things to be aware of before deciding

Know your responsibilities

All trustees/directors of SMSFs are equally responsible for the running of the fund. You should understand your responsibilities and penalties for non-compliance, as well as understand if you are eligible to run an SMSF and satisfy the residency rules before setting up your fund. You can learn more about SMSFs from the ATO website here

You Must Not Use The Funds For Personal Use

You can not access your superannuation until you reach retirement age. Make sure you do not use use the funds for personal use. Not even for 1 day. Using your SMSF funds for personal use can get you a jail sentence, a fine and your assets frozen. Check out the ATO website to see when you can access your super. 

Keeping things separate

All SMSF accounts and transactions must be kept totally separate from your personal accounts. So you need to set up dedicated SMSF accounts for banking, crypto, share trading accounts etc. Mixing funds with personal accounts could end you up with a hefty fine from the government.  So make sure you check with us if you are unsure.

Check your insurances

SMSFs can often get better insurance deals than  retail funds because SMSF insurance can be tailored to you as opposed to getting handed a product off the shelf from a retail fund. If you are on a good deal and want to keep it, you can keep a few thousand in your old fund to keep the policies active and rollover the rest. The rules are different with different funds, so call your provider to find out what is the minimum required balance to keep insurance policies active.

No borrowing, leveraging or shorting allowed

You cannot borrow, leverage or short any assets within the SMSF. You are not allowed to use the collateral in the SMSF to secure other loans either.  No exceptions. Doing so could leave you with a government fine. You can borrow to purchase property in an SMSF if you set up a bare trust which we can offer for additional costs.

Approved providers and data feeds.

You may only bank and trade with our approved providers.
Banks:  ANZ, NAB and CBA.
Crypto: CoinSpot, Independent ReserveSwyftx BTCMarkets, Binance, and BlockFi.
Shares: ANZ Share Investing, NabTrade, Commsec, SAXO and Interactive Brokers
You are also required to provide “read only” access to SMSF accounts via API or data feed where available. This means less work for you at tax time.

400 Transactions per financial year within the fund

Our $150 per month accounting fees cover the tax returns, audits and compliance on up to 400 non-bank transactions within the fund per financial year. This is more than enough for the vast majority of clients. Additional transactions will be charged at $4.40 per transaction.

Privacy coins must be kept on the exchange at all times

You are permitted to purchase privacy coins on approved exchanges but they must be kept on the exchange at all times. You must not move privacy coins off the exchange at any time. This is because the auditors are unable to verify the location of the coins once off the exchange. Moving privacy coins off the exchange will attract a fine.

Multiple members in the SMSF

You can have up to 4 immediate family members in your SMSF. While the setup costs are the same regardless of how many people are in the fund, funds with additional members are charged an extra $20 per month per additional member . Each member is equally responsible for the running of the fund. The SMSF runs as one entity so you cannot for example say “this is my gold and this is your bitcoin.” Each member owns a proportion of the fund. 

Buying gold and other precious items in your SMSF

You can buy gold and other precious metals in your SMSF but you cannot keep them at home and it must be kept with a qualified and insured custodian. See our blog post about holding gold in your SMSF here.

Contributions are taxed

It is important to understand that the  contributions you and your employer make to your super are taxed. This is exactly the same as your normal retail superannuation fund but you do not notice this with a retail super fund because it gets taken out automatically. However for SMSF’s, you get to control all the money throughout the year and the contributions tax (15%) is added to your tax bill at tax time.

Staking coins

You are permitted to stake coins with your SMSF. There is an additional staking fee of $55 per destination address of each coin staked and we must be able to look up and see the staking rewards on the relevant blockchain.

The bottom line

It is important to understand that each person in the fund is acting as a member and a fund manager. You as the fund manager are responsible for investing the member’s money for their retirement. It is against the law to borrow from the fund for personal use.

Set up Time frames

Why it might take longer than 2-3 weeks

The standard time it takes from completing the application until you own assets in your new SMSF is 2-3 weeks. This is true for most applications. However, hold ups can occur. 

The most common hold up is waiting for the ATO to approve the fund. The ATO approval is needed before you can open the bank account or apply for your rollover. If it takes longer than a week for the ATO to approve the fund you are likely getting an initial audit. This is where an ATO representative will double check the paperwork and want to ask you questions to make sure you understand your responsibilities in running an SMSF.  This will add a few weeks to your set up process as the members will need to book in a time to speak with the ATO rep. 

If your application for an SMSF is denied by the ATO we do not offer refunds as most costs go to ASIC, legal and administrative costs before ATO approval comes in. Because of this, if you fall into any of the categories below, you should seriously consider waiting to set up an SMSF until your circumstances change.

  •  not up to date with other tax obligations (as in 1 year or more overdue)
  •  unemployed
  •  on government benefits.
  •  a low income earner
  • it does not make financial sense for you to have an SMSF.
We are here to help.

While New Brighton Capital does not offer financial advise, we are here to help. If you are unsure on some of the ins and outs regarding an SMSF, why not book free consultation with one of our specialists who can answer your questions in plain english?

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