Planning for retirement can be tricky and choosing the right investment strategy can drastically affect how well you are set up for it. Self-managed super funds (SMSFs) are a flexible option that give you a tax efficient way to build up your retirement savings. If you are looking for a new way to manage your super, you need to know the tax benefits of self managed super funds and the advantages you could gain from investing in one.
At Taggart & Partners we have an expert team of SMSF accountants Brisbane. We are here to consult with your retirement savings plan and help you to fully understand your SMSF options. Contact us today by calling 07 3391 1188 or reach out via our online form.
What Are the Tax Benefits of Self Managed Super Funds?
SMSFs come with several tax advantages that can maximise your retirement savings if you know how to take advantage of them.
Concessional Tax Rates
With a SMSF you can benefit from concessional tax rates, with the income within the fund taxed at a flat rate of 15%. This applies to earnings such as interest, dividends, and rental income which is often significantly lower than personal income tax rates. When you retire this can even come down to 0% on eligible payments.
Capital Gains Tax Discounts
When you hold an asset, like shares, in a SMSF for more than 12 months they are eligible for a discount on capital gains tax. This reduction of acts as an incentive to hold assets as well as holding onto your retirement savings by minimising the tax you will send on these long term investments.
Ability to Manage Tax Liabilities
SMSFs gives you the full control of your contributions, deductions, and investment strategies to manage your tax. An example of this could be the strategic use of contributions and timing of asset sales with the above tip to reduce your taxable income and capital gains tax.
Flexible Contribution Options
On the topic of contributions, a SMSF allows you to make concessional (before tax) and non-concessional (after tax) contributions. This flexibility allows you to structure your contributions in a way that will benefit you come tax time. This method is particularly beneficial for high income earners who want to reduce their tax liability.
Why Should You Invest in a Self Managed Super Fund?
In addition to the tax benefits of self managed super funds there are some major selling points that will convince you to get a SMSF yourself.
Greater Control Over Investments
The biggest selling point of a SMSF is you have complete control over where your money is invested. Unlike a managed fund you can choose from a wide range of options such as shares, property, and even managed funds. This allows you to align your portfolio with your financial goals.
Tailored Retirement Planning
If you have a plan for retirement a SMSF will allow you to create a strategy that gets you there. You can adjust your investments, contributions, and withdrawals to ensure you can reach your objective.
Cost Efficiency for Larger Balances
If you have a large super balance a SMSF can be quite cost effective. Another cool feature of SMSFs is that you can have up to six members in one, pooling resources to share costs and admin
Transparency and Engagement
With a SMSF you have full visibility of your performance, fees, and investments. This transparency coupled with the responsibility of making sure your fund is set up correctly will keep you informed and engaged with your retirement savings. This will allow you to flag any issues or see what is doing well and double down.
Get Started with Taggart & Partners Today!
Taxes and management of SMSFs can be complicated, and properly navigating the tax code to get the best benefit is often a challenge – professional assistance makes the difference. We can help provide you with expert advice on creating, structuring, and managing your SMSF. If you are ready to get started, get in touch with our expert business accountants by calling 07 3391 1188 or reach out to us via the online form.