FAMILY SUPERANNUATION


Having your own superannuation fund, with less than five members can give you great satisfaction. Under this type of Superannuation, you will have access to very broad spectrum of Investments. But you must be aware of your full responsibilities as trustee and a member of your own fund. The penalties for non-compliance are hefty. 

There are many factors that a person needs to be aware of before making a decision about running your own fund! The SIS (Superannuation Industry Supervision) and the ATO (Australian Taxation Office) are the regulators for these types of funds.
This Sector of superannuation in Australia is the fastest growing sector, in the last few years these funds have grown to more than 400,000 up from 180,000 a few years ago.
It is the intention of New Wealth Directions to help visitors discover, the benefits of running your own Family Superannuation Fund. The following information should help you become more familiar with the pro's and con's of running your own fund.

If you require any further information and would like to discuss Family Superannuation Funds, don't hesitate to contact New Wealth Directions to set an appointment.

Family Superannuation Fund and Tax

A superannuation fund in the accumulation phase pays tax at the rate of 15%. When you run your own superannuation fund, through having access to Alternative Investments and being able to invest into investments that can help reduce the tax that your fund would pay. Structured properly with the right type of strategy, tax can be reduced dramatically. Through the use of these types of Investments that come with tax already paid at a level greater than 15% therefore allowing your Family Super fund to offset the tax the fund pays by using the credits pay the tax on other income of the fund. This effectively reduces the tax paid by the fund to less than 15%

Family Superannuation

Having your own family superannuation Fund, provides many benefits and features. To Set up a family superannuation fund it is generally recognised that you require ar least $200,000, this is because at around this level the fees to run your own superannuation fund are about the same at $200,000. This amount can be made up by combining all of your family superannuation accounts into the one fund, up to four members can belong to the fund. If you have more than four members you can start a second fund.

Share Trading Account

A Family Superannuation Fund can open it's own share trading account on the Australian Stock Market ( ASX ). The benefit of this is it gives your fund access to some of the better opportunities in the market.
A few examples below ....

  • New share Listings
  • Exchange traded Funds  (ETF's)
  • Index Funds                   (low cost)
  • Warrants
  • Options
  • Dividend Income ( Imputation credits )

Being Trustee of Your Own Fund

All members of the family Superannuation fund have to be trustees of the fund. This requirement ensures all members are given opportunity to be involved in the running of the fund and all members are given opportunity to be involved in the investment process. 

Investment Strategy

This is a very important part of running a family superannuation fund. The regulators will be checking these Investment strategies over the next few years. When running your own family superannuation fund the investment strategy is a mechanism by which you as a member of the fund and Trustee of the fund, map out how the super fund invests the money in the fund. This needs to be documented and recorded and reviewed often to ensure the investments reflect the retirment goals of the members.

Insurance & Your own Super Fund

When you have your own superannuation fund with it's own trust deed. Your life Insurance and TPD Insurance can be owned and payed for by your superannuation fund. Their are many Estate planning benefits which can help reduce the impact of tax in the event of an untimely death of a member of the fund. If the member has children under the age of 18, an Allocated Pension can be paid out to your children from your family superannuation fund. When a Pension is paid in this manner the tax benefits can be very effective. The effectiveness of the tax benefits are usually limited to the reasonable benefit limits as set out each year. Currently $ for pension from a superannuation fund.

Business Real Property

The ATO allows business real property to be owned by a Family Superannuation Fund if the Trust Deed allows it. The property could be the premise at which the business operates from or it could be an income generating Investment property.
Their are a lot of rules and regulations to be adhered to but with the right advice it can easily be set up. One of the benefits of this is the Capital Gains tax on the property could be managed much more efficiently, as the Super fund pays tax at the rate of 15%. Then if the Superfund is rolled in to an Allocated Pension the tax then is 0%, with this scenario their would be no tax to pay.

$500,000 Capital gains tax relief

If a business owner can show control of at least 50% for a lengthy period of time in the business. Then the business owner wishes to sell the business, he can rollover the proceeds of the sale to their Family Superannuation fund and receive relief on Capital Gains tax, on the sale of that business upto $500,000.

This is a complex area and each case would need to be dealt with on a case by case basis.

Controlling your Super Assets

By having more control over the assets in the fund, you can control the Capital Gains tax issues relating to each asset in the fund. The timing of the purchase or sale of an asset can control the amount of capital Gains tax you may pay.
It can be very effective to sell an asset towards the end of a financial year then buy it back very soon. Why would you do this? Perhaps to crystallise a loss on an asset to offset this capital loss against other capital gains in the fund, there by reducing the net tax to pay.