An SMSF is a specialist form of superannuation fund where control remains in the hands of the members who decide how the fund will operate and what investments will be made. An SMSF may have up to 4 members which means investors can establish one with up to 3 other family members or friends.

How does an SMSF work?

All members of the fund will be trustees of the fund. They may act as individual trustees or establish a company and be directors of this trustee company. These trustees will control the SMSF and all investment decisions within it. This means that as the trustee of their fund, investors will be able to decide how their fund invests and what it decides to invest in to best fund their retirement.

The trustees assume the responsibility for complying with all legal obligations and Sapient Superannuation is there to guide trustees through the establishment, ongoing compliance process to ensure the SMSF remains within the confines of the law. Each year Sapient Superannuation will organise for the preparation and lodgement of the tax return for the SMSF as well as the financial statements.

Are SMSF’s cost effective?

Ultimately this is analysis trustees will need to evaluate based on the current fees they’re paying, and, the potential returns they think they can generate within the SMSF. Often the cost of establishing and administering an SMSF is cheaper than the combined fees the trustee and the other members are currently paying in their existing super funds. In other cases maybe not.

Sapient Superannuation charge flat rate fees that do not increase when the value of the investments increase, and, do not increase if the number of members in the fund increases. If investors combine their superannuation balances with more members they will still be charged one flat SMSF fee, and therefore save on the fees being charged across multiple funds. We encourage investors to conduct their analysis on this before making any decisions.

The flat rate fees will depend on the type of investments that are being made. For example if investors are just holding cash and trading shares this will be a slightly lower fee than if they want to hold property and a loan. Talk to an authorised representative about the types of investments you intend to hold and we can advise you on the likely fixed costs.

A comprehensive list of the Sapient Superannuation fee structure is available upon request.

A primary concern for investors could be the question of what an SMSF allows them to do that they can’t do now, and what does their SMSF provider deliver in terms of service and comprehensive service. The wrong service from a cheap or poor provider can cost a fund tens of thousands of dollars so it is important to use a provider with strong credentials. At Sapient Superannuation there are no restriction on what investments trustees can make, provided they are within superannuation regulation.

How do I establish an SMSF

To establish a SMSF trustees will complete and application form and sign a trust deed. The trust deed will outline how the SMSF is governed and the rules and regulations it must abide by.

Sapient will establish the trust deed and make the necessary registrations to establish the fund.

What about the taxes?

An SMSF has all of the tax benefits the superannuation legislation provides, i.e. the tax rates for industry/retail funds apply to SMSF’s. While in the accumulation phase SMSF’s will have income taxed at a rate of 15%, and capital gains will be taxed at a rate of 10%.

When the SMSF is funding a pension (in pension phase), all income and capital gains on the pension account may be subject to zero tax. A registered tax agent will be able to provide this information.

Benefits of the Sapient SMSF Experience

• Live online reporting in one place of all the SMSF holdings; cash, term deposits, shares, options, & property

• Sapient acts as the SMSF’s mail box, filing the paperwork and other ongoing obligations

• We ensure your fund remains compliant

• Access to the best superannuation minds in Australia

Who might an SMSF suit and what can you invest in?

With almost 1 million Australians now being members of an SMSF, the appeal is clearly widespread as SMSF’s attract a diverse range of investors wanting to;

• Take more control of their retirement savings

• Invest into Australia residential property

• Trade shares and other online products

• Use leverage to buy property

• Acquire commercial property to lease back to their business

• Take advantage of small business tax concessions when selling a family business

• Better manage their estate and succession planning

• Protect their assets from future liabilities or bankruptcy