A Self-managed superannuation fund (SMSF) is a private super fund that you manage yourself for the purpose of providing retirement benefits. It can have up to four* related or unrelated members who are also the trustees of the fund. Managing own SMSF provides the Trustees control over the choice of the investments and insurances, as well as the responsibility for the funds’ compliance. While having control over your own super can be appealing, there are strict and complex rules to follow and comes with risk.  SMSFs are regulated by the Australian Taxation Office (ATO) and governed under different provisions, regulations and legislation. The overriding legislation is the Superannuation Industry (Supervision) Act 1993 (SIS Act), while the payment of taxes is governed under the Income Tax Assessment Act 1997 (ITAA 97). In addition, as an SMSF is a trust, the general law of trusts...

In Part 1 of THINKING SMSF – RISKS AND BENEFITS, we discussed the rules and regulations governing the management of SMSFs as well as the associated risks and benefits of owning and managing your SMSF. In this part, we will cover the common mistakes we see, with a summary of trustees most common do’s and don’ts.   Do Seek proper advice on whether SMSF is for you. See a qualified professional to assist and guide you in setting up the structure and the fund, register your fund ABN, TFN, formulate an investment strategy, and plan an exit strategy.Set up SMSF bank account and an electronic address.Conform to the superannuation and taxation laws, the Sole Purpose test per s62 SIS Act, inform the ATO of any changes to the fund, submit the SMSF’s annual tax returnsMaintain and keep your personal assets distinct and separate from the fund, as well as those of the individual or...