What are the benefits of using a Self-Managed Super fund?
The benefits of investing via a self managed superannuation fund can be enormous when implemented correctly and with the right team of people. The main areas to consider are:
A SMSF can provide you maximum control over your superannuation assets and allows you the flexibility to determine how and where your funds are invested and how the fund is going to operate.
A SMSF should be structured to meet the specific investment needs of its members and to provide greater control over the fund's investment strategies. The fund can invest in a wide range of investments including shares, direct property, currencies, commodities and personalised structured investments.
As of September 24th 2007 a Self managed superannuation fund (if structured correctly) can secure mortgages which allow you to buy property which you otherwise couldn't afford. Essentially the fund can buy any asset that suits the investment objectives of the fund provided it meets the sole purpose test.
Investing in a SMSF has tax advantages that make superannuation a tax efficient wealth creation strategy.
Concessional contributions are taxed at a maximum rate of 15%.* (Note: from July 2012, extra 15% contribution tax can apply to member with income over $300,000)
The concessional 15% tax rate also applies to income of the fund.
Realised capital gains on investments held for more than 12 months are taxed at an effective rate of 10%.
Tax can be lowered through the use of franking credits and the offsetting of capital losses.
SMSF’s who purchase property via a debt instalment warrant can claim interest costs deductions on top of the depreciation benefits associated with the property. These deductions can have a significant effect on reducing the tax liability of the fund.
Concessional tax treated pension payments. Once in pension phase, there is no income tax or capital gains tax on the super funds income. Pension payments to member over the age of 60 are also tax free in their hands.