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Self-Managed Super Funds (SMSFs) are increasingly becoming the go-to choice for Australians keen on steering their retirement savings. The latest ATO statistical overview for 2019-2020 reveals a significant 5.6% growth in SMSFs, now numbering over 600,000, with total assets soaring to $822 billion. This impressive figure represents a quarter of Australia’s total super assets, highlighting the growing trust in SMSFs.
One of the primary drivers of this surge is the unparalleled control SMSFs offer. As a trustee, you're at the helm, selecting investments, monitoring performance, and managing contributions and withdrawals. This autonomy extends to a broader range of investment options, including property and collectibles, offering a personalised approach to superannuation savings.
Recent research from the SMSF Association underscores this advantage, showing that SMSFs, particularly those with net assets over $200,000 and diversified beyond cash and term deposits, have outperformed APRA-regulated funds in two of the past three years.
The growth of SMSFs is also fuelled by reduced establishment costs, thanks to technological advancements. Online platforms and automation have streamlined the setup process, making it more accessible and cost-effective. While costs can vary depending on the fund's structure and service level, organisations like SuperConcepts offer SMSF establishment starting from as low as $650. Moreover, SMSFs typically incur lower ongoing costs, allowing for more savings to be retained in the super account. The 2020 SMSF Association report indicates that SMSFs with assets of $200,000 or more are competitive with industry and retail funds, becoming the most cost-effective option at $250,000 or more.
SMSFs also present attractive tax benefits. The ATO report highlights $4.5 billion in tax concessions for SMSFs in 2019-2020. These benefits include concessional contributions taxed at 15%, income tax exemptions for funds in full pension phase, potential CGT exemptions on long-held assets, and tax deductions and offsets under certain conditions.
An often-overlooked advantage of SMSFs is the ability to pool super balances in multi-member funds. With 76% of SMSFs comprising two or more members, this pooling method can lead to economies of scale and potentially enhanced investment returns.
The popularity of SMSFs in Australia is a testament to their ability to offer greater control, cost savings, diverse investment options, and significant tax advantages. They also provide the opportunity for pooling super balances in multi-member setups. However, it's crucial to seek professional advice and understand the responsibilities and regulations involved in managing an SMSF.
Every individual’s financial situation is unique, and while SMSFs offer numerous benefits, they may not be suitable for everyone. It's essential to make an informed decision, considering your specific circumstances. Tailored advice is key to determining if an SMSF is the right choice for you.
The popularity of SMSFs in Australia is a testament to their ability to offer greater control, cost savings, diverse investment options, and significant tax advantages. They also provide the opportunity for pooling super balances in multi-member setups. To explore whether an SMSF aligns with your financial goals and to understand its implications fully, we encourage you to book an appointment with our experts. Contact us at 1300 26 27 28 or visit www.rjsanderson.com.au/contact for personalised guidance and professional advice tailored to your unique financial needs."
Considering an SMSF for your retirement planning? Gain deeper insights and learn about personalised strategies with our comprehensive SMSF Information Sheet. Download now to explore how SMSFs can align with your financial goals and offer a path to a secure and controlled retirement.
To read more about the statistics see below:
SMSF QUARTERLY STATISTICAL REPORT SEPTEMBER 2023
This article is published by R J Sanderson and Associates Pty Ltd ABN 71 060 299 783. This article contains general information only and is not intended to represent specific personal advice (Accounting, taxation, financial or credit). No individual personal circumstances have been taken into consideration for the preparation of this material. It is recommended that you obtain your own personal professional advice before making any financial or business decision.