Useful Information

FORMATION

 Do I need a corporate trustee?     

If you have only one member - Yes

Is a corporate Trustee better than having Individual Trustees?  

Potentially Yes – but the differences should be understood – contact  your Accountant for advice

TRUSTEES

 How many Trustees can I have?   

For Individual Trustees – generally four – seek   advice if more than 4 (and less than 7) are being considered. Special rules  apply.

For Corporate Trustees – all Members should be directors.

MEMBERS

How many members can the fund have?  

Recent legislation changing maximum from four members to six members.

Can children be members?   Yes – subject to Guardian rules.

Can I have a one-member fund?   

An individual SMSF structure can be a  single-member fund but only if there are two trustees and the non-member trustee does not have an employer-employee relationship with the member. 

The only exception to the latter is when the non-member trustee is a relative of the member.

Who can be a member?  To be an SMSF member, they must:

Willingly consent to become a member, trustee, or director of the fund.

Accept their responsibilities by signing the Trustee Declaration.

Be fully responsible for the fund.

Not have an employer-employee relationship with a   fellow trustee/member, unless they are relatives.

Not be disqualified by SMSF regulators or the   court.

Not be declared bankrupt

CONTRIBUTIONS

 Can a person over 75 years old contribute to super?   

Your SMSF can only accept contributions for a   Member aged over 75 which are Employer Contributions. 

Your Employer is not required to make   Superannuation Guarantee Contributions (SGC) if you are 75 or over. 

Your SMSF cannot accept personal contributions after   age 75

Can you contribute to super after 65?

If you're aged 65 or over (but under the age of   75), you can make super contributions if you're at least gainfully employed   on a part-time basis. In short, you must work for at least 40 hours in a period of not more than 30 consecutive days in the financial year in which   you plan to make a super contribution.

What are the superannuation contributions limits?

Changes came into effect in 2017-18 where now no   matter your age you can contribute up to $25,000 to your superannuation.

 Are there any restrictions on a fund accepting mandated employer contributions?

Super co-contributions and employer contributions that relate to a valid contribution period for the member can be accepted at any time.

What are the concessional contribution caps?

Concessional contributions include:

- employer contributions (including contributions   made under a salary sacrifice arrangement)

- personal contributions claimed as a tax deduction.

Can I contribute more than the concession contribution cap?

Yes – but the tax rate makes it disadvantageous.   Note some carry forward rules apply – seek advice if required.

BORROWING

Can my SMSF borrow?

Your fund can borrow money only in very limited  circumstances. These circumstances include:

- borrowing money for a maximum of 90 days to meet  benefit payments due to members or to meet an outstanding surcharge liability  (the borrowings can't exceed 10% of your fund’s total assets) 

-  borrowing money for a maximum of seven days to  cover the settlement of security transactions if the borrowing does not   exceed 10% of your fund’s total assets (you can only borrow to settle   security transactions if, at the time the transaction was entered into, it   was likely that the borrowing would not be needed)

- borrowing using instalment warrants or limited  recourse borrowing arrangements that meet certain conditions.

A trustee can use a limited recourse borrowing arrangement to fund the   purchase of a single asset (or collection of identical assets that have the   same market value) to be held in a separate trust.

TAX   ON CONTRIBUTIONS

How are concessional contributions taxed?

Concessional contributions are contributions made   into your SMSF that are included in the SMSF's assessable income. These   contributions are taxed in your SMSF at a ‘concessional’ rate of 15%, which   is often referred to as ‘contributions tax’.

The most common types of concessional   contributions are employer contributions, such as super guarantee and salary   sacrifice contributions. Concessional contributions also include personal   contributions made by the member for which the member claims an income tax   deduction.

Concessional contributions are subject to a   yearly cap. From 1 July 2017, the general concessional contributions cap is   $25,000 for all individuals regardless of age.

How are non-concessional contributions treated?

From 1  July 2017, the non-concessional contributions cap is reduced to $100,000 for   members 65 or over but under 75. 

Members   under 65 years of age will have the option of contributing up to $300,000   over a three-year period for members depending on their total superannuation   balance.

Members   with more than $1.4M in super should seek additional advice from their   Accountant.

From 1 July 2017 your total superannuation   balance at the end of the previous financial year will determine:

- the non-concessional contributions cap you can   bring forward and

- whether you have a two-year or three-year bring-forward   period.

You should seek independent advice from a licensed financial adviser before undertaking any new type of investment in your fund.

Compliance

The most important part of the management of a SMSF by a Trustee is compliance with the Administrative provisions. 

Individual trustees and directors of corporate trustees are personally liable to pay an administrative penalty from 1 July 2014 if they contravene various provisions of the Superannuation Industry (Supervision) Act 1993 (SISA). The penalty cannot be paid or reimbursed from the assets of the fund. Directors of corporate trustees are jointly and severally liable to the penalty. Individual trustees are each liable to the penalty.

Compliance in respect of a SMSF is essential. Key responsibilities of a Trustee include - Lodging tax returns on time;  Obtaining an annual audit report before the due date; Keeping investments aligned with the investment strategy; Keeping good records that cover every single transaction – are key responsibilities of a Trustee of a SMSF.

Additionally, investments need to be compliant, and use of funds or funds assets personally, are not allowed.