Benefits
How can Austock Managed Accounts benefit a Self Managed
Super Fund?
Firstly, congratulations on owning a
self-managed super fund.
To reiterate some of the benefits, (partly for
the benefit of people thinking of starting one):
1. Tax incentives
Investment income is tax-sheltered within all superannuation funds.
Investment earnings are taxed at a maximum 15% tax rate when a
member is working and zero when the member is transitioning to
retirement (salary sacrifice combined with transitioning to
retirement is a “must consider” strategy when you reach 55). On
reaching age 60 a member can draw without restriction (or tax) and
in the meantime, the portfolio is better than tax free. Imputation
credits, which can be offset against earnings tax for working
members, receive a cash rebate for non-tax paying pension mode
investors. On death, there can be very favourable concessions
incluiding tax free payments to dependent beneficiaries. If the
Medici family could have accessed SMSF in the 14th
Century they might by now own the world as tax is the main
impediment to generational wealth transfer.
2. Strategies for the Individual
member
A SMSF gives each member the
freedom to choose an investment strategy which suits their phase of
life and preferences. Sophisticated investors are often comfortable
with investing entirely in a diversified share portfolio or an
actively managed mixture of assets. By contrast, the typical pooled
superannuation fund in Australia defaults to a relatively constant
asset allocation across all asset classes. This reduces short-term
volatility (eg. normally the fund would avoid a "loss" in any one
year), but this is at the expense of long term expected return. To
supposedly protect the interest of the marginal retiree in any one
year, accumulators and retirees with a ten-year plus time frame are
disadvantaged.
3. Transition to Retirement and
Retirement pensions
A SMSF can be
structured to pay you a pension upon retirement. Once the SMSF
starts paying you a pension, the investment earnings, including all
capital gains, are free from income tax. At 55, you should
seriously consider whether a transition to retirement pension is
appropriate for you. It has the same tax rules, but has limitations
(upper and lower) on the pension amount each year.
4. Cost efficiency
Most of
the administration costs of a SMSF are fixed. Austock Managed
Accounts provides a timely and audited annual taxation summary for
each client. If you wish to segregate assets (to reduce
actuarial costs) this can be done too. Your accountant can treat
your portfolio(s) within AMA as a single security for ATO purposes
and rely on the audited tax summary. This keeps your accounting
administration costs associated with owning shares through
your SMSF under control because it can be treated as a single share
as there is no need to verify individual transactions, holdings,
dividends or capital gains and losses.
5. Family
benefits
Current regulations allow
the trustee of a SMSF to accept up to four members, which is an
ideal vehicle for modern families (two or one adult(s) and two
children). It enables the trustee of a fund to pay tax-free lump
sums to a spouse and to pay concessionally taxed income streams to
dependent children in the event of death. More complicated families
can set up more than super fund.
6.
Portability
A SMSF is fully portable
and forever unless you choose not to. It can be used as you change
from job to job and can extend beyond one lifetime to the spouse
and the children providing it pays a pension to a dependant
beneficiary. You can even decide to exit Austock Managed Accounts
before death (yes we allow for remote possibilities) and select
another investment provider without it impacting on your pension
whereas it is very hard to exit an allocated pension in a retail
super fund.
7. Choice
One of the most significant advantages of a SMSF is that of
investment choice and flexibility. Current government regulation
allows SMSF trustees to invest in a variety of assets, which
include shares, exchange traded options and property.
8. Life Insurance
A life insurance policy can be tax effectively structured within a
SMSF. The premium is treated as a deductible expense