02
Apr
Setting up a self managed super fund (SMSF) is one of the most popular ways of saving money for the retirement. The distinction between this fund and the traditional way of saving money for retirement is the fact that you can use the assets you invest in this fund to receive income. One of the main advantages of setting SMSF is the control you have over the assets you invest. But, just like every other fund, there are certain rules that must be followed. For example, SMSF cannot have more than 5 members. Also, every member is at the same time a trustee of the fund as well. The fund is run for one purpose only – to benefit members and provide retirement income.
In addition, there are certain rules when it comes to SMSF contributions. You can accept employer contributions and certain non-mandated member contributions. But to make SMSF contributions you don’t have to be full-time employed by a third party employer. If you are self-employed you can still take advantage of the benefits the superannuation provides by making self-employed SMSF contributions.
You can voluntary make personal contributions to your SMSF and claim a tax deduction on the amount Usually called concessional contributions because they are taxed at the concessional rate of 15%, self-employed SMSF contributions can only be made if you are largely self-employed. This means that certain percentage of of your accessible income come from self-employed activities.
There are definitely many rules that apply to self-employed, so if you don’t have enough knowledge and experience, you should ask for professional help. There are companies specialized in providing legal advices regarding setting and managing SMSFs. Hiring a professional who is backed with years of experience and expertise in the field is the smartest step you can take prior to start making self-employed SMSF contributions. This will ensure you do not fall off the track that can cause you headaches down the road.
If you run your own business you can make two types of SMSF contributions:
Concessional contributions are taxed at tax rate of 15% of the total amount of assets you invest and you can claim tax deduction on. On the other side if you decide to go with voluntary investments, the assets you invest are not tax deductible which means the total amount you invest will be added to your fund.
