SMSF

 

Did you know that an SMSF can have up to four members? This can be a great way to access opportunities that otherwise wouldn’t be available. Let’s take a look at these opportunities and consider potential matters.

With size can come opportunity. But getting it right is very important especially when we are talking about your super and your retirement.

But firstly let’s take a look at what some of the situations that may unleash these opportunities:

  • Having an SMSF with your business partners and using your super fund to purchase property to be used in your business (learn more about property and SMSF’s in our blog “Property and my SMSF” )
  • Bringing your working adult children into your fund allowing their contributions to provide liquidity for your pensions
  • Provide additional capital to make large asset purchases such as property that you otherwise may not have had enough for
  • Allow the SMSF and its members to access a more diverse portfolio of investments (read our blog on investment diversification)
  • Bringing in younger members after your retirement to soak up any tax or capital losses that otherwise may have been lost
  • Reducing the fixed costs as a percentage of total fund balance
  • Bringing in your children to take over the administration of your fund as you get older

That all sounds great but what potential matters may cause problems? Let’s take a look at a few:

  • Fund members having very different investment risk profiles
  • New members may not understand the responsibilities of being a SMSF trustee (read more about trustee responsibilities on the ATO website  https://www.ato.gov.au/uploadedfiles/content/spr/downloads/spr46427n11032.pdf )
  • Relationships may break down and operating an SMSF together can become problematic
  • As there is a maximum of 4 members you may have to leave a family member out of the SMSF causing potential friction
  • Business partners may have different visions and goals causing a forced sale of property before you were ready
  • Other members may break the rules SMSF’s are bound by putting you at risk of penalties or even jail
  • Bulky assets may not provide the required liquidity to fund pensions and other expenses

So although it is important to know the risks there are still some fantastic benefits for those in particular situations. It is very important if you do have multiple members to regularly review your investment strategy. Read our blog here to make sure you understand the requirements of your strategy YSS & NCA Blog – Your SMSF Investment Strategy

To find out more about how we can help you with your existing SMSF or consider if an SMSF is right for you contact us here

 

This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.