cash, money, super, superannuation

As you near retirement, investment advice is important with more retirees looking toward SMSFs for help. Self-managed super funds can be managed without much hassle if you have the right information. When you are in charge of your own investment choices, you’re more likely to be more profitable and more engaged in the process.

The latest research shows SMSF trustees are getting younger, with nearly a third between 35 and 44 years. Thus, it’s absolutely crucial you’re armed with the best advice in preparation for a successful retirement. We check out a few vital tips below.


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Understand your role in SMSFs

The purpose of your SMSF is to ensure that everyone gets an adequate retirement. Professionals should be used because it is difficult for a novice to understand all of the tax laws to protect your assets. The sole purpose test must be passed in order to receive all the full tax concessions that are available to SMSFs.

Diversification, risks, and return on your assets should be discussed according to your members’ needs and circumstances. Many people will re-evaluate their SMSF assets near retirement age and may add to their portfolio a more low risk and low reward investment.

Know your duties as a trustee and the governing bodies

For instance, if you’re setting up an SMSF, you should consider devising an investment strategy. The strategy should include how to accept contributions and pay the benefits.

The authority of SMSFs is the Australian Taxation Office. It enforces the majority of regulations and restrictions that are related to an investment strategy. When you are a trustee, you have full control over your retirement investments. You can choose to invest in shares, property, art, or collectables.

Know how to keep your fund compliant 

Ensure that you’re in compliance with all tax laws and super laws. This will also protect your members’ assets. Again, the sole purpose test must be passed to get full tax concessions.

If anyone is under the age of 60, the amount of tax deductible contributions that can be made without accruing a penalty is $25,000. If you’re over the age of 60, the maximum amount is $35,000. Many people make a salary sacrifice to make the contributions. Check with your employment agreement to determine what the maximum amount allowed is at this point. In general, you need to work for at least 40 hours for 30 consecutive days before you can make non-deductible contributions and tax deductible contributions to a super.

Know how to make investment decisions

In general, your investment decisions should always be evaluated according to the increasing returns on your fund. Experts suggest that you change your SMSF asset to include more low reward and low risk investments. These are the basics you must know before investing in these types of products.

Be aware of personal tax deductions to superannuation

Self-employed people and investors can receive less than 10 percent of their income deducted for superannuation. Always notify the fund and tell them how much you’re eligible to claim every year. Always save your paperwork for your accountant or tax agent.

Any tax deductions that should be taken from a personal savings or an inheritance can come from your personal income. You can also transfer personal investments, an inheritance, or profit from the sale of investments. Keep in mind that you can contribute up to $150,000 after taxes in 2014. If you’re under 65, you can contribute up to $450,000 in a three year period. A tax penalty may be assessed if the contribution caps are exceeded. The penalty can be as high as 46.5 percent.

After July 1, 2014, the cap will increase to $180,000, and $540,000 can be contributed over a fixed period of three years. A professional adviser can help you if you do not understand the process or if you meet the upper requirements for contribution.

Be aware of government co-contribution

If your adjusted income is less than $48,516, you may be eligible for the government co-contribution. If you make super contributions before the end of the financial year, you can consider this feature. The government will contribute 50 cents to your superannuation for every dollar that you contribute. The maximum government contribution is $500.

Know the amount of taxation on superannuation pensions

Keep in mind that the superannuation fund will be taxed at 15 percent rather than being tax free. You should be aware of these taxes to ensure that you are taxed in the appropriate bracket. When you turn 60, the lump sums that are taken from the superannuation are not taxable. Thus, any funds removed before the age of 60 will be taxed. Keep in mind that no tax is payable on amounts up to $180,000.

SMSF asset valuations

Assets present in your SMSF must be valued in a financial year. The assets in SMSF need to be valued every financial year. Property, artwork, and unlisted investments are recorded in your financial statements to ensure that your investments are sound.

By Jayde Ferguson, a freelance writer based in Western Australia. Connect with her on Google+ today.