Self-Managed Super Funds: Why is there a growing interest?

Posted on May 27, 2015 by ATB Chartered Accountants

There has been a lot of hype recently about self-managed super funds (SMSF) and their benefits. But what are they? Why should you consider starting a self-managed super fund?

As at March 2014, there are over 1 million SMSFs in Australia with 39,514 set up in the last financial year alone. There has been steady growth in the number of Australians opting to set up a SMSF rather than investing their superannuation in a traditional industry or retail fund.

There are three main reasons that people are choosing to have SMSFs. These are control & flexibility, tax effectiveness, cost savings.

CONTROL & FLEXIBILITY

SMSFs provide Australians with the potential to take control of their money. How you invest in your future is in your own hands if you have an SMSF. An ability to invest in what you want provides an increased choice of investments as not all industry and retail funds are willing to invest in all of the options available to consumers.
If you have an SMSF you have the choice in what you want to invest in. This allows money to be invested into non-traditional superannuation assets. These may include real estate, artwork and other collectables.

TAX EFFECTIVENESS

There are a number of tax savings that can be associated with SMSFs. For example, when purchasing a rental property, tax savings can be made as the rent earned by the SMSF is only taxed at a rate of 15% rather than 47% (at a top rate) if you received the rental income without an SMSF.

COST SAVINGS

Although SMSFs have some expense involved in the set up, you may be able to save money in comparison to investing in traditional superannuation funds. While publically run funds deduct monthly fees and other additional costs from your super, SMSFs essentially incur fixed costs. This means that the more money you invest in your SMSF, the more cost effective it will become.

This article is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of your specific circumstances.