Why use smsf

You will also have access to derivatives to offer downside protection or hedging your portfolio risk. One of the main reasons that SMSFs are recommended for small business owners is to be able to have business property owned by their SMSFs and then leased back to the business. This gives a steady income for SMSFs and frees up any capital in order to grow your business and provide secure tenancy. With the rules that allow SMSFs to borrow, SMSF members can now purchase large single assets such as commercial property that would otherwise be outside of their reach.

This excludes other costs associated with the purchase such as legal, stamp duty etc. Apart from defined benefit super funds like a government employee fund , most other superannuation funds will offer the ability to take a tax-free pension as an income stream upon retirement. This provides trustees and their professional advisers the ability to use the unique flexibility of an SMSF to minimize the amount of overall tax that the SMSF members pay within the fund, by taking their unique situation into consideration and making strategic decisions on contributions, reserves and distributions.

This means that the trustee of the large superannuation fund may make a decision that negatively affects your tax position, and you have no way to prevent this.

There is also the flexibility when it comes to dealing with taxable liabilities for your fund, as this fund only has one single tax return although there may be up to four different members for the fund and each can have numerous pension accounts.

You are able to pay for your personal insurance cover through a SMSF. This includes;. You may have some insurance cover through your current industry or retail fund. The group insurance cover that you are automatically provided with through your industry or retail fund is often inadequate in terms of the levels of cover, plus the terms and conditions of the insurance contract.

Your insurance needs are highly personal. Your levels of cover should be determined by your age, family structure, income, cash flow requirements, debt levels, assets and liabilities to name a few variables. Only a qualified Financial Planner can make a full assessment of your personal insurance requirements, plus make a recommendation on the following;. Example: Comparison of Insurance Contract Ratings.

Below you can see the comparison of two personal, retail insurance policies for a male in a white collar role AIA and Zurich with three group insurance policies via industry funds — HostPlus, Rest and Hesta. The closer the score is to , the higher the quality of the contract. Low scores indicate the contract is of poor quality and is likely to be harder to make a claim on the policy. Important — this example is for illustration purposes only and will vary from person to person.

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Learn more about SuperGuide. How does an SMSF work? What are some of the benefits of SMSFs? What are some of the drawbacks of having an SMSF? How are SMSFs regulated? What are the differences between an SMSF and other super funds? What is the difference between an SMSF and a super wrap? The bottom line. What type of people have SMSFs? September 28, SMSF setup guide: 9 steps you need to follow September 27, How much super do you need to set up an SMSF?

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