Here’s part 1 of a 3 part series on what you need to know…
Self-managed super funds (SMSFs) are often a topic for discussion when there’s an asset boom like there is right now. Everyone feels like an investment hero when the tide is rising but you need to keep your wits about you, and SMSFs are no exception.
The Australian Tax Office (ATO) administers SMSFs and they take the task very seriously so whilst I’m a fan of SMSFs, I also want to impress upon you the importance of the compliance regime and what your role and responsibilities are.
Here’s 10 snippets you need to know;
- A SMSF is essentially a privately run super fund with up to 4 members.
- The core purpose of the fund is to provide retirement benefits (or death benefits) to the members and their beneficiaries so you can’t just use the money for whatever you want or have direct access to the funds.
- You’ll need to separate your personal money from your SMSF money.
- You’ll need a written investment strategy detailing how the funds will be invested. 100% into Bitcoin is unlikely a prudent strategy (although I do have a few exceptional clients who have done very well).
- You’ll likely need an auditor and an accountant to assist you with your annual compliance requirements.
- Yes, you can own Bitcoin in your SMSF subject to your investment strategy.
- Yes, you can potentially own direct property in your SMSF.
- Yes, you can borrow money to buy property in your SMSF under a limited recourse borrowing arrangement- there’s a lot of rules and limitations around this strategy.
- You can buy and sell shares, ETFs and managed funds in your SMSF.
- Ideally, you’ll have more than $200,000 to start the fund because they cost more than $2,000 per annum to run plus set up fees. So, the ATO suggests you should cost it out at around 1% per annum although that may differ depending on how you invest.
I’d highly recommend you read this booklet from the ATO;
and they’ve got a bunch of great videos explanation how SMSFs work and what you need to know; https://www.ato.gov.au/Super/Self-managed-super-funds/
If you need some help, please click below and we can work out if you need an Accountant or financial adviser to step you through the ways to reduce your tax and boost your super!