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Why Is Self-Managed Superannuation Fund Efficient?

Asad Fazal



Why Is Self-Managed Superannuation Fund Efficient

Investment control and the more excellent selection of investments available to SMSF members than to industrial and retail super funds, including residential and commercial real estate, collectibles, term deposits, and direct shares, are two of the main advantages of an SMSF. Derivatives are another option for risk hedging or downside protection for your portfolio.

The ability for entrepreneurs to acquire commercial real estate through their SMSFs and then lease it back to their companies is one of the primary reasons smsf property is advised. It provides a consistent source of revenue for SMSFs and releases any capital needed to expand your business and guarantee safe tenancy.

SMSF members can now purchase huge single assets like commercial property that would otherwise be out of their price range, thanks to the regulations that permit SMSFs to borrow. Typically, a limited recourse loan can be obtained for between 60% and 70% of the cost of the property. This does not include purchase-related expenses like legal fees, stamp duty, etc.

SMSF’s Advantages

Tax reduction

Most other superannuation plans, except defined benefit super funds (such as a government employee fund), will allow members to withdraw a tax-free pension as a source of income after retirement.

An SMSF offers you more freedom than any other superannuation structure in terms of donations; the timing of donations, assigning earnings to specific members, and instituting “reserves” is other advantages of an SMSF.

By carefully considering each member’s circumstances and making strategic decisions about contributions, reserves, and distributions, trustees and their professional advisers are allowed to use the unique flexibility of an SMSF to reduce the overall tax that SMSF members pay within the fund. Your situation cannot be considered in public offers or “pooled” superannuation funds since you are one of the hundreds of millions of other members who must all be treated equally.

Reduce transactional expenses

When the period arrives to transition to the retirement/pension phase, SMSFs will enable you to do so almost seamlessly without selling down assets, preventing you from incurring capital gains tax (CGT) and other transaction charges. You don’t have to liquidate your assets, such as shares, to avoid paying taxes and additional costs. Keep your investments and start taking income from your SMSF balance.

Most industrial and retail funds require you to sell your super fund assets as you exit the accumulation phase and then repurchase them during the pension phase to transition from the consolidation stage (while you are working) to the pension phase (retirement).

Transaction costs, including brokerage, buy/sell prices, and capital gains tax, are incurred whenever assets are sold or purchased. An SMSF can aid in lowering these expenses.

Tax Management

Tax can be decreased, and for most clients in the retirement phase, refunds can be requested from the ATO for any unused credits by timing pensions, structuring retirement plans and tilting investment strategies to take advantage of the funds’ favourable tax treatment, such as franking credits targeting.


SMSF property has gained popularity recently and is now the most potent retirement savings vehicle accessible. A good financial planner will help you acquire smsf property by guiding and educating you, but you must be ready to assume the duties of an SMSF trustee. Knowing that you have control over your superannuation, that you have control over your investment choices, that you have maximised your tax effectiveness, and that you have put into place efficient estate planning and asset protection methods will allow you to “pass the sleep test.”

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