Thinking of Setting Up a Self Managed Super Fund (SMSF)?
Did you know that you could save money by waiting until July before putting any assets into the fund?
This time of the year is typically a very busy time for the set-up of self-managed superannuation funds (SMSFs) as people review their financial and taxation positions and make decisions before the end of the financial year.
If you’ve decided to establish your own SMSF, give some consideration to whether you really need it up and running prior to 30 June or whether it can wait until July.
The decision could mean a savings of $1,600 or more if you can wait.
Let me explain.
To be legally established, not only must you sign various legal documents but the fund also needs to hold assets. The first asset held by a new fund is typically a bank account where a contribution or rollover is deposited into.
The financial year in which the first asset is held by the fund determines when a tax return and audit are required. So, if a bank account is opened and money deposited prior to 30 June 2018, there will be a requirement for a tax return and an independent auditor’s report for the 2017/18 year. This will entail some administration costs for the fund as outlined below:
ATO Supervisory Levy
$ 259.00
Independent Auditor
$ 395.00
Administration Fees
$ 950.00*
Total
$1,604.00
(the administration fees may be able to be negotiated lower for that first year; but a fee is still likely to apply to prepare the necessary documentation; liaise with the auditor and lodge the return)
If, however, the first assets held by the fund occurred from 1 July 2018 there would be no need to lodge a tax return or conduct an audit for the 2018 financial year.
There are other things to consider regarding the best time to set up your fund besides the administration and supervisory levy savings, but this is one aspect that is sometimes forgotten.
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