Can You Be Paid for Any Work You Perform for Your SMSF?
If you've decided to manage your own superannuation program and set up a self-managed super fund, or SMSF, you may wonder how hands-on you can be when it comes to certain aspects of its management. In particular, you may want to know if you can perform work related to owned assets and raise an invoice to the fund for your services. You may also want to know if you can charge the fund for all the work that you perform to administer the program going forward. What do you need to know about these questions?
Managing Your Fund
Generally speaking, the trustee of an SMSF cannot be paid for any work they do in managing the fund. There are grey areas that may apply if you are a professional manager of some kind as part of your everyday occupation. If you are qualified to provide a certain level of service to the fund professionally, you may be able to raise an invoice to the fund instead. However, this can quickly become challenging, especially when it comes to taxation and other issues.
Performing Work at Arm's Length
When you decide to charge your SMSF for work that you do, you need to ensure that it is handled at arm's length. This means that any charges raised must be clear and transparent, and you should invoice at the relevant market rate. You'll need to generate the appropriate documentation and keep this saved for further analysis. Otherwise, you may get attention from the tax authority.
Treading on Thin Ice
If you don't treat this situation at "arm's length", it may look as if you are potentially inflating the earnings of the fund. You may find that a higher marginal tax rate is charged, and capital gains may also come into the picture. So don't consider taking on certain elements of work at no charge simply because it's "your fund." You may end up breaching certain superannuation rules and generating more problems than you'd like.
Likewise, it's not a good idea to take on work for your SMSF and then try to charge rates above market value to earn more money for your efforts in this way. Again, you may well be breaching superannuation rules and treading on thin ice.
Asking the Professionals
Many people in this situation will simply choose to outsource the work to a known professional, even though they may well be able to do it themselves. But if you're not sure, you should certainly consult a qualified accountant and ask them to take a closer look at your plan.
For more information on self-managed super funds, contact a professional near you.
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