Without a doubt, the legislation concerning superannuation funds is confusing. Make the wrong move, and you could unwittingly end up avoiding tax compliance obligations, and not meeting all the applicable regulations relating to your retirement savings, can leave you in the hot seat with the ATO. If you’ve taken control of your self-managed superannuation fund (SMSF), avoid making these common 5 mistakes that could have you paying harsh penalties.
1. Accessing your SMSF early
One of the top mistakes made by many is thinking they have access to their SMSF early. One typical example is members seeing their SMSF bank account savings rather like their personal bank account, withdrawing cash from it, which legislation strictly prohibits in Section 65 of the Superannuation Industry Supervision Act. Our advice is to avoid temptation altogether by ensuring your SMSF-related and personal assets are kept strictly separate. Accessing your SMSF early could also see you paying a hefty tax on the amount withdrawn.
2. Administrative mistakes
Managing your own fund can be a potential minefield of administrative errors. Two common types of errors are not meeting the required deadline for submitting returns and newly-appointed trustees failing to sign the ATO Trustee Declaration in the time given. Trustees are advised to seek the guidance of a SMSF specialist for all administrative obligations.
3. Appointing the wrong person as trustee
A trustee of a SMSF should be eligible to take on the associated responsibilities. The Australian government deems this to be any person 18 years or over who is of sound mind and who hasn’t been disqualified due to reasons such as being convicted of an offence linked to dishonesty.
4. Not putting in place an investment strategy when establishing the fund
Not having a written investment strategy in place can have you contravening Superannuation tax laws. In addition, all trustees need to review their written plan regularly for compliance.
5. Not seeking professional advice from an experienced SMSF Accountant
You need an experienced SMSF Accountant and Financial Planner to help you establish, manage compliance obligations and manage your fund. Not having one means you run the risk of contravening compliance laws you don’t understand or aren’t aware of. In addition, a Financial Planner can help you with sound financial investment advice for maximum returns on your nest egg.
If you need self-managed super fund advice, contact Stones Sharp. We have been providing Melbourne with Accounting and Taxation services since 1940 and can assist in providing and obtaining the right advice.