Published on 12 Sep, 2023

Why You Need an SMSF Accountant for Effective Fund Management

Written by:
Thomas S Phabmixay
General Manager

Page Contents

Managing a Self Managed Super Fund (SMSF) offers unparalleled control over your investments, but it comes with complex compliance and taxation obligations. With stringent requirements set by the Australian Tax Office, many SMSF trustees find themselves mired in detailed accounting work, missing out on maximising their fund’s potential. That’s where an experienced SMSF accountant can help. Specialising in SMSF setup, ongoing SMSF administration, and SMSF accounting, a qualified accountant can become your cornerstone for effective fund management.

An SMSF specialist is someone who can assist you with the technicalities of SMSF administration all while ensuring quality service and adherence to compliance requirements.

Read on to learn why hiring an SMSF accountant can simplify the process of managing your Self Managed Super Fund and offer invaluable services to help you meet your financial goals.

What is a Self Managed Super Fund?

A Self Managed Super Fund (SMSF) is a type of superannuation fund, distinct from the managed super funds often overseen by corporate authorised representatives. As an SMSF trustee, you hold a unique position, one that offers unparalleled control over your super fund. However, with this control comes the added responsibility of overseeing the fund’s investments, ensuring legal compliance, and fulfilling other requisite duties.

Managing an SMSF isn’t for the faint-hearted. The whole process demands a solid grounding in financial planning and a deep understanding of SMSF accounting. Unlike other superannuation options, an SMSF requires a meticulous approach, with many SMSF trustees leaning on the expertise of chartered accountants for guidance. These specialists ensure that the accounting of the SMSF aligns with the annual return and tax compliance requirements. An SMSF specialist is adept at handling the complexities of SMSF setup and ongoing SMSF administration.

One of the standout features of an SMSF is the flexibility it offers in terms of investment choices. SMSF trustees can diversify their portfolio, investing in assets like stocks and even commercial property. All investment decisions must prioritise the best interests of the SMSF members. To navigate the maze of compliance and ensure that the fund invests wisely, tapping into the services of an SMSF expert is a wise move.

Is an SMSF the Right Choice for You?

Although there is no legally specified minimum balance required to establish an SMSF, it’s generally advisable to consider setting up one if your balance is a minimum of $250,000. This recommendation takes into account expenses linked to SMSF setup and annual compliance. You’ll be responsible for paying the annual supervisory levy to the ATO, arranging for an accountant to handle financial statements and tax returns, and conducting an independent audit, along with potential financial advisory costs.

Determining whether an SMSF aligns with your financial needs can pose a challenge. It’s wise to consult a licensed and qualified financial advisor, as our expertise is primarily focused on taxation advice. Through our strategic partnerships with prominent Financial Planning firms in Sydney, we can connect you with the one that suits your circumstances.

SMSF setup and administration

When embarking on SMSF setup and administration, the expertise of a skilled SMSF accountant becomes crucial. They can guide you through the setup process, ensuring the fund qualifies for tax concessions and remains eligible for contributions. Setting up an SMSF the right way not only optimises the fund’s benefits but also streamlines its future administration.

Considering the substantial time commitment involved in managing an SMSF, an SMSF accountant can significantly assist in shouldering administrative responsibilities and help ease the overall burden of running the fund, enabling you to focus on other aspects of your financial journey. Moreover, entrusting your SMSF’s compliance to a capable professional ensures the fund operates within the necessary regulatory framework.

SMSF Accounting responsibilities

To set up and oversee an SMSF you will need to obtain a Tax File Number (TFN), an Australian Business Number (ABN), and a dedicated bank account. This account serves as the operational hub for the fund, enabling seamless investment transactions, contribution processing, and the administration of disbursements like pensions and lump sum distributions. The intricate landscape of SMSF accounting responsibilities, governed by the superannuation legislation known as the Superannuation Industry (Supervision) Act 1993 (SIS Act), necessitates a specialised skill set.

The significance of partnering with a seasoned accountant cannot be overstated. Their adeptness in navigating the complexities of SMSF accounting is invaluable for ensuring adherence to regulatory guidelines and optimising the fund’s performance. Engaging with firms with extensive SMSF experience offers the dual advantage of streamlining SMSF management intricacies and effectively addressing taxation implications.

Establishing an SMSF: Step-by-Step

When embarking on the journey of setting up an SMSF, you’ll need to follow these key steps:

Decide between individual trustees or a corporate trustee structure.
Nominate and appoint your chosen trustees or directors.
Craft the trust and its accompanying trust deed.
Confirm your fund meets the criteria to be recognised as an Australian super fund.
Register your fund and secure an Australian Business Number (ABN).
Arrange for the setup of a dedicated bank account.
Develop a comprehensive exit strategy.

SMSF Compliance and Administrative Duties

As a trustee, it’s essential to uphold various compliance and administrative obligations, including:

Engaging an SMSF auditor for conducting annual audits.
Accurately valuing the assets held within the fund to ensure precise annual returns.
Filing an SMSF annual return with the Australian Tax Office (ATO).
Reporting Superannuation transfer balance account events as required.
Maintaining meticulous records of the fund’s operational activities.
Promptly informing the ATO about significant changes in the fund’s structure or operations.
Regularly reviewing the registration status of your SMSF. For detailed guidance on this aspect, you can refer to the ATO’s official website.

Overview chart detailing the key steps and compliance responsibilities for managing an SMSF, emphasising the role of experienced accountants and advisory services

Exploring SMSF Taxation

A comprehensive approach to SMSF management encompasses not only compliance and accounting but also crucially, taxation. An SMSF accountant, well-versed in both the accounting and tax aspects of super, can play an instrumental role in guiding you through the complexities of both.

Typically, a Self Managed Super Fund (SMSF) that adheres to compliance requirements enjoys the advantage of a concessional tax rate, set at 15%, on its generated income. This favorable rate applies to a diverse range of assessable income streams within the fund, spanning assessable contributions, net capital gains, interest, dividends, and rental income. It’s paramount to note that maintaining adherence to stipulated rules and regulations is key to accessing this concessional rate. Non-compliance can subject the fund to taxation at the highest marginal tax rate.

The knowledge and expertise of an SMSF accountant is pivotal in maneuvering through the intricate landscape of compliance and taxation.

Next Step is to Contact TMS Financials

TMS Financials provides you with a team of experienced professionals that help you achieve your financial goals through smart tax structures and strategic financial structuring. We’re a one-stop shop for all financial needs and pride ourselves on building strong partnerships with our clients.

Book a free financial health review to see the difference we can make in your financial future.

Book a free accountant consultation with TMS CPA Accountants your specialists in Sydney Australia.

Disclaimer

This outline is for general information only and not as legal, tax or accounting advice. It may not be accurate, complete or current. It is not official and not from a government institution. Always consult a qualified professional for specific advice tailored to your unique circumstances.