A superannuation fund, or shortly know as SMSF, is a type of fund that can have up to 5 members. Each DIY super fund member is also a trustee of the fund. The members (trustees) of the DIY super fund are basically responsible for managing the fund in the best interest of all members. The SMSF is a unique superannuation fund as the members, in their role as trustees, have the complete control over the management and the investment decisions. Simply said, with a DIY SMSF you have the complete control of your fund. Of course, certain rules must be followed. For example, no member of the fund can be an employee of other SMSF member. Also, not a single DIY super fund member can be paid for carrying out his/her duties as a trustee.
For your DIY SMSF to receive tax concessions, it must be established and managed in Australia. Normally, your DIY super fund must satisfy the DIY super fund residency requirements which state that all SMSF members must be Australian citizens. Central control and management of the fund also needs to be carried out in Australia. If any DIY SMSF member plans to stay or live overseas for an extended period, then he or she should seek professional advice in order to see what needs to be done to ensure the super fund is in compliance with the ATO (Australian Taxation Office) regulations. The SMSF must be maintained only for the purpose of providing advantages to all members of the SMSF after their retirement.
The number of SMS funds that exist in Australia is growing constantly. Many companies are implementing this modern trend in their businesses, which means that the number of people who work overseas is constantly growing. Because of this, there are two important SMSF residency rules that need to be considered and followed:
- DIY SMSF needs to be established in Australia.
- There is a residency rule about the active trustees of the super fund – a member who makes real contributions to the SMSF.
Another important thing about the SMSF is that every super fund must have a trust deed. This is a document that outlines all the rules that need to be followed and respected. This document should be updated regularly in order to keep up with the changes in the ATO legislation. The trust deed can be updated at any time.