Most frequent questions and answers​

A self-managed superannuation fund (SMSF) is a special category of superannuation fund with up to four members, where the members are required to be trustees and actively participate in the fund’s investment, administration and management. It is a trust designed to provide retirement benefits for it members. SMSF’s are regulated by the ATO.

Generally, anyone can be a member of a SMSF. Each member must also be a trustee or director of a corporate trustee. To be an eligible trustee or director a person must be

  1. Over the age 18.
  2. Not under a legal disability or
  3. Not be a disqualified person

Were a person is under the age of 18 or is under a legal disability they are still eligible to be a member if a legal representative or guardian is appointed to act as trustee on their behalf.

The main benefit of a corporate trustee is that it is cost effective and administrative friendly when members joint or leave the fund. The title of all fund assets need to be in the name of all the trustee, meaning if a fund has individual trustees all asset titles need  to be amended if a trustee is appointed or resigns. With a corporate trustee the company would be the title holder meaning only the ASIC register would need to be updated.

Another appealing benefit is a corporate trustee offer a member has greater protection. With a corporate trustee, if the director only the company is involved in a legal dispute, any action is generally limited to the assets owed by that company and not the director personally.

To access your superannuation benefit  you must satisfy a condition of release. The following are a form of a condition of release

  1. Retirement or Reached Preservation Age (generally age 55)
  2. Reached 65 year of age
  3. Death or permanent incapacity

An Account Based Pension is a means of transferring your superannuation benefit from accumulation to pensions to provide a regular and tax effective income stream. Each year a member with an account based pension is required draw a minimum from the previous year 30 June balance, based on the member age and percentage factor.

Age at start of pension (and 1 July each year)Minimum %
Under 654%
65-745%
75-796%
80-847%
85-899%
90-9411%
95+14%

A SMSF can invest in all types of property, including residential, commercial, industrial, and listed and unlisted property investment funds. There are some special rules, peculiar to super, that may affect how you use a property bought via a self-managed super fund.

The  trustees deal with the principal areas of running an SMSF

  1. Accepting Contributions
  2. Investment of Funds
  3. Payment of Benefits

The SMSF trustee are ultimately responsible for ensuring the SMSF complies with superannuation laws.

The trustees can be either individuals or a corporate trustee.

Yes, there are two types of contributions. Concessional Contributions and Non-Concessional Contributions.

Concessional contributions are made up of employer contributions (super guarantee) and other contribution which a deduction is claimed in your personal return. The SMSF pay 15% tax when it receives a concessional contribution. The concessional contribution limits for the 2014/15 financial year can be seen in the table below. These limits apply per member.

Income yearAgeAnnual cap amount
2014–1548 or under on 30 June of the previous year$30,000
 49 or over on 30 June of the previous year$35,000

Non-Concessional contributions are personal contributions whereby there is no deduction claimed. The SMSF does not pay any tax on a non-concessional contribution. The non-concessional contribution limits for the 2014/15 financial year can be seen in the  table below. These limits apply per member.

Age on first day of financial yearAnnual cap amount
< 65$180,000 or a three – year limit of $540,000
65 – <75$180,000
75 +NCC cannot be accepted

Once you have meet a condition of release you can take you superannuation as a lump sum benefit or a pension. The two main types of pensions are Account Based Pension and Transition to Retirement Benefit.

A Transition to Retirement Pension enable a member to access their superannuation benefits once they turn 55 years of age with without having to retire or satisfy another condition of release. Like an account based pension a member is required to take a minimum amount which is based on the previous year 30 June balance, age and percentage factor. Additional, a Transition to Retirement Pension has a maximum percentage for members under the age of 65.

Age at start of pension (and 1 July each year)Minimum %Maximum %
Under 654%10%
65-745%n/a
75-796%n/a
80-847%n/a
85-899%n/a
90-9411%n/a
95+14%n/a

An SMSF can borrow from a third party under a limited recourse borrowing arrangement. The following guidelines apply:

  1. The funds borrowed are used to acquire a single asset.
  2. The funds are not applied to improving an asset including an asset acquired with the borrowing. i.e. borrowed funds cannot be used for the renovation of a super fund property.
  3. The asset is to be held in a Bare Trust with the SMSF to receive the beneficial interest in the asset.

Any recourse the lender has on the SMSF trustees is limited to asset acquired with the borrowed fund.