Frequently Asked Questions (FAQs)
Q: "What is the difference between an SMSF and other superannuation funds?"
The major difference is that the trustees or members of the SMSF have control of the fund. In particular, the trustees or members are responsible for how the fund operates, how the money is invested and the types of investments.
Q: "How many members can an SMSF have?"
An SMSF must have no more than 4 members in total.
Q: "Are the costs of establishing an SMSF tax deductible?"
No. These expenses are of a capital nature. However, the administration costs of the fund are tax deductible. For example, accounting and auditing fees.
Q: "The money in the SMSF is mine so can I use this money whenever I need it?"
A member or trustee must keep super fund money separate from their own personal assets. The money in the SMSF must not, under any circumstances, be used for personal or business purposes.
Q: "What is the 'sole purpose test'?"
This refers to the requirement that an SMSF must be maintained for the sole purpose of:
- retirement benefits for the members
- death benefits for the members or the estate of the members.
Q: "Why does my fund have a tax liability if it is paying me a pension?"
Generally, an SMSF will not have a tax liability if it is in pension phase. That is, all the members have retired and are no longer making superannuation contributions and all members are being paid a pension from the fund.