What is a Self-Managed Super Fund?

A Self-Managed Super Fund (SMSF) is a private superannuation fund that you manage yourself, distinct from traditional retail or industry super funds. An SMSF offers you the flexibility to tailor your superannuation investments according to specific personal and financial objectives. Unlike public super funds, where your investments are pooled with other members’ contributions and controlled by fund managers, an SMSF gives each member of the fund (typically limited to four) a trustee role, providing significant control over the fund’s investment decisions. This arrangement is particularly attractive to those who wish to have direct oversight of their retirement savings, invest in wider and sometimes non-traditional asset classes, and implement specific tax strategies.

How does a Self-Managed Super Fund work?

Operating an SMSF involves creating a trust structure where members are typically trustees and are responsible for decisions about investments and management. Here’s how it generally works:

• Legal framework: An SMSF is set up under a trust structure, meaning it requires a trust deed that outlines the governance, legal obligations, and operational framework of the fund.

• Compliance and responsibilities: Trustees are required to adhere to strict regulatory requirements set by the Australian Taxation Office (ATO), including preparing and submitting annual returns, maintaining records, and ensuring the fund complies with the laws.

• Investment control: Trustees have the autonomy to make investment decisions, which could range from stocks and bonds to real estate or even cryptocurrencies, depending on the fund’s trust deed and investment strategy.

• Financial benefits: The primary purpose of an SMSF is to provide financial benefits to its members upon their retirement. The members/trustees manage the fund’s investments with the goal of achieving substantial returns over the long term.