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ASSESSMENT OF THE SELF-MANAGED SUPER FUNDS
EXECUTIVE SUMMARY
This assignment focuses on the Self-managed Superannuation Fund also called as SMSFs. This assignment describes the structure of the SMSFs and the types of the fund. This assignment aims to show the returns on the Self-managed Superannuation Fund along with the comparison of the same with other super funds. This shows the historic return that this fund has earned over the years making it the largest fund in the total superannuation fund in Australia. The SMSFs are highly controlled and regulated as the investment of the employees is at risk and the retirement benefits whether lump-sum or in installments is based on this fund.
    Serial Number
    Contents
    Page Number
    1.
    Introduction
    1
    2.
    Self-Managed Superannuation Funds-Structure
    2-4
    3.
    Self-Managed Superannuation Funds vs Other Funds
    5
    4.
    Returns on Self-Managed Superannuation Funds
    6-8
    5.
    Recommendation
    9
    6.
    Conclusion
    10
    7.
    Referencing
    11
INTRODUCTION
The employee class of people will not have any source of income after their retirement other than savings from the job they were doing. Therefore a contribution is made by the employer in a fund that will get accumulated during the course of the employment and the employee will receive the same after his retirement. The retired employees can take the payment either every month or in installments or lump sum amount. The money that is contributed by the employer will be collected and invested in a fund. This fund is known as a superannuation fund. The tax effect on these funds is almost negligible. Organizations set up this fund in a form of a trust or a company wherein the amount of contribution is made and the fund invests the amount collected for higher returns. They invest in a portfolio wherein the amount risk of losing the money is very low and the returns are comparatively higher. Due to the diversification of the portfolio, the unsystematic risk for the fund is very low.
These superannuation funds can be managed by a trained professional who will be receiving a hefty fee for his portfolio fund management or the owners of the fund can manage the fund themselves. The superannuation fund that is controlled and managed by the members or the owners or the trustee themselves is known as Self-managed Superannuation Fund. These funds are directly under the control of the owners of the fund or trustee appointed by them which generally are they.
SELF-MANAGED SUPERANNUATION FUNDS-STRUCTURE
IDENTITY
As discussed above the Self-managed Superannuation Fund is managed by the trustee or the owners of the fund. The maximum number of members that can be the owners in these funds is limited to four. This fund will be used after the retirement or in case of the death of the members. These funds can be established as a corporation or a trust which gives a separate identity to the fund and therefore the fund has its own unique TFN (Tax File Number), ABN (Australian Business Number) and also a bank account in which the Self-managed Superannuation Fund receives the contribution and make payments for investment or paying the retired employee or members the part of their pension plan (Butler, D., 2018).
The superannuation legislation provides rules and guidelines according to which the Self-managed Superannuation Fund has to operate. The fund has to control the mixing up of the bank accounts of the trustees and the bank account of the fund which therefore has to be kept separate. The compliance of the rules and guidelines as provided by the superannuation legislation is the responsibility of the trustee and the member to ensure that the same are being followed.
CONTROL AND SUPERVISION
In a Self-managed Superannuation Fund, the individual member is a trustee but in case of a retail fund, they may appoint a board to do the same. The ATO that is the Australian Taxation Office has a direct regulation over the Self-managed Superannuation Fund and the ASIC that is the Australian Securities and Investment Commission has indirect control on the fund. The Australian Taxation Office governs the financial reporting compliance and the matters of taxation and the compliance of independent audit of the fund is overseen by the Australian Securities and Investment Commission (Bird, R., Foster, D., Gray, J., Raftery, A., Thorp, S. and Yeung, D., 2016).
CATEGORIES OF SELF-MANAGED SUPERANNUATION FUND
The Self-managed Superannuation Fund can be formed in two categories that is:
(i) Individual Self-Managed Superannuation Funds.
(ii) Corporate Self-Managed Superannuation Funds.
While setting up a Self-managed Superannuation Fund, the first thing that the members have to decide is whether Individual SMSFs are to be formed or Corporate SMSFs. In an individual SMSFs, the fund will be in the form of a trust and a Corporate SMSFs, a company under the Corporations Act has to be formed. Detailed discussion on both the categories of SMSFs is done below:
INDIVIDUAL SELF-MANAGED SUPERANNUATION...