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HomeFinanceWays to Ensure SMSF Success: Criteria to Meet
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Ways to Ensure SMSF Success: Criteria to Meet

Posted by: Roy Jenkinson, June 22, 2017

We all want financial stability, especially on the long run when we think of our future. Lucky for us Aussies, setting up and managing a superannuation fund (SMSF primarily) makes all of this easy to achieve, so we get to enjoy retirement days in peace. However, as easy as it might be or sound, one has to be aware of all the rules and regulations that accompany setting up such a fund, otherwise there are penalties and fines to pay and they are sure to break your bank.

financial-stability

All this shouldn’t worry you but rather inspire you to get informed well, and consider getting the help of professionals who know everything about these rules and regulations, even if you intend to manage the fund on your own. One of the criteria you’d have to meet is Smsf residency. What this refers to is the fund must be established in Australia, and if not then at least one of the fund’s assets must be situated on Australian soil, then the management and control over the fund (high-level decision-making processes) have to take place in Australia, and at least half of the SMSF membership be Australian, i.e. Australian residents as active members.

Then again, even if fund trustees are overseas on a permanent basis, they can still take part of a superannuation fund with the help of a Power of Attorney who’d be in charge of the management and control. Along with this, other criteria to meet are not having more than four members (trustees), either individual or corporate trustees. In order for the SMSF to be cost-effective, it’s required that there’s at least $200.000 in other super savings. To be even able to set up and run an SMSF, you have to hold a trust deed (a set out of rules for establishment and operation of the fund), reviewed on a regular basis.

Similarly, trustees and their fund have to meet the sole purpose test. This test refers to sticking to the basic purpose of the fund, that is to provide the members with retirement benefits, or in other words, provide benefits for every member after their retirement. An SMSF can be an SMSF if and only if it’s in compliance with the laws of the ATO (Australian Taxation Office). Have in mind the fund loses its status as such when it fails the compliance test – breaching one or more of the rules and regulations.

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Roy Jenkinson

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