Maximising Investment Opportunities with Self Managed Superannuation Funds (SMSFs)

Money in a piggy bank

The appeal of a Self Managed Superannuation Fund (SMSF) lies in the autonomy it provides, allowing individuals to control and access a diverse range of investments beyond what traditional industry funds offer. While the prospect is exciting, potential SMSF trustees must be well-versed in the stringent rules that govern this financial avenue before taking the plunge.

Key Considerations:

  1. Trust Deed Consultation: Before embarking on SMSF investments, a crucial first step is consulting the trust deed. This ensures that the deed doesn’t impose restrictions on desired investment types, setting the stage for informed decision-making.
  2. Mandatory Investment Strategy: All SMSFs are mandated to formulate a robust investment strategy, documenting the trustees’ plans for acquiring, holding, and liquidating assets in alignment with investment objectives and retirement goals. Regular reviews ensure adaptability to changing financial landscapes.
  3. Sole Purpose Test and Compliance: SMSF investments are dedicated to providing retirement benefits. Deviating from this purpose, such as providing pre-retirement benefits, can lead to a failure of the sole purpose test. Superannuation laws impose restrictions on specific investment types, such as transactions with related parties or those involving borrowing.
  4. Commercial Arm’s Length Basis: Adherence to a commercial arm’s length basis is paramount in all SMSF investment dealings. This ensures that purchase and sale prices, as well as income from fund assets, reflect true market value, preventing practices like renting properties at below-market rates.

Diverse Investment Options: SMSFs offer a wide array of investment opportunities, including residential or commercial property, Australian and international shares, trusts, managed funds, gold and silver bullion, cash, term deposits, and collectibles. While the choices are extensive, careful consideration and advice are essential, particularly for investments in private companies and trusts.

Navigating Collectibles: Investing in collectibles such as artworks, jewellery, vehicles, boats, and wine comes with specific restrictions. These investments must be made exclusively for genuine retirement purposes, with stringent rules on usage, storage, and display.

Whether contemplating investments in shares, property, or unique assets like paintings within an SMSF, seeking advice from a qualified accountant or financial advisor is crucial. Avance Chartered Accountants, are ready to guide you through the complexities. Book a consultation today at 1300 620 345 to ensure your SMSF strategy aligns seamlessly with your unique financial goals. Remember, the information provided is general, and individual circumstances require personalised assessment.