Your structure – superannuation funds

Nest EggIn the previous posts of our “Structure” series, we have discussed the entities which can be used for operating your business activities.

All of those entities can also be used for general investing activities, but one of the most tax effective ways of holding investments is through a superannuation fund.

There are a number of types of superannuation funds, but the most common are:

  • retail and industry superannuation funds
  • self-managed superannuation funds

The benefits of holding investments in a superannuation fund include:

  • the income earned by investments is taxed at a low rate of 15%
  • investment income is tax free when in “pension phase”
  • there is a possibility of an individual making deductible contributions to the superannuation fund, which may be tax effective

Disadvantages of holding investments in a superannuation fund include:

  • self-managed superannuation funds are expensive to establish and maintain
  • the individual may have little or no say in the investments made by a retail or industry fund
  • the investments belong to the superannuation fund and should not be used by the individual
  • investments in superannuation funds (and their proceeds), are not readily accessible as they are required to be held until preservation

The laws regarding superannuation are varied and complex – please note: you should consult a superannuation specialist before establishing a self-managed superannuation fund or before making any significant superannuation investments, you should also consult a licensed financial planner to assist with your investments – I can provide referrals if you need to know who to talk to!



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