Frequently asked questions about self managed superannuation funds
In recent years one of the most popular topics our clients want to discuss with us is their eligibility to have a self managed super fund, so we have compiled a list of questions asked by our clients and by the clients of our industry peers.
We have also provided answers to those questions and remind you that these are of a general nature and do not constitute specific advice.
Can you set up an SMSF with a corporate trustee?
Under paragraph 19(3)(a) of the SISA, the trustee of the fund must be a constitutional corporation pursuant to a requirement contained in the governing rules.
In other words, you need to set up a company incorporated under law and obtain a certificate of registration in order to have the company act as trustee of a fund. Registering a company incurs immediate costs and there is also an annual fee depending on the purpose of the fund.
Please note that the company must be registered before the SMSF is established.
What is my preservation age for accessing my super benefits?
Your preservation age is the minimum age at which you can access your preserved super benefits without meeting another condition of release. It is based on your year of birth.
Your preservation age will be 55 if you were born before 1 July 1960.
If you were born after 30 June 1960, you will have a higher preservation age of:
56 – if you were born between 1 July 1960 and 30 June 1961
57 – if you were born between 1 July 1961 and 30 June 1962
58 – if you were born between 1 July 1962 and 30 June 1963
59 – if you were born between 1 July 1963 and 30 June 1964
60 – if you were born after 30 June 1964.
To access your preserved super in the 2015-16 income year, you must have turned 55 before 1 July 2015.
Your preservation age is relevant to the following conditions of release:
reaching preservation age and retired with no intention to work again in the future
reaching preservation age and starting a transition-to-retirement income stream.
Can an SMSF purchase shares in a private company?
An SMSF is prohibited from acquiring assets from a related party.
There are limited exceptions, including market listed shares, business real property or in-house assets (where the value of all in-house assets does not exceed 5% of total fund assets).
If the private company is a related party of the SMSF, the purchase would be a prohibited acquisition and a breach of section 66 of the Superannuation Industry (Supervision) Act 1993 (SISA) would occur.
Can an SMSF sell a collectable or personal-use asset to a related party?
Yes – collectables and personal-use assets held in an SMSF can be sold to a related party.
For items acquired:
After 1 July 2011, the sale must be made at market price as determined by a qualified, independent valuer before 1 July 2011 and sold before 1 July 2016, an independent valuation is not required, however, the sale must be made on an arm’s length basis.
All sales to related parties that occur on or after 1 July 2016 must be supported by an independent valuation.
What is the time limit for providing requested documents to my SMSF auditor?
You must provide requested relevant documents to your SMSF auditor within 14 days of the request being made. If you fail to do so, you will be in breach of a statutory time period in section 35C (2) of the Superannuation Industry (Supervision) Act 1993.
Where a statutory time period is exceeded by more than 14 days, your SMSF auditor is required to report the contravention to the ATO via an Auditor Contravention Report.
