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My husband and I are wondering whether it is still worthwhile maintaining our self-managed super fund. We currently have about $1.6 million in our SMSF. The fund previously held investment properties, but we have now sold those properties and the fund is invested in financial assets.<\/p>\n
We have a financial adviser, but before discussing this with him, I\u2019d like to do some independent research and understand whether an SMSF still makes sense for us. Given the costs involved in running an SMSF, would we potentially be better off transferring our super into a professionally managed industry or retail super fund instead?<\/p>\n
At what level of superannuation does an SMSF generally become cost-effective, and are there other advantages of retaining an SMSF that we should consider beyond simply comparing the fees? We are both retired, so the fund is also now at a different stage of its life than when we originally established it. What would you suggest we look at when deciding whether to keep the SMSF or move to a managed super fund?<\/p>\n
The conventional thinking is that you should only use a self-managed super fund if you wish to invest in assets that are not readily available through a normal retail or industry super fund.<\/p>\n
These may include your own business premises, unlisted property syndicates and, in my own case, listed shares with such a small market capitalisation that the normal managed super funds do not have in their portfolios.<\/p>\n
Given you have sold your investment properties and now have the money invested in normal cash and equity-based assets, I see little purpose in retaining the SMSF simply for the sake of having one.<\/p>\n
With $1.6 million, the issue is not so much whether the fund is large enough to be cost-effective, but whether the additional flexibility and control you get from an SMSF justify the costs, administration and responsibilities involved.<\/p>\n
There is another important issue for retirees. As they age, the administration of an SMSF can become so onerous that they simply don\u2019t want to keep doing it. This is particularly relevant if one partner loses capacity, leaving the other partner to deal with all the investment decisions, paperwork and compliance.<\/p>\n
In your situation, I would be asking your adviser to compare the total annual cost of retaining the SMSF with the cost of moving to a suitable retail or industry fund, while also looking closely at what investment flexibility or other benefits you would actually be giving up.<\/p>\n
If there is no significant advantage in keeping the SMSF, simplifying your affairs while you are both able to make the decision may make a great deal of sense.<\/p>\n
I have a share portfolio of about $117,000, with most of the shares bought in the mid-1990s. I am a self-funded retiree and my taxable income is well below the tax-free threshold. Like many investors, I am trying to understand the capital gains tax changes due to start on July 1, 2027.<\/p>\n
Would it be sensible to sell some shares before then to avoid paying substantially more tax in the future? My understanding is that capital gains may then be taxed at a minimum rate of 30 per cent, with indexation replacing the present 50 per cent CGT discount. How would indexation be calculated for shares held for 30 years, and where would I find the necessary figures? Would the gain accrued up to June 30, 2027 still qualify for the existing 50 per cent discount, with the new rules applying only to gains arising after that date? If so, the market value of my shares at June 30, 2027 would appear to be critical. What do you think?<\/p>\n
The key date is June 30, 2027. If you sell your entire portfolio before then, the existing capital gains tax rules will apply. If you sell after that date, the gain up to June 30, 2027 will still be taxed under the current rules, including the 50 per cent discount where applicable.<\/p>\n
Only the increase in value after June 30, 2027 will be taxed under the new regime, with that gain adjusted for inflation instead of receiving the 50 per cent discount.<\/p>\n