The beauty of self-managed superannuation funds (SMSFs) lies in their ability to provide Australians autonomy over the investment decisions regarding their retirement nest egg. But managing an SMSF can be complex and time-consuming. That's where an SMSF administrator might help.
Is an SMSF administrator?
SMSF administrators can handle most complexities of running an SMSF, ensuring taxation and regulatory compliance and sound investment management. While you'll still determine your SMSF's ambitions and strategies, an SMSF administrator can take care of the trickier details.
SMSF administrators need strong skills in record keeping and a thorough knowledge of areas like taxation, investment regulation, and super laws.
What can an SMSF administrator help with?
Here are the areas in which SMSF administration services might help:
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Establishment
Setting up an SMSF is a complicated task - one that an experienced SMSF administrator could simplify. An administrator can help you appoint trustees, prepare a trust deed, register your SMSF, and create an investment strategy.
See also: Guide to setting up an SMSF
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Accounting
SMSF administrators can assist with bookkeeping, preparation of financial statements, and maintenance of accurate records of investments and transactions. -
Tax compliance
For many SMSF trustees, tax compliance is the most complicated part of managing the fund, and an administrator may help ensure SMSFs meet their obligations on income, capital gains, and GST. -
Regulatory reporting
SMSF administrators can help prepare and lodge annual returns and other documentation required by regulators like the Australian Taxation Office (ATO) and the Australian Securities and Investments Commission (ASIC). -
Investment management
Some SMSF administrators can provide guidance and advice on investment strategies and asset allocation. Those that hold a Financial Services License (AFS) may help you and other SMSF members make informed investment decisions.
What should be considered when choosing an SMSF administrator?
When choosing an SMSF administration service provider, you must make sure that they right registration for the services they provide and professional indemnity insurance.
In addition to that, here are some other factors you should look at when getting an SMSF administrator:
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Expertise and experience
Ask your SMSF administrator about their previous experience in managing funds. Look for someone who is familiar with relevant laws and regulations. -
Range of services
Consider the range of services offered by your potential SMSF administrator. Some administrators provide services across all areas while others might specialise in a particular area. -
Fees
What SMSF administrators charge can vary depending on expertise and the level of services provided. -
Technology
Another important factor when choosing an administrator is the technology, systems, and tools they use to manage SMSFs. -
Communication
An SMSF administrator must be able to keep their communication lines open and must be responsive to your needs and concerns.
Benefits of employing an SMSF administrator
Outsourcing an SMSF's administration has several advantages.
Saves trustees time
Firstly, it can save time and reduce the burden on you and other trustees. This is particularly important for those who have busy lives and limited time to dedicate to managing their SMSF.
By outsourcing administration tasks, trustees can focus on making investment decisions and growing their retirement savings, rather than getting bogged down in paperwork.
Helps ensure compliance
SMSF administrators can also help ensure a fund stays compliant with complex and ever-changing SMSF regulations. This is particularly important, as penalties for non-compliance can see an SMSF charged significantly more tax while trustees can be fined or even disqualified from running an SMSF.
While SMSF trustees are responsible for ensuring their fund meets all legal requirements, an experienced SMSF administrator can help ensure super laws are obeyed. This might involve keeping proper records, reporting all needed information accurately, obeying investment restrictions, sticking to minimum pension standards, engaging an independent auditor annually, and more.
Access to expert advice
Finally, outsourcing SMSF admin tasks can provide access to specialist expertise and resources. SMSF administrators have a deep understanding of the rules and regulations governing SMSFs, as well as experience in managing and investing SMSF assets. Such knowledge can provide valuable insights and guidance to trustees, helping them to make more informed investment decisions and grow their retirement savings.
However, it is essential to note that trustees remain responsible for the overall management of the fund, including the selection of an SMSF administrator and the investments made by the fund.
How much does an SMSF administrator cost?
The price charged by an SMSF administrator will likely depend on where you are in your SMSF journey, the complexity of your fund, and the amount of work your fund entails.
Typically, SMSF administrators charge anywhere from $600 to upwards of $3,000 to set up an SMSF. How much they might charge to establish a fund may depend on whether they're also setting up of things like a corporate trustee or a limited recourse borrowing arrangement (LRBA), commonly called an SMSF loan.
From then, an SMSF administrator might charge a fund somewhere between $1,000 and $4,000 per annum for their services, with the lower end of the scale securing less admin support and the higher end more admin support.
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