Help & Support

We know that switching to an SMSF is a big decision and it isn’t necessarily right for everyone. Here are some of the most frequently asked questions we get from people just like you. Of course, if you have a question you can’t find the answer to here, our team are always on hand to help – just give them a call!

FAQ

Category:

Risks

What are the risks of an SMSF?

It is important to fully understand that there are risks to consider when setting up an SMSF. A few risks of an SMSF are outlined below: 

  1. We do not provide financial advice or advice as to whether an SMSF is appropriate for your financial plans, circumstances, or situation needs. Please speak with a professional financial adviser before deciding to establish an SMSF. 
  2. SMSFs are not eligible for compensation if they suffer loss as a result of fraud or theft.
  3. SMSF members must resolve their own complaints or obtain their own legal assistance. 
  4. SMSF members cannot access the Superannuation Complaints Tribunal.
  5. SMSFs are regulated by the ATO and require regular compliance. You will be responsible for compliance and making sure you are able to keep up to date with changes in the laws and regulations.
  6. SMSFs have costs to run the fund, including investing, accounting, and auditing. Any costs may have a significant impact on your retirement. Make sure that your SMSF will have a balance large enough to maintain its viability
  7. Super funds often offer discounted life and disability insurance. With an SMSF you would need to purchase your own insurance. Before terminating your existing superannuation account review your insurance and insurance options and costs.

General

What is an SMSF?

An SMSF is a short and sweet way of saying Self-Managed Superannuation Fund. SMSFs allow you invest your super however you want, while making sure you’re compliant with the current super and tax laws.

General

Who Controls an SMSF?

The trustees of the SMSF control the SMSF, including its investment strategy, audits and accounting.

General

What is a trustee?

An SMSF trustee is a person or a legal entity (e.g. A Corporate Trustee) that is responsible for managing the SMSF as set out by the Superannuation Industry Supervision Act 1993 (SIS) and any other legislation related to superannuation.

A trustee can either be an individual or a company, so long as each named director is a member of the fund.

Risks

Can I lose my insurance if I start an SMSF?

If you start an SMSF and don’t select an insurance policy, you would not have a life insurance policy.

We consider it highly important to have an insurance policy in place.

General

How old does a trustee of an SMSF have to be?

Anyone over the age of 18 can be the trustee of an SMSF. That is, unless they have been named as a “disqualified person” under SISA.

General

Who is named as a disqualified person under SISA guidelines?

A disqualified person are people who’ve been a little bit naughty. Officially, they’re named as individuals who at any time were convicted of an offense that involved dishonesty, for example fraud; if they have ever been subject to a civil penalty order by the SISA or a person who is insolvent under administration or bankrupt.

General

Do you have to be an Australian resident to have an SMSF?

No, but as a non-resident you would have to pay 47% tax on the fund assets, whereas residents only pay 15%.

General

How many people can be trustees?

Each SMSF can have up to four Trustees.

General

Who Owns the Assets in an SMSF?

Fund assets are owned by the trustees of the fund – either as an individual trustee or the corporate entity if it’s a company.

The assets are not to be held in the individual name of a trustee or member – that would be breaking a big golden ATO rule.

Set up

What balance do you need to start an SMSF?

Funds with lower balances have higher operating cost ratios than those with higher balances. For example if you have $200,000 then our $3,171.05 setup fee and $121 monthly admin fee are not as big a chunk from your super than if you had a lower balance.

Set up

What are the advantages in setting up a SMSF?

There are some major advantages in setting up an SMSF and managing your super yourself.

  1. Greater Financial Control – the fact that you decide exactly how your money is invested, whether it be cryptocurrencies, property or a classic car collection. You’ve got the power.
  2. Lower Fees – This is a big advantage of Squirrel SMSF. You benefit even more from our low, flat rate fee the higher your balance gets.
  3. Shared with a spouse – You and your partner can be trustees of the same fund, so you have a greater balance together but pay the same low flat rate fee (which essentially cuts your SMSF fee in half for you!)
  4. SMSFs have some serious tax benefits. In accumulation phase this is capped at 15% and in pension phase you pay ZERO tax. Not even capital gains!
  5. Transparency – rather than trusting the investment strategy of a fund manager, you know exactly how your money is invested and what the risks/potential pay out might be.

Set up

How long does it take to set up an SMSF?

Once your application is complete it takes Squirrel less than 48 hours to set up your SMSF. The most time-consuming part is the rollover of your current super into your SMSF. And this is because of the sometimes ‘ancient’ processes of industry and retail super funds. Once the rollover is requested it can take anywhere between 1 and 4 weeks to rollover, depending on the processing speed of your current super provider. Rest assured that we will be calling them regularly to speed it up, as we know you want to start investing as soon as possible. The ATO can also slow things down, but we are usually able to rollover all accounts within 3-4 weeks.

In Short:

  1. It takes us under 48 hours to set up the fund. To give them all supporting documents, accounts, and register with the ATO and ASIC etc.

The time consuming thing however can be:

  1. The rollovers, which can take anywhere between 1-4 weeks and now;
  2. The ATO recognising the fund – As this is in the ATO’s hands we cannot control this, due to a large amount of Australians moving across to SMSFs they are being inundated with applications and thus the wait time for them to process them is unpredictable.

Squirrel is still lightning quick with Setup of the fund and we’re one of the fastest in the industry due to our technology and online signing program.

But, we are limited to our setup speed by the ATO and your super provider, which, if we’re being perfectly honest would be exactly the same with every other provider. We can comfortably say that ‘On Average’ it can take anywhere from 3 to 5 weeks to complete the fund. However this heavily depends on the ATO and your current super provider.

Contributions

Who can contribute to my SMSF?

There are two types of contributions to your SMSF; Mandated Employer contributions and Non-Mandated Contributions which are your own personal contributions, super, co-contributions, eligible spouse contributions and any contributions made by a third party such as an insurer.

The ATO does have some rules around which contributions you can accept. For example, any member making contributions must have their member’s tax file number and you cannot accept contributions from any member aged over 75.

Contributions

Is there a cap on the contributions I can make to my SMSF?

You and each member of your fund has a cap on the contributions you can make to your SMSF. From July 1 2017, the concessional cap is $25,000.

Contributions

What are concessional contributions?

Concessional contributions(CC’s) are pre-tax contributions to your super balance. These are a combination of your employer contributions and any salary sacrifice you make during the year. CC’s are capped by the government at $25k per annum (This is down from $30k last financial year, new laws brought on July 1, 2017). They are taxed at 15% going into the fund, and will be untaxed coming out once you are in pension phase.

For further Info see ATO website:

https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?anchor=Concessionalcontributionscap#Concessionalcontributionscap

Costs

What are the costs for having a Squirrel SMSF?

We have a flat fee structure, to make our SMSF as simple as possible.

Our sign up fee is $3171.05 (inc GST), which can be deducted from your SMSF cash account. This includes:

  •    Establishment and registration of SMSF Trust
  •    Establishment and registration of Special Purpose Corporate Trustee Company
  •    Establishment of SMSF governing rules
  •    Establishment and registration of investment strategy
  •    Submission of “Election to be regulated” Compliance statement
  •    Establishment of accounts with service providers

Additional services we provide at no extra cost to you include:

  • Registration with Australian Tax Office
  • Rollover of other superannuation funds into SMSF

We then have an annual admin fee, which is $121 per month (inc GST) deducted from your SMSF cash account. This includes:

  •    Annual compliance, administration and accounting of SMSF
  •    Annual return of Special Purpose Company
  •    24/7 access to Squirrel online SMSF management portal
  •    Business hour access to Squirrel technical experts
  •    Fixed fee for 1 – 4 members and any number / value of assets

The only extra cost that will be deducted from your SMSF is the $259 ATO supervisory levy at the time we lodge your tax return.

Costs

Can I Pay the establishment costs of my SMSF with my super?

With Squirrel SMSF, you can! We front the costs of the administration of your SMSF and take our fee out of your super balance once you’re all set up so there’s absolutely no upfront cost to you.

Costs

Is the establishment fee of my SMSF a tax-deductible expense?

Sorry, you can’t claim tax back for the establishment fee of your SMSF.

Costs

Can I pay the sign up fee out of my SMSF or do I have to pay it upfront?

Yes, the sign up fee can come out of your SMSF cash balance so that there are no upfront costs to you for starting a Squirrel SMSF. 99% of our customers onboard with us like this.

Costs

Do I pay for the administration, audit and tax return of the SMSF?

These are all included in our monthly fee of $121 a month. There are absolutely no add-ons or extra costs you need to worry about. Our fee is flat rate and covers everything.

Pension Phase

When can I withdraw the funds?

You can start withdrawing from your SMSF when you reach preservation age.

Pension Phase

Can I withdraw the SMSF funds all at once or take monthly payments?

Both! You can withdraw your super either as a lump sum or set up an income stream. These payments can be regular payments at set intervals, annually or as randomly as you want. Super Income streams are very popular with retirees as they help you manage your income and spending.

If you prefer, you can withdraw your funds as a super lump sum or in several lump sums.

Pension Phase

If a member reaches pension phase before other trustees, how is the SMSF divided?

The SMSF money is divided as a percentage of what is contributed. For example,

ABC Super Fund:

  • Member 1(10 years older) rolls over $70k
  • Member 2 rolls over $30k
  • Total balance of ABC Super Fund is $100k  (Member 1 – 70%, Member 2 – 30%)

For simplicity assume no further contributions. That balance then grows to $200k.  Member 1 retires at 60 years old, Member 2 is still only 50 years old. Member 1 will have access to 70% of the super fund balance ie $140k

Investments

What Can An SMSF Invest In?

You can invest your super in a huge variety of ways – with some restrictions to bear in mind. Here is a list of the approved investments you can undertake with your SMSF:

Direct Investments:

Cryptocurrencies

Australian and International Shares

ETFs

Cash and Term deposits

Annuities

Gold/Silver bullion 

Direct property:

Residential houses, units and villas, as well as Commercial property such as offices, warehouses, factory units, shops and land.

Managed funds:

Retail or wholesale, domestic and/or international

Private Unit Trusts

A business (not a business that you earn an income or benefit from in the present day however) and business property

Non-traditional assets such as coins, antiques, art , taxi plate licences, ATMs ( i.e. collectibles)

Tax

Do I pay tax on my super?

Yes and No. You pay tax on contributions to your super at a 15% tax rate.

When you withdraw your super as either a lump sum or income stream when you’ve reached preservation age, you pay no tax on your withdrawals.

Investments

Can Squirrel provide investment advice to me?

Squirrel will not provide you with personal financial advice.

We can offer general advice on how to setup your investments and provide help with accounting and auditing for your SMSF, but if you ask us ‘is this a good investment’ we are not licensed to give you our opinions or advice. If you would prefer to have financial advice, you can still hire a financial adviser, however this will be at an extra cost to you.

Our SMSF platform is designed for people who have a clear investment strategy in mind, are confident with their strategy and want a low-cost, digital and innovative alternative to managing their SMSF.