Trustees must prepare and implement an investment strategy for their SMSF, which they must then give effect to and review regularly. The strategy should be reviewed at least annually, and you should document that you have undertaken this review and any decisions arising from the review. Certain significant events, such as a market correction, should also prompt a review of your strategy and may require updating your investment strategy.

If the assets of an SMSF or the level of investment in those assets fall outside of the scope of your investment strategy, you should take action to address that situation, which could involve adjustments to investments or updating your investment strategy. We don’t consider that short term variations to your articulated investment approach, including to specified asset allocations whilst you adjust your investments, constitute a variation from your investment strategy.

All investment decisions must be made in accordance with the investment strategy of the fund. If in doubt, trustees should seek investment advice.

An SMSF must be an Australian super fund to be a complying fund and receive concessional tax treatment.

To be an Australian super fund an SMSF must meet three residency conditions, see Check your fund is an Australian super fund. The second and third conditions are relevant in this case.

“The COVID-19 health crisis has resulted in many countries imposing travel bans and restrictions and a high degree of uncertainty generally around international travel.

If the individual trustees of an SMSF or directors of its corporate trustee are stranded overseas due to COVID-19, in the absence of any other changes in the SMSF or the trustees’ circumstances affecting the other conditions, we will not apply compliance resources to determine whether the SMSF meets the relevant residency conditions.”

The establishment of a self managed superannuation fund is normally only encouraged where it is evident that the value of the fund will be large enough to warrant the costs associated with the maintenance of such a fund. The Australian Securities and Investments Commission (ASIC) recommends a minimum of $200,000 in assets or an expectation of achieving that amount quickly due to a high level of contributions.

The cost of our services to assist in the setting up of a self-managed superannuation fund are between $900 – $2,000 (exclusive of GST).  These services include:

• Discussions regarding the setting up of the fund
• Purchase of the Fund Deed
• Preparation of the documentation and minutes
• Application for Tax File Number and Australian Business Number with the Australian Tax Office
• Assisting with the setting up of bank accounts

In order to be a complying superannuation fund receiving the tax concessions, your fund has to meet the residency requirements.  If your fund is deemed non-complying, its assets and its income is taxed at the highest marginal rate.

When setting up your superannuation fund, it is important to determine what structure you will use.  All superannuation funds are trusts.  As such, a decision needs to be made as to what type of trustee it will have, and this in turn will determine the requirements applicable to you.  Your fund may have:

• A corporate trustee
• Individual trustees
• A single member

AWT Accountants will be able to provide information on the different structures.

The advantages of establishing your own self-managed superannuation fund include:

• Control over your own retirement fund including taking an active interest in the investing activities which are granted more flexibility in a self managed superannuation fund within the constraints of the rules relating to investments
• Where imputation credits are received by a self managed superannuation fund, the members receive the full benefit of these credits
• Members can defer the payment of contributions tax until it is actually payable by the fund, whereas in most managed funds, contributions tax is deducted on receipt of the contribution by that fund.
• Generally less expensive than managed funds for large superannuation interests where management fees are expressed as a percentage of the funds under management.

The disadvantages of establishing a self-managed superannuation fund include:

• Risk of non compliance where this could lead to tax being levied on the fund at a rate of 45% on the fund assets not the fund income
• The extensive responsibilities of the trustees of the fund including but not limited to ensuring that the fund complies with all the rules associated with maintaining a superannuation fund.
• The number of members of a self-managed superannuation fund is limited to 4.
• The cost of maintaining a self managed superannuation fund including the administrative requirements. These costs will vary according to the complexity of the fund.  Factors used in determining the complexity of the fund are commonly (but not limited to):

1. Structure of the fund – namely does it have corporate trustees or trustees who are individuals.
2. Type of investments held by the fund
3. Mode of the fund – this being whether or not it is in pension mode or accumulation mode or a combination of both

• Superannuation funds are subjected to an annual audit.
• Significant borrowing restrictions apply to self managed superannuation funds

For more information on how to best mitigate these risks, feel free to get in contact with us at AWT Accountants

All self-managed superannuation funds are regulated by the Australian Taxation Office.  Self managed superannuation funds are required to undergo an annual audit by a current member of a recognised professional body who is in possession of a valid certificate of public practice.  Recognised professional bodies include – but are not limited to – Chartered Accountants (C.A.s) and Certified Practising Accountants (C.P.A.s).

On finalisation of the superannuation accounts, we at AWT Accountants will arrange for your fund to have its annual audit and should queries arise from the auditor, we will assist you in clearing these queries as required in an efficient and timely manner.

This is dependent on the size and complexity of the fund in question.  We at AWT Accountants usually charge between $1,200-$2,000 (exclusive of GST) for the administration and accounting of small non-complex funds.  For the larger more complex funds this will be determined once we have ascertained the amount of work involved on a fund-by-fund basis.

We outsource the auditing of our funds and our auditor usually charges between $450 – $900 to perform his audit.  Once again, this is dependent on the size and complexity of the fund.

The Australian Tax Office also charge every self managed superannuation fund an annual levy – currently $259.00