Key points
- SMSFs offer greater control over investments, allowing business owners to align their super with personal interests and business needs.
- Owning commercial property through an SMSF and leasing it back to the business can improve asset control and reduce rental costs.
- SMSFs provide flexibility in estate planning, enabling trustees to direct benefits and minimise disputes or tax implications.
We all know the long-term benefits of superannuation. The vehicle in which you hold your superannuation can make a significant impact on your retirement savings. For small to medium business owners there are several benefits to owning a self-managed super fund (SMSF). In our last article we discussed how SMSF are not just for those people with large super balances and showed how they can be cost competitive to run. In this article we will take you through the benefits of owning a SMSF.
More control over investments
An SMSF gives you more control over where you invest your money than other funds. You can invest in areas which you are passionate about and in areas that can also benefit your business. With other funds you are at the mercy of fund managers who invest your money based on your risk profile. Institutional funds are often incentivised to invest in government infrastructure which may not be where you want your super to be.
Business benefits
Some business owners buy a commercial property through their SMSF and then lease it back to the business. This provides a better way of controlling assets and means they are not paying rent to someone else. There is also the option of borrowing to purchase a larger asset.
There can be tax benefits from taking out life insurance, total and permanent disability insurance (TPD) and income protection insurance through an SMSF. It is possible to tailor life insurance to each member’s needs. You can also take out property insurance, audit protection insurance and trustee insurance within an SMSF.
Flexibility
With an SMSF you can switch your account or advisors but stay in the same fund.
More effective estate planning
You have more flexibility and control in relation to estate planning with an SMSF. Super is not covered by your Will as it is not owned directly in your name. The trustee of your fund determines where your super is distributed when you die. As you are a trustee in an SMSF you can more effectively control where your benefits go and minimise disputes over who receives your benefits. The fund can continue, and you have options to minimise tax implications for your beneficiaries.
Expert help for business owners in managing an SMSF
Superannuation is a complex area. The rules regarding super are constantly changing and compliance is heavily regulated.
Whether you are looking to set up an SMSF or better manage an existing one, expert advice can save you time and money in the long run. It is critical to correctly set up an SMSF.
Pitcher Partners Newcastle and Hunter has a specialist superannuation team. Superannuation is all we do and our team members each have decades of experience. We have seen every superannuation scenario and focus on providing practical SMSF solutions.
We can advise if you would benefit from having an SMSF and the right strategy to get the best possible results for you and your family in the short term and longer term. We can also advise on the steps to set up your SMSF or set it up for you.
Other ways we support clients include facilitating SMSF audits, managing SMSFs, tax planning, SMSF compliance and administration and technical support. Our live reporting technology gives clients real time information on how their super portfolio is progressing.
Have a question about SMSFs?
We love questions. If you want to know more about Pitcher Partners Newcastle and Hunter’s superannuation (SMSF), business tax and advisory, and wealth management services, please contact us.
