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Q&A’s

Below are some frequently asked questions and their answers that may help.
Whatever your SMSF question, our specialist SMSF advisers can help.
Call 1800 626 881 or enquire online.

How much do I need to start an SMSF?

The general answer is around $200,000. That’s because it will cost you a few thousand dollars to start-up and manage your own fund in legal fees, accountant’s fees, registration and possibly platform fees. Compare the total of these costs to using a normal retail super fund, where the fees are usually between 1 to 2 per cent, you will see it makes sense to have a balance of at least $200,000 to make it viable.

I’ve seen advertisements about buying an investment property using an SMSF.
Is this a good strategy?

The first issue to consider with any investment strategy is whether it is the right strategy for you, regardless of the tax benefits offered. The investment property you’re considering will need to pass the tests of being a good investment, providing a strong yield and capital growth and whether you can afford any potential shortfall.

If you are thinking of putting in the holiday house which you’d like to use on occasion, think again. This is the sort of practice the Australian Taxation Office (ATO) wants to deter. You cannot utilise any assets within your SMSF for personal use, unless it’s a commercial property – even then you must charge a market rate of rent.

And if you borrow to buy the property there are further restrictions while the borrowing arrangement is in place. For example, you cannot improve or develop it to the extent that it changes the nature of the property, which may restrict its potential.

Can my partner/spouse join my SMSF?

Yes, you can have up to four members in your fund.

Who can be a trustee of my fund?

Firstly, you need to decide whether you are going to have individual trustees or a corporate trustee to run your fund.

All members of your fund must be trustees or directors of the corporate trustee, and all trustees or directors of the corporate trustee must be members.

If you are going to be the only member of the fund, then:

  • if you have individual trustees, you need to appoint another person who is not a member, in addition to yourself, or
  • if you have a corporate trustee, you can be the sole director of the company, or you can appoint another director who is not a member, in addition to yourself.

Under super law, you are prohibited from being a trustee if you are a ‘disqualified person’.

Who receives the benefit if a member dies?

A superannuation death benefit is paid to the deceased member’s beneficiaries, providing they are a dependant under super law, and/or their legal personal representative (LPR) ie their estate.

The death benefit may be paid as a lump sum and/or pension depending on who it is paid to.

Members may arrange a binding or non-binding death benefit nomination.

If it’s a binding nomination, the surviving trustee(s) must pay the death benefit in accordance to the instructions, as long as they are a dependant or the deceased’s LPR. You should note that this type of nomination generally lapses after three years, so it is up to you to ensure it is current and valid.

If it’s a non-binding nomination, then the surviving trustee(s) can use their discretion.

Do I need an investment strategy and what is in it?

Yes, you do and super legislation requires you have one. Your investment strategy can be as broad or as specific as you like. It is important it is broad enough to allow you to be flexible in your investment choices, and specific enough to be effective in helping you reach your retirement goals.

This is where an investment specialist, like a financial adviser, can help you.

I already have my own SMSF. Why do I need a financial adviser?

A financial adviser can work with you to help you with your technical strategy and investment strategy.

Our technical advice can help you understand how to best structure your affairs. For instance, we can give you advice on how to grow your super, whether you should consider salary sacrificing, co-contributions or contribution splitting, where the best place to hold your insurance is, how to structure your estate planning and beneficiary nominations – tax effectively – and how to maximise your Age Pension, prepare for aged care and protect your small business. And these are only a small sample of the strategies we can advise on.

We can also help you put together an investment strategy that is broad enough to ensure you don’t breach your trust deed, and is effective. It needs to work with your retirement goals and invest in assets which provide the risk and returns you’re comfortable with.

What does the ipac smsf service do that I can’t do?

The ipac smsf service is a state of the art superannuation platform. It brings all your administration together onto one platform and into one space, where you can view all your investments together.

It helps you track investment performance on a daily basis. It helps you remember important dates and deadlines. It offers a range of investments you might be interested in, such as term deposits, from a range of providers, so it saves you time shopping around. And you can trade shares through it as well, and keep all your important records together.

And you can ensure you don’t go over your contribution caps, as there are alerts which help you monitor your contribution limits.

It also allows you draw a pension through it (once you have met a condition of release) and has alerts which will warn you if you are nearing your maximum limit.

These are all tasks which you can do yourself. With the ipac smsf service, you can save time and make the paperwork tasks much easier and more manageable as you have a system to support you.

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whether you are starting out or already have an SMSF, an ipac adviser can help, call 1800 626 881 or enquire online

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