Planning For The Future

With the global financial crisis, Euro zone bailouts and the roller coaster ride of the share market getting regular front page coverage in the press, many of us cannot help but wonder what is going on and what will happen next. Some people feel that the average person in the street is not really affected by all this uncertainty but the reality is quite different.

With most of us, our biggest investment is our home and the sway that can move interest rates can change what we have to pay each month on our mortgages. What many fail to consider is probably the next biggest investment, namely our superannuation. For most, this sits in a large superfund that gets added to each time we get paid and a nameless fund manager makes decisions on how that is invested.

Sure, you can choose the breakdown of how your money is invested in relation to risk, for example 50% into shares, 30% in cash and the rest in property. However, you can generally only make a set number of changes in a year and the detail of where your money goes sits with the super fund. There is an alternative option where you get to make all the decisions, known as a Self Managed Super Fund (SMSF).

At first glance this might seem like one for the too hard basket. Isn’t superannuation heavily regulated and you would need a team of lawyers and a corporate headquarters to untangle all that red tape? Really when you break it down superannuation is a long term saving scheme designed to give you an income after retirement. It does have rules around how the money can be accessed in order to protect it for retirement but on the flip side it also has generous tax concessions that can help maximise the return of your hard earned cash. You become the trustee, fund manager and you decide the investment strategy. You are also the beneficiary of the fund as you have control over the performance.

In our next article we will go into more detail on the Benefits and Requirements of setting up and running a Self Managed Super Fund.


At a glance, there are a number of benefits in setting up your own superfund but there are also responsibilities that you must fulfill and certain requirements that you must meet while managing the fund. Below we try to simplify these issues in broad terms but each individual case is different and so it is advisable to seek professional advice.


Control of the investment – Members get to define their own investment strategy. There are a wide range of investment choices open to those managing their own fund.

Manage the Risk – Because the trustees of the fund control all the assets they can balance the risk against the investment strategy.

Tax Concessions – The income from the investments of a compying fund are generally taxed at a concessional rate of 15%.


Investment Strategy – The investment strategy for the fund must be formally decided and reported on.

Annual Audit – An approved auditor must be appointed for the fund to provide the annual audit to ensure it is compliant. The ATO is the regulator of Self Managed Super Funds and needs to be provided with the annual audit report.

Annual reports and accurate records – Minutes of meetings and decisions, reports of transactions, copies of member reports and operational statements are some of what needs to be recorded.

Sole Purpose Test – The sole purpose of a SMSF is to provide for the retirement or death benefit of its members. All investment or actions of the fund must satisfy this rule to remain compliant and thus enjoy the tax concessions for super funds. Failure to meet this rule can result not only in higher tax but also mean penalties.

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