SMSF 101: How much of an SMSF can be self-managed?
iSUPER®’s SMSF 101 series is designed to cover the basics for those new to SMSFs, currently considering an SMSF or simply looking for an easy reference guide.
Setting up and running an SMSF for the first time can seem like a daunting process if you are unfamiliar with managing financial and legal structures. Thankfully, there is a wealth of information available to trustees, as well as professional administrators who can help simplify the process.
The first step in this process is figuring out what kind of trustee you want to be. This will help you identify what services you will need to source, and where. Below we have considered the different levels of trustee involvement to illustrate what each entails.
If you require any further information, you may contact a member of the iSUPER®Team on +61 2 9377 0766 or via email, to see how we have tailored our services to meet differing trustee’s needs.
The 3 most common trustee styles:
2. Hands On
3. Audit Only
This is where a trustee does not have either the time, or the resources, to run all aspects of their fund. The trustees opt to “outsource” the day to day management of the fund to an administrator, whilst they focus on the strategic direction of the fund (including investments). Trustee’s using this sort of service will typically receive a range of services, including;
- accounts preparation;
- audit file preparation and auditor dealings;
investment advice and strategy planning;
- technical guidance;
- mail service for fund statements and tax matters;
- ATO dealings and lodgements; and
- pension, property and contributions support.
2. Hands OnThis service tends to be popular with trustees who know how to manage the “front office” of the fund, however, though they need assistance to prepare the fund’s accounts.
Often, this type of trustee does not need assistance with pensions, contributions or property services due to their age or investment choices. Accordingly, it is the core services they are after, rather than strategies and advice which are not as important to them at this stage in their superannuation life cycle.
Using an accounts and audit preparation service involves a bit more work for the trustees, such as collating and sending in documents required for compliance work. Any advice or structuring is then billed on a need only basis allowing trustees to minimise costs.
This level of service would normally include:
- preparing the Fund’s annual return and accounts;
- audit file preparation and liaising with auditor; and
- general strategy and technical support.
To read about our service options for this type of support offered, please click here.
3. Audit OnlyThis type of trustee prepares all financial statements, annual returns and documents themselves. However, it is not for the faint at heart. With the complexity of superannuation rules, strategies and the work involved in preparing accounts, this trustee type requires knowledge, time and research to ensure all risks are mitigated. Some will obtain technical or structuring advice separately, or arrange for lodgement of the tax return independently.
The services generally offered are:
independent audit of the accounts and tax return; and
- may include lodgement of the Fund’s tax return.
iSUPER® offer independent audit services to a range of individual and corporate clients. To read more about our audit services, please click here.
Some other things to be considered when deciding the level of assistance you require for your trusteeship;
1. Are the funds in pension phase?
- Do you need help structuring or setting up a pension? Failing to get this right could cost thousands in tax;
- Do you know when you can start one? What happens when you start a pension?
2. Are you borrowing to buy a property in super?
- What steps must be taken to avoid costly issues later on;
- Who can lend to the fund? What should you avoid?
- Are you going to discuss the different costs, options and technical issues with an adviser? There are some unexpected costs that you need to know as part of your investment decision process;
- How do different structures affect your ability to get finance? Could this affect you?
- Why you should always deal with SMSF experienced advisers. When borrowing in an SMSF, there are small differences to normal property transactions. These can have a big impact if not prepared properly.
- Do you know what considerations your investment strategy must include?
- Do you know all the investment types available to your fund?
- Are you using an adviser? Can they work directly with your accountant to reduce your work?
- Is your strategy up to date? How do you ensure it is working towards your retirement goals?
To hear more about how iSUPER® can assist you, whatever your trustee style, call one of our team to discuss. We have a range of service structures that give you flexibility to choose the cost and services that suit your needs.