Your future, your decisions. Your SMSF

A self-managed super fund, or SMSF, is a way of saving for your retirement. Also known as DIY super, it is a private super fund that you manage yourself, in which you are responsible for making all relevant investment decisions.

The difference between an SMSF and other types of funds is that the members of an SMSF are also the trustees. As trustee of your SMSF, you manage your own super fund, rather than having a bank or fund manager make all of the investment decisions for you.

You can usually have up to six members in a fund and almost all Australian residents can apply to set up their own SMSF. To be an SMSF member, you generally must:

• Be at least 18 years old
• Be financially solvent
• Consent to being a member or trustee of the fund
• Accept the fund’s responsibilities by signing a Trustee Declaration
• Have no criminal convictions relating to dishonest behaviour
• Have never breached the Superannuation Industry (Supervision) Act 1993 or been disqualified by SMSF regulators
• Not breach the sole purpose test

SMSF investment types can include, but are not limited to:

• Australian and international shares
• Residential and commercial property, or REITs
• Exchange-traded funds (ETFs)
• Commodities (e.g., gold and silver)
• Antiques and collectables
• Cryptoassets
• Businesses
• Cash

Some of the benefits of a self-managed super fund are:

• Flexibility. You have the flexibility to make decisions according to fluctuations in the market — and timing is critical when it comes to investing. Investing in stocks in Australia gives you greater control over your investments, so you can track their performance and adjust your investments accordingly.
• Diversification. You have the freedom to choose from a range of investments, industries and asset classes. From stocks in Australian securities to investing in cryptocurrencies, it can be a good idea to diversify your retirement portfolio to help reduce the risks associated with individual stocks. Be sure to do your research before deciding which asset types are right for you.
• Liquidity. A self-managed super fund lets you exit a stock at a time that suits you. Plus, most shares can be sold quickly.
• Assistance. You may have control over your super and be responsible for its financial and legal obligations, but that doesn’t mean you can’t seek professional advice. Consider speaking to an independent financial advisor to make the most of your SMSF.
• Tax credit. Because it is a retirement fund, your SMSF will only pay a flat 15% tax rate. Income from shares generally comes with a 30% tax credit, so you can claim back the difference.
• Tax savings. Super funds generally do not pay tax on all capital gains. That means once you have held an investment for over one year, only two-thirds of the gain is taxable. Over time, this could help you significantly increase your investment gains and help build your overall wealth.

As an SMSF trustee, you are responsible for making all investment decisions for your fund. SMSFs also have legal administrative obligations that require you to maintain records, provide financial statements, complete a tax return and organise an independent audit.

Some risks may include:

• You are personally liable for all of the fund’s decisions — even if you get help from a professional, or if another member made the decision.
• Your investments may not bring the returns you expect.
  You are responsible for managing the fund even if your circumstances change — for example, if you lose your job.
• There may be a negative impact on your SMSF if there is a relationship breakdown between members, or if a member dies or becomes ill.
• If you lose money through theft or fraud, you won’t have access to any special compensation schemes or to the Australian Financial Complaints Authority (AFCA).
• You could lose insurance if you’re moving from an industry or retail super fund to an SMSF.

Setting up an SMSF generally costs between $300–$800 AUD. In addition, there are annual auditing fees which can cost $1,000 AUD or more, depending on whose services you employ.

Holders of SMSFs pay tax at a rate of 15% rather than your marginal tax rate of tax.

It is legally possible to have multiple SMSFs. However, bear in mind that additional fees for each fund would be incurred.

Any net capital gain made through your SMSF will be included in your SMSF’s assessable income. SMSFs have a flat tax rate of 15%. Complying SMSFs are entitled to a CGT discount of 1/3 if the relevant asset has been owned for at least a year.

There are three steps to the SMSF application, which we will guide you through:

1. Fill out the SMSF application form
2. Fill out the IRS series form according to the SMSF and Corporate Trustee (if applicable)
3. Fill out the IRS series form according to individual Trustees/Directors of a Corporate Trustee (if applicable)

Note: if we cannot electronically verify a party, we would request Proof of Identification and Proof of Address.

In order to comply with CRS & FATCA regulations, we require all clients to provide information including tax residency and tax file numbers (TFN’s) and in the case of SMSF clients, the classification of the SMSF under both regulations. TBanque is also required to collect appropriate IRS W-Series forms. This information is to be provided at the time of the account opening and accuracy must be maintained for the duration of your account with us.

Please note that TBanque cannot advise you on the appropriate W form to sign and you will need to do a self-assessment and confirm your tax status yourself.

Please see the links below for the appropriate forms and instructions:
Form W-8BEN-E and instructions can be found here: https://www.irs.gov/forms-pubs/about-form-w-8-ben-e

Form W-8BEN and instructions can be found here: https://www.irs.gov/forms-pubs/about-form-w-8-ben

Form W-9 and instructions are available here: https://www.irs.gov/forms-pubs/about-form-w-9