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Pindara Private Hospital Magazine - Issue Eight

A Self-Managed Superannuation Fund (SMSF) is a very popular choice for people who would like complete control over their retirement nest egg, with almost 600,000 SMSFs in operation in Australia. However, before you decide to start your own, it is wise to ask yourself these five critical questions first, writes Jason Skinner. 2014 the costs and penalties for making SMSF mistakes drastically increased, with fines ranging into the tens of thousands of dollars, right through until possible prison sentences. To show just how serious they are about these new SMSF rules, the ATO disqualified 660 trustees, issued 92 notices of non-compliance and wound up 44 self-managed superannuation funds in the 2014/15 financial year, because of the contraventions under the new penalty regime. As well, if the SMSF fails to comply, it will lose its concessional tax status and will have to pay to the tax office 47% of the market value of the fund's assets. Should I have a minimum superannuation balance? Currently there is no mandated minimum balance required when setting up your own SMSF. However, research suggests $200,000 - $250,000 in super is the average starting point. It's an amount seen as cost effective when you consider the fees and time you need to spend in maintaining your SMSF. However, if you are interested in starting your own SMSF but are concerned your current balance isn't high enough to justify the costs, consider this: regulations allow up to four members per SMSF so if you combine your current superannuation amount with potentially three other members you suddenly have a higher balance to begin with, and can also share the costs of the fees. Is it expensive to start up my own Self-Managed Superannuation Fund? According to the Rice Warner Costs of Operating SMSFs Report (May 2013) there are many legal and accounting costs to be considered when establishing your own Self-Managed Super Fund so you will need to allow for these establishment fees. In return you will receive expert advice from those who understand the implications and advantages of SMSFs, as well as invaluable advice on what ASIC and the ATO require of you to establish your Self- Managed Superannuation Fund. What ongoing costs do I need to consider? Just as with a retail fund, there will be fees associated with running your SMSF. However, you should be aware there are extra expenses incurred when you opt for a Self-Managed Superannuation Fund. You'll need to put more aside in the budget for accounting fees, including the compulsory auditing of your SMSF. It's important to remember these costs will cut into your final retirement balance. You should also be aware of the penalties that can be incurred by the ATO should you not adhere to the strict compliances in place. From 1 July pindaramagazine.com.au Pindara Magazine 111


Pindara Private Hospital Magazine - Issue Eight
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