What is a Self Managed Super Fund? (SMSF)
Well, quite simply, it’s super that you manage yourself. An SMSF gives you more control over what you choose to invest your super funds in.
A lot of small business owners choose to set up SMSFs for this reason – it can be used wisely as an investment strategy that supports your business goals. As an example, you can use your SMSF to purchase commercial property and then lease the property back to your business.
There can be tax advantages to doing this, and it offers a level of protection in the event of bankruptcy.
Many small businesses start out by financing themselves with borrowings using equity in personal assets, but if the unthinkable happens, superannuation assets are generally protected.
Your SMSF can invest in your company or business, too.
This is called having an ‘in-house’ asset and it is restricted to a maximum of 5% of the SMSF’s total asset pool.
It’s important to get the details right and set up the SMSF properly. SMSFs also require much more detailed regular reporting as well as an active interest in management.
They’re not for everyone, but for some they can provide significant opportunities.
If you’d like to know more, contact us.