Is a Self-Managed Super Fund right for you?

Is a Self-Managed Super Fund right for you?

Before we investigate whether a Self-Managed Super Fund or SMSF is right for you we should explain what is a SMSF?

A self-managed super fund (SMSF) is a superannuation trust structure that provides benefits to its members upon retirement. The main difference between SMSFs and other super funds is that SMSF members are also the trustees of the fund. SMSFs can have between one and four members, and one of the main advantages is the level of control that trustees have when it comes to tailoring the fund to meet their individual needs. This differs from retail and industry super funds, which are designed to benefit a large group of members, meaning decisions are based on collective interests rather than what is best suited to individuals.

What is the first step in identifying if a SMSF is right for you? How much super do I need?

You generally need a reasonable amount of super—or be looking to build up your super quite quickly—to justify the costs of an SMSF. Everyone has a different view of how much is enough to start an SMSF. The Australian Taxation Office (ATO) has said that to have a viable fund, you may need a minimum of $200,000.

While $200,000 might seem like a lot of Super you can combine your super balances with another person for example your partner or wife.

How much time?

There are many tasks involved in managing a SMSF, so it helps to be prepared for the time commitment. As an SMSF trustee you'll need to:

  • monitor your investment strategy

  • stay on top of your reporting obligations and make sure you meet relevant deadlines

  • keep up to date with changes to superannuation laws that could affect your responsibilities as a trustee

  • keep abreast of investment opportunities and performance, and adapt your investment strategy.

While there are added responsibilities and tasks to managing an SMSF an Administrator/Accountant can assist you in the day to day management of your responsibilities and keep your SMSF compliant with Superannuation laws.

How much will an SMSF cost you?

The costs will depend on your circumstances, super balance, investment strategy and how you choose to manage your fund. The more complex you make it, the more it’s likely to cost.

The key difference between a retail Super fund and a SMSF is that retail super funds charge a percentage of your superannuation balance i.e. the larger the super fund balance the larger the fee.  While a SMSF is usually a fixed charge.


For Example;  

Establishment costs (One off); $1500

Ongoing Administration/Accounting costs; Start at $200 per month or $2400 per annum*

*BMR Corporate Solutions.

Who is eligible to become a trustee?

Are any members insolvent or disqualified?

Individuals may not be eligible to be a trustee if they are:

  • classified as an undischarged bankrupt

  • mentally incapacitated

  • charged with certain criminal convictions.

Age restrictions

An individual under the age of 18 can be a member of an SMSF, but not a trustee.

What are the benefits of a SMSF?

More control over your financial future

Investment choice – SMSF’s provide more investment options than any other super fund.

Tax Strategies - Like all super funds, SMSFs benefit from concessional tax rates. In the accumulation phase, tax on investment income is capped at 15 per cent; in the pension phase there is no tax payable, not even capital gains tax. Carefully considered tax strategies can help trustees grow their super savings and reduce tax payments as they transition to retirement

Flexibility - SMSFs allow multiple members to run a mixture of accumulation and pension accounts. Trustees can adjust their investment mix as it suits them, allowing for a fast response to changes in market conditions, super rules or personal circumstances.

Transparency - SMSFs offer significant transparencies that allow trustees to align their personal goals with their investment decisions. Whether you’re passionate about property, shares or sustainable and ethical investing, SMSFs allow you to better understand where your money is invested, with complete visibility over performance and tax treatment. 

Cost - SMSF trustees must lodge an annual tax return and audit, and pay ATO fees (these are capped and not based on a percentage of your super balance). The more an SMSF grows, the more cost-effective it becomes, but the total cost of running an SMSF will depend on the related investments and any costs associated with engaging professional support.

Consolidate super assets - An SMSF allows a trustee to combine their super assets with up to three other members (such as partners or family members). Consolidating super accounts immediately creates a larger fund balance, which increases the fund’s assets and investment opportunities – with only one set of fees.

Important Information

While SMSF have numerous benefits it’s important to consider your particular circumstances before deciding whether a Self-Managed Super Fund is right for you. This information hasn’t taken your circumstances into account. Disclaimer: The article is sourced from Mark Ratcliff of BMR Tax Advisory. HarbourSide Capital does not guarantee accuracy of the information and you should consider the appropriateness of it (and any relevant product) having regard to your circumstances.


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