Self Managed Super – SMSF

Florisson Financial can help you decide if a Self Managed Super Fund (SMSF)  is right for you and recommend a range of strategies to make the most of your opportunities.

Some of us prefer to manage our own superannuation and an SMSF can be beneficial for the following reasons.

Investment Choice

One of the key benefits of an SMSF’s is investment control, and the wider investment choices such as residential and commercial property, collectibles, term deposits, direct shares, etc. that trustees have compared to industry and retail super funds. You will also have access to derivatives and other complex strategies in order to implement downside protection or hedging your portfolio risk. Having access to such a wide range of investments can also result in increased diversification (and therefore less risk) compared to other super funds. One of the main reasons that SMSF’s are recommended for small business owners is to be able to have business property owned by their SMSF’s and then leased back to the business. This gives a steady income for SMSF’s and frees up any capital in order to grow your business and provide secure tenancy.

Tax-efficient

The tax benefits of an SMSF cannot be ignored. Excluding SMSF’s, Australia’s superannuation system is already regarded as the most tax-efficient structure in which to build wealth. However, an SMSF builds on this by offering greater tax-planning flexibility that is generally not achievable with other super funds. Implementing strategies to reduce the amount of tax paid in your SMSF can make a significant difference to fund performance. This is one reason why SMSF’s often outperform other super funds. Strategies to minimise capital gains tax (CGT) by timing the sale of fund assets and using imputation credits from Australian share dividends to offset earnings tax are two examples of how tax can be better managed by using an SMSF.

Transaction cost savings

Whenever it comes time to move to the pension/retirement phase an SMSF will allow you to have an almost seamless transition from the accumulation phase to the pension phase without the need to sell down assets, therefore not triggering capital gains tax (CGT) and other transaction costs. You do not need to sell your assets such as shares which would incur various taxes and fees in the process. You just retain your investments and begin to draw down on your SMSF balance as an income.

Estate Planning

Some of us have a preference to keep assets in the family after we pass away. This is one of the more complex benefits of using an SMSF so we’ll use an example. Let’s assume you run your own business (as a company) and your SMSF owns the business premises. The SMSF leases the premises to your company and in return, your company pays rent to your SMSF. You’ve recently retired and your son, who recently separated from his wife, has taken over running the business, but your SMSF still owns the business premises and continues to lease it to the company.  Because your son now runs the business, when you pass away, you want the business premises to be transferred to him. You also want the business premises to be protected (e.g. in the event your son and his wife divorce, or the business becomes bankrupt and owes money to creditors). Additionally, you also want to minimise the tax implications for your son after the transfer has taken place. An SMSF, in conjunction with expert estate planning advice, can achieve the desired outcomes in this example. Complex estate planning requirements, such as those in this example, may not be achievable with other super funds.

Holding an SMSF Specialist Accreditation, We can help you decide if an SMSF is right for you and recommend a range of strategies to make the most of your opportunities.

SMSF Specialist Accredation