SMSF is the short term for Self Managed Super Funds. Sometimes, it is also called the DIY or Do it Yourself Super Funds. Such kind of investment is a retirement fund available in Australia. It is the same as the self managed superannuation fund where the SMSFs invest the contribution given by its members. It also gives benefits to the members whenever they retire and also gives the beneficiaries with death benefits in case there is a death of the member.
If there is one main difference of SMSF and the other superannuation funds, it would be the members of the SMSF are also its trustees. It is also referred as the directors of a corporate trustee. It implies that they need to plan and execute the investment strategy for their fund, manage payment benefits and accept contributions. Read more at http://ezinearticles.com/?The-Self-Managed-Super-Fund-Strategy&id=3286338
There is a broader choice of investment for SMSF as compared to the other super funds. There is an option to make direct property, direct shares and investment management.
The SMSF members need to appoint the approved auditors. They also need to select the accountants, tax agents, administrators and financial advisors. Even so, the utmost legal job for the compliance of the fund would be under its individual trustees.
- The sole reason why SMSF is maintained should only be for retirement purposes of the members.
- The members of the SMSF should be limited to five members.
- Each of the members is also the trustee.
- For single member SMSF, there is a need to appoint a company as its trustee or there should be another person to act as individual trustee.
- Unless the members or trustees are associated, it is not allowed for the fund member to be an employee of a different member of the fund.
- It is not allowed for the fund trustee to receive compensation of any kind for the services as being a trustee.
- It is fine for the SMSF to give financial assistance or lend money to its member.
- An asset cannot be acquired by the SMSF from a fund member or other related person to the trustees. There is an exception with managed funds, business real property and listed shares.
- It is not allowed for the SMSF to borrow. Some limited exceptions are applied.
- It is required for the trustees to set out the objectives of the funds as well as the formulation of strategy for the investment. All of such must be in written form and must be reviewed on a regular basis. With such, it can be ensured that the objectives will be fulfilled.
- There is higher control over the funds for retirement as well as its way to be invested.
- There is a wider choice for investment as opposed to funds that are offered publicly.
- It is possible for the SMSF to be moved from generation to generation.
- It can manage to pay for the opportunities of benefit payments as well as estate planning.