More Australians want to take charge of their superannuation fund. By 2016, about one-third of the total super funds in Australia are self-managed superannuation funds (SMSFs), which makes it one of the top choices for those who choose to be more involved in the management of their super funds.
Many commenters call SMSF as a do-it-yourself super fund, but that doesn’t mean that anyone can have a go at it. So how would your accounting firm offer assistance should your client decide to start their own SMSF? First of all, it’s important that they understand what’s involved in the process.
What Your Client Needs to Know about SMSFManaging their own retirement investment plan through an SMSF sounds appealing, but it’s not as simple as it sounds. Here are some of the things that your client needs to know before they make a decision.
What an SMSF is for
One of the reasons why having one’s own SMSF investment strategy is popular is its flexibility. Unlike with industry and retail super funds, an SMSF can be used to invest in collectibles, term deposits, residential and commercial property, and direct shares, among others.
An SMSF should be run solely for providing for your client’s retirement. It’s illegal for someone to set up an SMSF to try to get early access to their super or get loans to purchase personal property. Using the fund to provide financial assistance to a fund member or to a relative of a fund member is also not allowed.
In addition, SMSF assets should be kept separate from a trustee’s personal assets. This will help the trustee’s auditor identify who the owner of a particular asset is.
How an SMSF Works
When your client first sets up an SMSF, they would have to:
- Identify who the fund members and trustees would be;
- Establish the trust and trust deed;
- Open a bank account;
- Register with the Australian Taxation Office (ATO),
- Create an investment strategy, and
- Include a plan for when your SMSF ends
Once it’s set up, there are other things to consider, such as:
- Rolling over of existing super;
- Organising employer contributions;
- Making investments that are compliant to the regulations; and
- Documenting all transactions for up to 10 years.
The trustee will also have to take care of the following each year:
- Accounts and financial statements;
- Annual return lodgements; and
SMSF levy and other taxes that are due
Whether your client decides to set up an SMSF or opts for other super funds, it’s important for you to provide useful financial information that will help them meet their short- and long-term investment goals.
Let Us Help You Add Value to Your Clients
As a finance and accounting expert, your job does not end with planning and reporting. You have to focus on adding value and providing sound advice to your clients that will help them make better financial decisions. As always, what your clients need is the peace of mind that an expert is guiding them throughout the process.
To achieve this, it would be to your advantage to turn over the tedious administrative and basic accounting tasks to a reliable partner. This is where D&V Philippines can help. With us, you can outsource your bookkeeping, audit and compliance, financial analysis, and other financial and accounting services so you can devote more hours to client services.
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