry (Supervision) Act, or
- is insolvent under administration.
How much do I need to start a self managed superfund?
You will need to determine whether you have enough in superannuation for a self managed superfund to be cost-effective and achieve investment diversification. Opinions vary as to how much superannuation money you need to make a self managed superfund effective. It can be the sum of superannuation from up to 4 members. As your fund balance increases, it reduces the relative costs.
How many members can a self managed superfund have?
There can be no more than 4 members in a self managed superannuation fund. The members of the funds need not be related. You can establish a fund with your spouse, partner, children, other family members, relatives, friends or a mixture. When there is more than one member, the individual member balances are tracked and member statements produced for each member annually.
Is it possible to have only 1 member?
Yes. A self managed superfund can have only 1 member. The most common arrangements are:
- two trustees, one is the member and the other is a relative of the member.
- a body corporate acting as trustee, where the member is the sole director of the body corporate, or the member is one of only two directors of the body corporate, and the member and the other director are related.
What contributions can be accepted by my self managed superfund?
A self managed superfund can accept contributions from all sources including:
- superannuation guarantee contributions (employer compulsory contributions),
- from your employer where you have salary sacrificed,
- your after tax personal contributions,
- from the Government (Government co-contributions), and
- transfer or roll-over from other superannuation fund.
Can contributions from my employer be paid into my self managed superfund?
Yes, from 1 July 2005 the 'super choice' legislation will come into effect. This means that most Australians can now instruct their employer to pay their compulsory 9% superannuation contributions into their self managed superfund.
Progressively, new legislative instruments have been introduced to extend choice of superannuation to more people.
Your self managed superfund is not linked to a specific employer. This means that if you change jobs you can continue to contribute to your self managed superfund.
Can I rollover my existing superannuation into my self managed superfund?
You can rollover your existing superannuation into your self managed superfund. You can use the standard choice form to make this request.
What happens if I am currently in a defined benefit fund?
You can rollover your benefits from a defined benefit fund into your self managed superfund. It is important to seek financial advice on the consequences of the rollover.
What are the costs associated with having my own self managed superfund?
There is a once-off set up cost and ongoing yearly fee for the superfund's accounting and tax reporting. A self managed superfund can have up to 4 members and therefore, the costs are shares and depending on the value of the superfund's assets, it may be cost effective relative to the superfund's total asset value
What can self managed superfund invest in?
You, as trustee of your superfund you will formulate your own investment strategy and invest accordingly. Self managed superfund can invest in most investment products including managed funds and direct assets such as shares – listed and unlisted, Australian and overseas, listed and unlisted property trust, bonds and derivative products like warrants and options.
In addition to the wide choice above, some investments will only be available exclusively through self managed superfunds. These include real property and collectables.
Can self managed superfund invest in warrants?
Yes. Self managed superfund can invest in warrants.
Can self managed superfund invest in real property?
Yes. Self managed superfund can invest in real property, commercial and residential.
Can I invest alongside my self managed superfund in real property?
Yes, you can invest alongside your self managed superfund in real property. It is important to ensure that the nature of the superfund's interest is 'tenant in common' and that the superfund's ownership is clearly evidenced. You should seek professional advice.
How are self managed superfunds taxed?
As with other superannuation funds, concessional contributions to self managed superfund and earnings of self managed superfund are taxed at 15 per cent.
Capital gains realised on assets held for less than 12 months are taxed at 15 per cent. Capital gains realised on assets held for 12 months or more are taxed at 10 per cent.
When you are in pension phase (fund assets are held solely for the purpose of paying a current pension), all income earned and realised capital gains are exempt from tax within the superfund.
What is the effect of franking credits?
If the self managed superfund holds Australian shares directly, any tax payable by the fund may be reduced by franking credits on dividends. For example, contributions and earnings taxes can be reduced or offset. If the franking credits exceed the tax payable, the excess amount is refundable. When in pension phase, as no tax is payable on income earned or realised capital gains, the franking credits are refundable in full.
Can self managed superfund pay lump-sum payments to members?
Yes. Self managed superfund can pay lump-sum benefits payment to members who have satisfied a condition of release.
Can self managed superfund pay member benefits in the form of a pension?
Yes - subject to the self managed superfund's trust deed. A member can seamlessly transfer from accumulation phase to pension phase, including to transition to retirement income stream. Seamless transfer means paying no capital gains tax, for example, capital gains from shares bought when you were in accumulation phase, then sold after you commence pension is tax free.
Which Government department regulates self managed superfund?
Australian Taxation Office regulates self managed superfunds.
What is the Supervisory Levy?
All self managed superfunds are levied a supervisory levy by the Australian Taxation Office for prudential supervision. The levy is currently $150 per annum.
Minimum Pension Payments
For the 2008/09 and 2009/10 financial years, minimum pension percentage factors have been halved in lieu of the Global Financial Crisis. This is to be reviewed for the 2010/11 financial year onwards.
