Business owners can gain valuable tax concessions by establishing a self-managed superannuation fund.

Requirements on how SMSFs operate and owners must consider how they’ll manage their fund to comply with the law and ensure security in retirement.

Every month another 2,500 SMSFs are started and the Self-Managed Super Fund Professionals’ Association of Australia (SPAA) estimates they collectively hold more than $351 billion worth of assets – about one third of total superannuation assets.

Peter Burgess, SPAA Technical Director, says trustees/managers have to understand their responsibilities. “SMSF’s are not for everyone. There are legal obligations and responsibilities you’re expected to be on top of, so you need to know the rules on contributing to your fund, the investments you can make, record-keeping and how you can access your money.”

More trustees are engaging professionals for administration and investment advice, but Burgess notes the trustee remains ultimately responsible for the fund. SPAA believes specialist skills are needed to run a SMSF and Burgess says it is essential to find advisers with experience and qualifications in the industry.

Many business owners establish a fund to gain greater control over their retirement savings and to gain valuable tax concessions that recognise SME owners often use their business to fund their retirement. “We’re also finding that more and more clients have some unique estate planning outcomes in their super which can be provided for only via a SMSF,” Burgess says.

“SMSFs are very flexible. You can make binding and non-binding nominations, arrange for particular assets to be paid to various members and determine the form in which a benefit is paid. All these can be built into your trust deed to give instructions to surviving trustees on your death,” he says.

The Australian Taxation Office, which regulates SMSFs, suggests a six-step checklist for people considering establishing their own fund:

1. Consider your options and seek professional advice from a qualified and licensed adviser such as an accountant, tax agent or financial adviser.
2. Ensure you have sufficient assets, time and skills to manage your own fund.
3. Follow the super and tax laws and understand the risks.
4. Tailor your trust deed and investment strategy to suit the members of your fund.
5. Be sure you can meet your record-keeping and reporting obligations.
6. Make sure you understand your annual auditing obligations.

Find out more about SMSFs from the ATO website and NAB SMSF.