Paul Clitheroe said on the Money Show last week that the cost of running an SMSF is excessive. SMSF’s are not really worth it unless you have an account balance of more than $250,000. What is your opinion?
The major impediment you will hear most other commentators say is that the costs of SMSF's are prohibitive if you have a small balance. This is because most Accountants charge at least $2500pa to administer your fund. WFS Canberra has overcome this by charging only 1% of the SMSF up until the fund reaches $250,000. For example; a fund with only $50,000 will only be charged $500pa. This is far cheaper than the fees that this same $50,000 will incur if left in a retail superannuation fund. Better still, when your fund reaches $250,000 :) we will cap our fees at $2500 (plus GST) so that as your fund grows the fee becomes even less than 1% which is very cheap compared to retail funds. If you combine your super into an SMSF with spouse or children the relative fee becomes even cheaper :). So yes, Paul Clitheroe is right, but WFS has overcome his objection by reducing our fee.
When it comes to contributing to superannuation I understand there are upper limits and if they are exceeded extra tax is payable. I think at my age (64 last July 6)) a limit of $150k per financial year applies? I contributed nothing to super in 2008/9, $50k in 2009/10 and $150k in 2010/11 to date. However, I believe there is some provision for “bringing forward” contributions. Are you able to explain how this applies and, in my case, may I contribute more to super in 2010/11?
There are two limits – I call them the ‘tax deductible’ (concessional) limit and the ‘non tax deductible’ (non concessional) limit.
The tax deductible limit for you is $50,000. You can claim this as a deduction against your income and it is taxed at 15% in the fund.
The non tax deductible limit is $150,000 and yes, before your 65th birthday you can bring forward 3 years and contribute $450,000. This amount is not claimable against your income and is tax free in the fund.
Howdy Catherine
ReplyDeletePaul Clitheroe said on the Money Show last week that the cost of running an SMSF is excessive. SMSF’s are not really worth it unless you have an account balance of more than $250,000. What is your opinion?
Joanna
The major impediment you will hear most other commentators say is that the costs of SMSF's are prohibitive if you have a small balance. This is because most Accountants charge at least $2500pa to administer your fund. WFS Canberra has overcome this by charging only 1% of the SMSF up until the fund reaches $250,000. For example; a fund with only $50,000 will only be charged $500pa. This is far cheaper than the fees that this same $50,000 will incur if left in a retail superannuation fund. Better still, when your fund reaches $250,000 :) we will cap our fees at $2500 (plus GST) so that as your fund grows the fee becomes even less than 1% which is very cheap compared to retail funds. If you combine your super into an SMSF with spouse or children the relative fee becomes even cheaper :). So yes, Paul Clitheroe is right, but WFS has overcome his objection by reducing our fee.
ReplyDeleteHi Catherine
ReplyDeleteWhen it comes to contributing to superannuation I understand there are upper limits and if they are exceeded extra tax is payable. I think at my age (64 last July 6)) a limit of $150k per financial year applies? I contributed nothing to super in 2008/9, $50k in 2009/10 and $150k in 2010/11 to date. However, I believe there is some provision for “bringing forward” contributions. Are you able to explain how this applies and, in my case, may I contribute more to super in 2010/11?
Thanks again.
Regards,
John
Hi John,
ReplyDeleteThere are two limits – I call them the ‘tax deductible’ (concessional) limit and the ‘non tax deductible’ (non concessional) limit.
The tax deductible limit for you is $50,000. You can claim this as a deduction against your income and it is taxed at 15% in the fund.
The non tax deductible limit is $150,000 and yes, before your 65th birthday you can bring forward 3 years and contribute $450,000. This amount is not claimable against your income and is tax free in the fund.