You are running out of time.
There’s a big misconception that it’s okay to set up a Self-Managed Super Fund (SMSF) and then just leave it be. Educating yourself on the legislation surrounding your SMSF is key to being prepared for the changes to come in the 2017 financial year, explains Adelaide Accountant Kym Nitschke.
Changes in the area of SMSF are fast and furious.
Most investors are having a hard time with staying up-to-date on current requirements.
It will get even harder from the start of the new financial year.
Major changes to your SMSF from 1 July 2017:
– Significant reduction in the amount of tax-deductible super contributions allowed
– Cap on annual after-tax super contributions
– Limit to your tax-free pension balance
Are you prepared to comply with such new legislation? What else do you not know about your SMSF?
Experts estimate that one in three account trustees have no idea about SMSF compliance laws.
The key to maintaining a successful SMSF lies in self-education.
Your Responsibility As A Trustee
Did you know that as long as you are named a trustee of an SMSF you bear full responsibility? This means that no matter who manages the account, no matter how many professionals you have making important decisions, you’ll be the one to answer for it all at the end of the day.
If there is more than one trustee named on the account, you will each bear responsibility. And not a shared one, at that.
A non-compliant fund can result in fines, penalties, and even jail time for every one of the trustees. For example, if a legal breach incurred a fine of $1,000 and you and your spouse are both trustees, you’re not paying $500 each.
You’re paying $1,000 apiece.
Guess how you’d have to pay those fines you could be nailed with? Not with your super fund. It would all be out of your own pocket.
No one can know the law and your account’s compliance for you. This is why it’s so important to fully understand the current legislation and criteria and make sure your fund is properly managed.
What can you do if you realise your super fund knowledge is a little rusty?
Ongoing Education For SMSF Trustees
To avoid problems such as SIS breaches, audits and penalties, you need to educate yourself.
In an effort to address breaches and failures to execute responsibility, as of 1 July 2014 the ATO began requiring offenders to complete courses of ongoing education about SMSFs.
However, that doesn’t seem to be efficiently quashing the problem.
We could very soon see such education become mandatory for all SMSF trustees, regardless of whether or not they are compliant. It could even become standard to receive certification before you open up an SMSF.
With so much at stake, why not take charge of your own retirement fund and be proactive about protecting it?
There’s plenty of free and easy-to-access material out there to educate yourself on SMSF.
For example, the following are ATO-approved education courses:
– CPA–CAANZ SMSF Trustee Education
– SMSF Wisdom
– SMSF Association Trustee Education Program
– AMP SMSF Trustee Course
Make The Most Of Your SMSF
Many people would argue that an SMSF is the best option because it offers flexibility, more options, tax benefits, lower costs and more control. But it also comes with more responsibility.
An SMSF is no more self-managing than your pet. If the owner doesn’t look after his pet (or super fund), it will not thrive.
Getting education is not just about broadening your knowledge to increase your wealth. It’s also about understanding your limitations so that you know what’s legal, what’s not, and when it’s time to get professional advice.
Andrea Slattery, SMSF Association Managing Director/CEO recently said, ‘I would strongly advise SMSF trustees and members that their first point of call should be their financial adviser or accountant.’
It’s easy to let your personal wishes get in the way of your responsibilities as trustee. Be very cautious about who you select when it comes to getting professional advice. You need the help of an expert who will take the time to understand your personal situation.
Don’t have an SMSF yet, but weighing it up? Read more.
While the responsibility for your SMSF rests with you, you can count on Nitschke Nancarrow for expert advice and support.
– Kym Nitschke