What is a SMSF?
WHAT IS A SMSF?
A Self Managed Super fund (or SMSF) is a superannuation fund where you (along with up to 3 others) are also the trustees of the fund. Trustees are the one’s that have control over a super fund, and everything that goes on within it.
And whilst "control" is the key driver as to why most people set up their own SMSF, it’s also important to note that this control also comes with responsibility.
WHAT ARE THE RULES?
To be a SMSF, the fund must have the following:
- it has no more than 4 members
- unless they are related, no member of the fund can be an employee of another member of the fund,
- each member is a trustee, and no trustee of the fund can receive any remuneration for their services as a trustee.
- if the fund uses a corporate trustee each member of the fund must be a director of the company, the corporate trustee cannot receive any remuneration for its services as a trustee, and no director of the corporate trustee can receive any remuneration for their services as a director.
Unless related, employees cannot be in the same SMSF as an employer member.
ONE MEMBER FUNDS
Self managed superannuation funds can also be operated with just one member. If a SMSF has only one member, then they may have a corporate trustee, where the member:
- is the sole director of the trustee company, or
- is related to the other director of the trustee company and there are only two directors of that company, or
- is not an employee of the other director of the trustee company and there are only two directors of that company.
The alternative is that a one member SMSF can have two individuals as trustees. One trustee must be the member, and the other trustee must be either:
- a person related to the member, or
- any other person, however the member can not an employee of that person.
WHO CANNOT BE IN A SMSF
A 'disqualified' person is the term used for someone who cannot be a trustee of a SMSF (or be a director of the trustee company).
A disqualified person is defined as someone who:
- has ever been convicted of an offence involving dishonesty;
- has ever been subject to a civil penalty order under the SIS Act;
- is an undischarged bankrupt;
- has been disqualified by a regulator
In terms of trustee companies, a company will not able to act as trustee of a SMSF if:
- any of the responsible officers (e.g. director, secretary, executive officer etc) of the company are disqualified persons as above;
- a receiver, official manager or provisional liquidator has been appointed to the company; or
- the company is being wound up
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