If you are looking for a great way to save for your retirement days, then SMSF is the right decision. One of the greatest advantages of a self managed superannuation fund is that you are in charge of everything. As a trustee of your own SMSF, you will decide how or where to invest the money. But even though you are have the full control over the fund, still there are certain SMSF rules set by Australian Taxation Office (ATO). These SMSF rules must be follow accordingly.
Even though it sounds easy, SMSF is not suitable for everyone. You need to learn more about this type of fund and decide whether you are capable of running the fund according to the specif self managed superannuation fund rules. Below are just few of the SMSF rules you need to follow to help you manage your SMSF better and ensure it is always in compliance with ATO. If you fail to follow the SMSF rules, you will face certain penalties.
- Even though the self managed superannuation fund rules do not state exactly where a trustee can invest, still there as some restrictions on fund investments. Thus a trustee must invest in commercial assets that are based on a fair market value.
- According to the self managed superannuation fund rules, a trustee is not allowed to lend money to members or relatives. SMSF rules are quite strict and prohibit any kind of financial assistance.
- Even though borrowing is prohibited, still there are some exception from these SMSF rules. A trustee is allowed to get limited short term loans in order to settle certain security transactions or certain types of installment warrants.
- Self managed superannuation fund rules do not determine exactly which assets can be related party to an SMSF, but some of them include shares, units, stock exchange, real estate property and in-house assets as well.
- An in-house asset means that you can own shares in a related company, lease a property or give a loan to a related company or trust. However, the investments or the lease that are part of in-house assets must not exceed 5% according to the SMSF rules.
- Not a single member of the SMSF is allowed to access the fund before retirement. According to the self managed superannuation fund rules, the fund money cannot be used for personal or business needs under any circumstances.