Superannuation is money set aside by employers during working years for retirement, which is crucial as it increases retirement funds. Withdrawal is only allowed in certain circumstances, like retirement or turning 65. SMSFs, which are one of the best retirement planning strategies, are popular among Australians who want to gain control and become more involved in their superannuation and future planning. Let’s take a look at some of the benefits of an SMSF.
-
Purchase investment property
SMSFs can now borrow to purchase large single assets like commercial property, enabling members to purchase assets out of reach.
-
Control Tax
Tax reduction can be achieved by timing pensions and structuring investments, utilising concessional tax treatment, and claiming refunds from the ATO. Flexibility in dealing with taxable liabilities is provided by a single tax return for multiple pension accounts and allocating earnings from non-retired members.
- Reduce the cost of transactions.
Transitioning to the pension/retirement phase with an SMSF is seamless, eliminating the need to sell assets and transaction costs. This helps avoid capital gains tax and other taxes. Unlike traditional super fund sales, SMSFs can reduce transaction costs like brokerage and CGT. This helps reduce the need for asset purchases.
- Asset Defense
Superannuation offers asset protection for business owners, protecting them from litigation and bankruptcy. However, it cannot be used to support a struggling business. To achieve asset protection, consider purchasing an investment property through an SMSF instead of in your name.
- Investment Option
SMSFs offer investment control, a broader range of investment options, and access to derivatives. They are recommended for small business owners as they allow them to own business property and lease it back, providing consistent income and freeing up capital for growth.
- Tax Reduction
SMSF superannuation funds offer tax-free pensions and greater flexibility in contributions, timing, and allocation. SMSFs allow trustees to reduce overall tax by considering individual circumstances and strategic decisions on contributions, reserves, and distributions. However, unlike public offers or ‘pooled’ funds, which treat all members equally, SMSFs may make decisions that adversely affect a member’s tax position, making it difficult to prevent.
- Life Insurance Payment Option
Personal insurance, like life insurance, can be paid through SMSF, industry or retail funds, or guaranteed renewable policies. Group insurance is inadequate and can be reduced or cancelled. Coverage needs are personal and depend on age, family structure, income, and debt levels.
- Fund Transfer to the Right People
An SMSF in the Australian superannuation system offers additional control and flexibility in estate planning. It allows for tax-efficient distribution of wealth, including tax-free pensions to dependents and tax-effective income streams for dependents. This is particularly beneficial for young children or spendthrift beneficiaries.
- Savings on costs for larger balances
SMSFs can be cheaper than other public super funds, especially for large fund balances over $300,000.
Conclusion
Self Managed Super Fund Brisbane is becoming increasingly popular as a powerful retirement savings structure. To participate, one must accept the responsibilities of an SMSF trustee and have a good financial planner assist. This ensures control over superannuation, sound investment decisions, tax efficiency, estate planning, and asset protection strategies, allowing individuals to pass the sleep test.
Do you want assistance from the SMSF Specialist Advisor? Virtu Super can handle all of your SMSF compliance needs, whether it’s administration and tax services provided in-house or legal documentation arranged for you at a discounted rate by our legal experts.
