Have you ever heard these words: Super’s complex, the rules keep changing and it’s hard to stay current. Who can help me?
While these are good questions, there are no single answers and it depends on what you want. Let’s look at the different options for help available.
Are you after information?
If it’s information you’re after, many organisations provide fact sheets and the like that describe aspects of superannuation and SMSFs in relatively simple terms. Look out for material that’s no longer than one or two pages and without too much product promotion.
There are several publications you can tap which cover superannuation and SMSFs in lots of technical detail, if that’s what you are after.
Conversely, there are publications aimed at the novice end of the spectrum. But don’t be put off by this – an easy-to-read format may be perfectly sufficient.
The regulatory bodies, ATO and ASIC, provide worthwhile information. The videos on the ATO’s website explain what an SMSF can and can’t do in simple non-technical language. The ASIC website is useful in terms of personal financial advice and who’s authorised to provide it.
You can always glean information informally – over the proverbial watercooler or BBQ. And while it can be interesting hearing what others say, you need to exercise caution and common sense. There is complexity and nuance with how the rules work, so make sure you also refer to more expert sources.
It’s about education
Doing some form of education is a step up from sourcing information, although they’re close relatives. Education is generally delivered by an accredited professional and tends to be more formal and structured in style.
When it comes to super, education can range from seminars and updates provided by your accountant, lawyer, financial adviser or fund administrator, through to courses run by universities and other training institutions.
Education can help you understand the SMSF rules and apply them to your advantage. It can also build your investment knowledge, important for setting and managing an investment strategy.
Advice is out there
There are any number of professionals you can engage for advice. Look for someone who can provide strategic advice, which might include a programme to save and invest via your SMSF, and contingency plans in the event you’re unable to work due to accident or injury. Remember that your personal financial situation can be included as a component of your plan, as there are some assets that are better held personally and others suited to an SMSF.
Where to find good advice is always a difficult question, however, the ASIC MoneySmart website has some useful information. Then there’s the tried and tested ‘word of mouth’, which can be helpful but should be tempered with common sense. Don’t fall for arrangements that seem too good to be true – because they probably are. Prior to seeking advice, make sure you understand what your goals are. And read information about super and investing to give you a good starting base.
Professional assistance: who does what
There are various professionals and specialist companies, who provide services to SMSFs. Here’s a list of who does what:
1. Accountants and tax agents
Accountants can assist with the accounting, operation, structuring and valuation of the assets of an SMSF. If an accountant provides advice about making contributions, fund investments, paying lump sums or pensions, or transferring your benefit to an SMSF, they must hold an Australian Financial Services (AFS) licence or be a representative of an AFS licensee.
Tax agents can provide SMSF tax advice and help lodge your fund’ tax and regulatory returns.
2. SMSF auditors
As part of its annual return, your fund is required to be independently audited by a registered SMSF auditor. ASIC has a register of approved auditors which you can refer to.
Some superannuation funds that are paying pensions require a valuation by an actuary to work out the taxable and tax-free income of the fund. The actuary will calculate the proportion of the fund’s investments that were allocated to supporting pensions in retirement phase, and those that were in accumulation phase.
4. Financial advisers/planners
Financial advisers can provide help in relation to your fund’s investment strategy, the suitability of different types of investments, and how fund members are able to meet their financial goals.
Advice often centres on super contributions: whether contributions are permissible, and whether they qualify for tax concessions including tax-deductibility, the government co-contribution, the low-income super contribution, or a tax offset for contributions made for a low-income-earning spouse. As well, an adviser can help you stay within contribution limits.
When considering the transfer of your superannuation to an SMSF, an adviser is required to provide additional information to you. This includes any potential benefits that may be lost, and any other significant consequences, if you decide to transfer your benefit to an SMSF. The additional information is usually included as part of a Statement of Advice (SOA) and relates to:
- limits on the access you may have to compensation schemes.
- the impact of changing funds on any insurance arrangements.
- the limits on access to complaints schemes.
Some organisations can provide administration services, which include accounting, tax and other services to assist with the day-to-day operation of your fund. This may reduce the amount of effort for you in running your SMSF and allow you to concentrate on the fund’s investments. Generally you can pick and choose the type and level of service you require.
Lawyers can come in handy when it comes to the documents for your SMSF, disputes associated benefit payments, and in any regulatory action associated with a rule violation. Often your accountant or fund administrator will have contacts with lawyers and can refer you for assistance if required.
To sum up
Help is widely available. It’s good to understand your options and the people and places you can turn to, depending on your needs. It can also be useful to talk to other SMSF trustees, to find out about the various help they’ve sourced and how they value and rate it.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.