What is a self managed super fund (SMSF)?

A self managed super fund (SMSF) is a specialised superannuation trust that can be established for up to four people, for the sole purpose of providing retirement benefits to its members. A SMSF if you own superannuation fund, where you have control of what investments your super fund invests in.

A SMSF needs to have:

• A trust deed: This establishes what the super fund can or cannot do. The trust deed needs to be reviewed regularly to make sure that it is up-to-date.
• A trustee: All members of the fund have to be trustees. You can act as individual trustees, or appoint a company as a trustee, in which case all members need to be directors. Speak to a financial advisor about which is suitable for you.
• An investment strategy: An SMSF investment strategy sets out what the SMSF will invest in and addresses risk, return, diversification, liquidity, cash flow and asset allocation. Seek professional financial advice from a trusted financial advisor first for details on setting out our investment strategy for your super fund.

There are currently over 400,000 SMSFs in Australia and in March 2009, there was nearly $300 billion invested in self managed super funds. This represents about 32% of the whole superannuation industry's investments.

But before you set up a SMSF, you need to take the following into consideration:

• If you have decided to appoint a company as trustee, you will need to register the company to be the trustee and obtain an SMSF trust deed. This can cost you from $800 to $1,500.
• You need to apply for a Tax File Number, an Australian Business Number and establish a bank account in the super fund’s name
• Once this has all been completed, you might like to think about rolling over your existing super accounts into your SMSF. You can also change your payroll details, so that your employer can contribute into the SMSF.
• Appoint an accountant and auditor to prepare your SMSF accounts, tax return and audit every year.
• Once your SMSF has been established, you need to manage it and its investments and keep proper records of all transactions. This will be essential if your SMSF is ever audited by the Tax Office.
• At least in the beginning, you should consider getting advice from a professional financial advisor.

Before you set up a self managed super fund, we recommend that you speak to a qualified financial advisor first to ensure this is the best option for you. Our financial planners are available to answer any queries you may have and help set up your SMSF and investment strategy. Call 1300 55 10 45 or visit www.intellichoice.com.au for more details.