When creating a life plan, the last thing we expect is to fail. That is why when thinking about establishing an SMSF, understanding how it works is what will ensure you get the most out of this retirement super fund. Getting best out of your SMSF and dealing with changes and challenges is something you will have to learn to deal with. Thus the decision to set up an SMSF should not be taken lightly. As there are many really good reasons why you should, there are also number of issues to consider, assignments to perform and responsibilities to take as an SMSF trustee. Read on to understand better the unique and key rules involved in running of an SMSF.
An SMSF is a retirement fund that:
Explanation Of A Trust Deed
A trust deed is a legal document designed to govern the SMSF and sets out the rules of the fund which must comply with the regulations of the Superannuation Industry Supervision Act (SIS Act). Some of the rules are:
Explanation Of The Sole Purpose Test Superannuation
This test is required to ensure retirement benefits are provided to fund members. Sole purpose test superannuation also allows the fund to be maintained for other secondary purposes such as:
Your SMSF must be an Australian super fund in order to comply with the regulations. It has to be established in Australia and members must also be Australia’s residents. An SMSF must be in compliance with the ATO laws. You will be penalized for neglecting any of the above mentioned rules.