| Obligations of self-managed superannuation |
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| While there are many benefits in self-managed superannuation funds, by law there exists a number of important obligations including personal responsibility, administrative obligations, investment/market risks and compliance reporting. |
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| Responsibility |
| The trustees are ultimately responsible for all aspects of the management of the fund. Penalties for non-compliance can be significant and in severe cases can include tax penalties, fines and even possible imprisonment. You should note that administrative penalties apply to SMSF’s for failure to lodge documents on time and making misleading statements in documents. |
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| Administrative obligations |
| For a fund to comply with its reporting obligations, record keeping and management of actions must be up-to-date. This necessarily involves a degree of time and effort either performed by the trustee(s) or a nominated fund administrative services provider. |
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| Investment/market risks |
| All investments made by the trustees on behalf of the fund contain an element of risk. Investment returns are influenced by a variety of factors both on a local and global scale. These include for example, economic conditions, interest rate changes, exchange rates, liquidity of the assets, government policy, technology factors as well as market sentiment and business decisions. |
| Large superannuation funds employ expert advice and people with strong experience to consider these factors in determining the future investment purchases and asset disposals over the coming periods. In contrast, the trustee(s) of a self managed superannuation fund may not have the same level of expertise in market knowledge, nor time to consider changes to investment conditions. |
| Furthermore, the trustee(s) of a self managed superannuation fund may have made investment decisions which place a substantial spread of the fund’s assets in classes of investment that may be more vulnerable to certain changes in investment conditions such as property or shares. In contrast, certain types of larger investment funds may have a greater spread of investments that reduce their risk to exposure to one particular class of investment. |
| By diversifying the fund’s investments and investing for an appropriate time frame, the trustees may be able to reduce this particular risk. Professional and qualified financial advice should be sought before making any financial decision. |
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| Legislative change |
| The fund may be affected by changes in Australian superannuation laws from time to time. |
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| Go to Next Section > Choosing a Self-Managed Super administration service |
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