A SMSF is another form of trust with its own set of tax rules.  Used for the provision of people’s retirement.

Advantages

1.    Tax Rate at 15% in accumulation phase.

2.    Tax Rate at 0% in pension phase.

3.    Great Asset Protection while in accumulation phase.

4.    Provides greater control over your investments when compared to industry / manages funds.

5.    Immediate access to cash if required.

6.    As a SMSF can have up to 4 members you are able to pool your resources to purchase larger assets, i.e., like real property.

7.    SMSF also have the ability to borrow money.

Disadvantages

1.    Difficult to access funds before 55 years of age.

2.    Only for investment, they can not be used to operate a business.

3.    Large degree of responsibility.  As a trustee you are legally responsible for the decisions that you make.

4.    Administration of the fund can be time consuming.  Proper records will need to be maintained.

5.    Penalties.  There are strict laws that govern the Superannuation Industry.  The Australian Taxation Office (ATO) and Australian Securities Investment Commission (ASIC) regulate and enforce these laws.