When you're setting up an SMSF there are some fundamental decisions that need to be made before you even get started. These will affect the way the super fund is run, the powers that it has, and the administrative ease with which changes to the structure can be made. So its not just, 'what should we call our fund'. One of the biggest decisions you make at this stage is whether to have individual or corporate trustees. Unfortunately there is a sizable cost disparity between the two options and I think all too often this initial cost saving becomes the dominant reason for the decision.  

I found and read with interest the ASFA (Association of Superannuation Funds) Retirement Standard research report from February this year. This is a piece of research published and updated quarterly to give an indication to presumably the average Australian, how much is enough.  

I come across mistakes when dealing with pensions all the time. Here are just five of the common mistakes that I have come across. What is clear is that, "when dealing with Self Managed Superannuation good advice is vitally important before you start".  

While a SMSF cannot lend money to a member or relative of the fund, it is possible for a loan to exist with a related party of the member. Similarly the SMSF can invest into a related party of the fund. The proviso is that the value of all such related party transactions doesn't exceed 5% of the total value of the fund. Tread carefully, because a mistake may not be easily remedied.  

Minimum Pensions

Firstly let's draw your attention to the pension draw-down relief which will continue in the 2012 – 2013 year for account based pensions. Minimum payment amounts for account-based, allocated and market-linked pensions will continue to be reduced by 25%. As equity markets have continued to be volatile, this relief will hopefully allow retirees to recoup some of their capital losses as the markets recover.  

Super and particularly your SMSF, is just TAX structure.

So what tax are you liable to pay, that all depends on the structure in which the income was generated? As you can see from the table below, this could vary from as little as 0% to 48.5%.  

Can my SMSF's wine collection be stored at my home or at the private residence of a related party if that residence has a purpose built wine cellar?

If your fund acquired the wine on or after 1 July 2011 it must not be stored in the private residence of any related party. A private residence includes all parts of a private dwelling (above or below ground), the land on which the private residence is situated and all other buildings on that land, such as garages or sheds.  

What is suggested here is only a guide to some of the things you may like to consider.  

What does the law say about the requirements for an investment strategy and what do the regulators appear to want. Next week we will look at what seems to happen in practice, because while most strategies are formulated in a way that complies with the law, many seem to fall short of regulator expectation.  

A self managed superannuation fund (SMSF) is required to comply with the SIS regulations and when it doesn't, there is a chance the ATO could deem it non-complying and consequently it will lose its tax concessions.