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Self-managing a small superannuation fund is becoming increasingly popular, especially among small business people, self-employed and higher income earners.

The main attraction is the way this wealth creation strategy gives control over the fund’s investment decisions. This enables members of the fund to use its assets much more flexibly.

Unfortunately there are administrative burdens. There is also a cost consisting of the need to keep up to date with the many legislative changes which apple to both the administration and tax treatment of superannuation. (Macarthur’s MSVDH handle this for clients).

However, trustees of a fund who do not want to be involved in detailed administration and are prepared to pay additional fees should be able to delegate much of that to the accountant, or specialist firm to handle the detail as well as the fund’s accounts and tax and regulatory return. In addition help may be needed, at least initially, to prepare each period’s Business Activity Statement if the fund is registered for GST or Installment Activity Statement if not registered for GST.

Who Should Be The Trustee?
Initially a decision has to be made about whether the trustees of the fund will be the members or whether a company will be used as the fund trustee. New rules require all members to be trustees and all trustees to be members, or all members to be directors of the trustee company and all directors of the trustee company to be members.

Where a fund is to have one member, the trustee can either be a single or two director company or two individuals, one of whom is the member and the second who is not the member’s employee, unless that person is a relative of another member of the fund.

Getting The Right Trust Deed
The type and content of the governing trust deed also needs to be considered. Standard trust deeds can be purchased, or a specialist superannuation lawyer can draw up a trust deed and tailor it to cater for specific requirements of the fund members. The latter approach may be more appropriate for a ‘blended’ family so that those people who may otherwise make a claim for a deceased family member’s superannuation benefits are excluded from the dependant beneficiaries.

Paying A Pension
Once a member of a self-managed superannuation fund retires, paying a pension from the fund gives that person a hands on approach to retirement income.

It is therefore important to make sure that the trust deed allows for the payment of a pension from the fund.

Knowing The Rules
People who plan to, or already have their own self-managed superannuation fund should not just rely on their adviser/s. As trustees they need to be personally aware of the basic rules of running their funds in order to maximise returns, minimise risks and ensure that they get value for money service from their advisers. This approach may seem difficult to the client at first. It is important for the adviser to guide them through the main rules.

The sole purpose of superannuation is to provide benefits to members on retirement, at age 65, or to the member’s dependants if the member dies before age 65. Therefore, if a member gets a benefit from the fund in most other circumstances the sole purpose test is no longer satisfied. In the case of a serious breach, the worst-case scenario is that the fund can lose nearly half of its assets in penalty taxes, plus the trustees are highly likely to be penalised.

Prepared by: Peter Townsend BS, LLB, FAICD

Peter Townsend Business Lawyers
The Clarence Street Professional Group
Level 3
222 Clarence Street

This article is not a substitute for independent professional advice. We do not warrant the accuracy, completeness or adequacy of the information or material in this article. All information is subject to change without notice. We and each party providing material displayed in this article disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. You should make your own enquiries before entering into any transaction on the basis of the information or material in this article. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation.


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