What are the benefits of a self managed super fund (SMSF)?

Setting up an SMSF means as a trustee, you can choose how to invest and manage your super savings. Below we explore the main benefits to managing your own superannuation.

Investment control

Most superannuation funds will allow you to invest into shares, fixed interest and property via managed funds, but often with restrictions. SMSFs however can offer a large range of additional investment options including direct property, physical gold and other commodities, derivatives, and subject to strict requirements, collectables such as art work. SMSFs can also offer the flexibility of borrowing within your fund for investment. In particular, small business owners may hold their business premises within their SMSFs for a variety of reasons including asset-protection, succession planning and security of tenancy.

Greater investment flexibility

SMSF members also have greater flexibility on when they acquire and sell their investments and this hands-on approach can mean, for example, as market conditions change you can quickly respond by adjusting your investment portfolio.

Capacity to pool your super with up to three other individuals

SMSFs provide you with the ability to pool your resources with up to three other members. This increased pool may allow you to access investment opportunities that may not be available otherwise. This further increases when gearing using this increased investment pool is considered.

Estate planning

SMSFs offer great flexibility with your estate planning needs. If the fund’s trust deed allows it, SMSF members can make binding death benefit nominations that do not lapse, unlike many public offer superannuation funds which tend to require binding death benefit nominations to be updated every 3 years. In addition, SMSF members may have greater flexibility in specifying how death benefits are to be paid.

Effective tax management

Control and flexibility over your SMSF investment decisions affords you the ability and means to consider tax when managing your fund’s investments such as the effect imputation credits will have on the after-tax earnings of the fund.

The current tax rate on earnings within a superannuation fund is 15%, however, where the income is produced by assets wholly supporting an income stream such as a pension, there is no tax payable within the fund on that income.

This difference in tax rates means that by having control over the disposal of assets, you can minimise, or potentially eliminate a capital gains tax liability.

Adding value with property

Adding to your SMSF with property can be an effective way to grow your super. Owning property through your SMSF typically involves the fund acquiring a residential or commercial rental property which is leased to unrelated tenants, as fund members or relatives generally can’t rent a residential property from an SMSF because of the in-house assets test.  Find our more about how to use a self-managed superannuation fund (SMSF) to access property

Always consider the risks

There are strict laws and regulations that govern SMSFs. As a trustee of your own super fund you’re held responsible for your investments and complying with superannuation and taxation laws. Please ensure you aware of the risks to consider before setting up an SMSF.

Next: How much does an SMSF cost?

It’s important to understand the types of costs associated with running a self managed super fund. Here we overview some of the common costs.

You may also be interested in:

Self managed super funds can offer Trustees more control over the taxation of their superannuation however like all aspects of SMSFs there are rules that apply.
Once you’ve decided an SMSF is right for you, it’s important to understand the steps involved in getting your SMSF established. We outline the 5 key steps.
As with other aspects of self managed super funds there are rules around who can be a Trustee or Director of the corporate Trustee of your SMSF. This article explains some of those Trustee rules.

Learn about managing your own super, frequently asked questions and more. 

Learn about SMSF

Find out how BT can help you set up, invest and manage your SMSF – all in one place.

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The information in this document has been prepared by BT Portfolio Services Ltd ABN 73 095 055 208 AFSL 233715 (BTPS) and is current as at 2 December 2016. The information provided is general in nature and does not take into account your personal needs, objectives or circumstances and therefore, before acting on it, you should consider whether it is appropriate for you.

BTPS operates BT Panorama Investments (the investor directed portfolio service operated by BTPS). BT Funds Management Limited ABN 63 002 916 458 AFSL 233724 (BTFM) is the responsible entity and issuer of interests in BT Cash and Westpac Financial Services Ltd ABN 20 000 241 127 AFSL 233716 is the responsible entity and issuer of interests in BT Managed Portfolios. An Investor Guide is available for BT Panorama Investments and a PDS is available for BT Cash and BT Managed Portfolios (the Panorama products). These disclosure documents can be obtained from BTPS by visiting www.bt.com.au/smsf or calling 1300 554 267. A person should obtain and consider the disclosure documents before deciding whether to acquire, continue to hold or dispose of interests in the Panorama products.

In addition, BTPS is the provider of the Panorama SMSF Establishment Service and the Panorama SMSF Administration Service. The Guide and Terms and Conditions for these services are available by visiting www.bt.com.au/smsf or calling 1300 554 267.

BTPS, BTFM and WFSL are subsidiaries of Westpac Banking Corporation ABN 33 007 457 141 (Westpac). Apart from any interest investors may have in Westpac term deposits or securities acquired through Panorama, an investment in or acquired through Panorama is not an investment in a bank or a bank deposit. Westpac and its related entities do not guarantee an investment in or acquired through Panorama Investments.