SMSF Members Should Be Tax-Smart

Investors and trustees who have their own self managed super fund should learn to adopt strategies that are tax effective. Experts say investors should be savvy given the volatility of the market since the GFC. 

Efficiency in tax management can help bring real returns with rewarding benefits, especially since supers are part of a tax-exempt pension phase. 

Meg Heffron said SMSF members can strategize and minimize tax further by reducing stock turnovers, earning franking credits, and picking out more tax-effective shares. They can also participate in share buybacks. Heffron is the co-principal of Heffron, an SMSF administration group. 

Industry observers also observed that many of these members tend to disregard the tax impact in their investments when their contributions already enter the tax-free phase of the pension system. In fact, some members may completely disregard taxes in making their decisions, minimizing capital gains that could benefit even their independent adult children. 

Part of a well-managed portfolio is for an SMSF member to understand what stocks are best to invest on and which ones can produce the best gains. Those already enjoying tax-free pension can also benefit from learning about taxes in order to know when to sell their stocks and earn the highest possible capital. 

Investors must also comfortably discuss share’s sales with their financial planners or advisers, who must carefully explain to them what a gain or loss in franking credits could do to their money. 

These strategies will help members avoid capital losses, or even offset any losses, particularly when the pensioner’s account ceases, as a result of his or her death.

Tagged Meg Heffron