According to the ATO (Australian Tax Office), 1.1 million Australian SMSF members have $869B in self-managed super funds (SMSF), according to the Australian Tax Office (ATO). Figures from Q1 2024 show that 616,400 now have SMSFs compared to 594,334 from the same quarter in 2023.
Self-Managed Superannuation Funds (SMSFs) are increasingly prevalent in Australia as they offer individuals greater control over their retirement savings and investment strategies than other superannuation funds.
Aquamore specialises in providing commercial SMSF loans. Read on to find out more.
Reasons for the Rise of SMSF
The spike in SMSF popularity can be attributed to a wide range of reasons, including:
- Property purchase: Property purchase, including commercial property, is a primary investment class for SMSFs.
- Greater control over investments: SMSFs give investors more control over their superannuation (asset type, risk and potential returns).
- Investment opportunities: SMSF trustees can select from various asset classes that reflect the individual investor’s risk profile.
- Potential for tax benefits: It may be possible to claim tax deductions for investments and other contributions.
Advantages of SMSF for Australians
Wider investment opportunities. SMSFs may have tax advantages pending on the asset. SMSFs are commonly used for estate planning due to their estate planning flexibility. In the event of a member’s passing, SMSFs can provide a clear overview of the distribution of funds to beneficiaries.
SMSF Risks to Consider
As with all financial decisions, it’s essential to be well-versed in all aspects of an SMSF structure, including:
- Adhering to Australian regulatory compliance laws
- Set up fees and ongoing costs for maintaining the SMSF
- Any limitations on default insurance and income protection
- Legislative changes in statutes or tax rules
Setting up and Managing an SMSF
Setting up an SMSF can be a complex process. Here are some areas to consider:
Seeking Professional Advice
Given the complexity of SMSFs, it’s preferable to collaborate with an accountant or financial adviser.. Specialist SMSF professionals can provide guidance about compliance, investment strategies, and tax planning.
Understanding Your Responsibilities
As an SMSF trustee, you have significant legal obligations to consider. Make sure you fully understand your compliance responsibilities. Again, your accountant or financial planner can take you through what’s required in the SMSF setup and ongoing compliance requirements.
Diversifying Your Investments
One of the primary reasons that SMSFs are on the rise in Australia is that the structure allows investments across a diverse range of asset classes. This enables trustees to manage their risk profiles.
Stay Informed on Regulatory Changes
The rules governing SMSFs in Australia are subject to change. It is crucial to stay updated on compliance changes to maintain compliance.
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