Superannuation and SMSF
Self-managed superannuation funds have been a feature of the Australian retirement savings landscape since 8 October 1999.
A self-managed superannuation fund (SMSF) is a superannuation fund that meets certain requirements. There must be four or fewer members. A member only counts as one member, even if s/he has more than one account and/or pension in the fund.
Where there are two to four members, all members must either be:
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individual trustees and there are no other trustees, or
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directors of the corporate trustee and there are no other directors.
These requirements mean that all members have equal rights in the decision making processes of the fund regardless of the proportion of benefits each member has, unless otherwise provided.
Where there is one member, the member must be:
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the sole director of a corporate trustee, or
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one of only two directors and is either a “relative” or not an “employee” of the other director, or
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one of only two individual trustees and the member must either be a “relative” or not an “employee” of the other trustee – two individual trustees are required because the member cannot be both the single beneficiary and sole individual trustee of a trust under trust law because the legal and equitable interest in the trust property merge and there is no trust relationship.
No member, individual trustee or director of the corporate trustee can receive any remuneration for trustee duties or services performed in respect of the fund.
Income of an SMSF is generally taxed at the concessional rate of 15%, but to remain entitled to this reduced rate the fund needs to be "complying", which basically means it is an SMSF that follows the rules and regulations administered by the ATO.
The following articles will clarify and explain all the aspects of SMSFs that practitioners and their clients need to know.
