So what is this thing that everyone is talking about called a Self Managed Superannuation Fund (or SMSF).

It is basically a superannuation fund of no more than 4 people known as “members” who are also the “Trustees”. (Some people e.g. a   bankrupt person cannot be a member of a SMSF so be careful).  So how does this differ from a large commercial fund such as AMP or MLC or an Industry Fund such as Hesta or REST?

As Trustees you are in control of how your money is invested (your investment strategy). It is the desire to have more say in how your money is invested and to be able to access investments such as property that is the most common reason for setting up a SMSF. There are other reasons such as; lower costs, control over the tax position of your superannuation, looking after your family (i.e. Estate Planning), the ability to borrow, pension planning and asset protection.

However with the gain comes some pain and you also have the responsibility of making sure that the fund complies with the rules (being the fund’s Trust Deed and the Superannuation Industry Supervision Act (SIS Act)) or you can incur significant penalties.



After determining who is going to be in the fund (best to keep this simple after all you are all responsible for each other’s money) and whether you will have a Corporate or individual Trustees, you need a set of rules known as the Trust Deed; these are usually purchased from a reputable lawyer.

The fund then needs to be registered with the Australian Taxation Office to obtain a Tax file number and ABN. This will enable you to set up the fund’s bank account and roll in money from your other superannuation funds if that is what you want to do.   Once the rollovers are complete, you can then formulate the fund’s investment strategy (which must comply with the rules) and invest the money accordingly.

Once the fund is established, all of the fund’s expenses and income (including further contributions) goes through the fund’s bank account and at the end of each financial year the fund must prepare an annual return which includes financial statements and a tax return. This must be audited by a qualified auditor before being lodged with the ATO.




It is relatively straightforward to set up a fund; the main cost is the Trust Deed and the purchase of a company to be the Trustee (if this is what you choose).

We can purchase the Trust Deed and a company to act as Trustee as well as set up a bank account; register with the ATO and rollover any existing superannuation for a set fee of $2,200.

You may also want assistance in formulating your fund’s investment strategy; our financial planning staff can help you with this for $550.

Ongoing Costs

The ongoing costs of a SMSF can be classified as compliance or investment costs which are mandatory or advisory which is not.

Compliance costs typically include fees for the preparation of the fund’s annual return which includes the financial statements and income tax return (this can cost between $1,750 and $5,500 depending on the complexity of your fund).

The fund will also incur a fee to be audited and this is typically between $550 -$1,100.

The ATO also charges a supervisory levy which is currently $191 increasing to $259 in 2013/14. If the fund has members receiving pensions from the fund, your fund may have to pay for an actuarial certificate to gain the income tax exemption. This is typically $165 – $550 depending on the type of certificate.

The investment costs incurred depends on the types of investments your fund holds. For example brokerage will be payable if you transact in direct shares or fund managers will charge a fee if you invest in a managed fund which is generally deducted from your investment returns. Alternatively you may incur costs associated with holding a property (such as agent’s commission, rates etc.).

Your fund may also incur advisory costs if you engage a financial planner to provide advice and administer the funds’ investments or a SMSF specialist to provide you with strategic advice.

Financial planners fees will typically be either a set annual fee (this will vary depending on the level of service offered. For example our service packages range from $2,500pa to $15,000pa) or a percentage of the fund’s assets (generally between 0.5% -1.0%).

Strategic advice is typically charged on an hourly basis or as a set fee per project. You can expect to pay $250 – $400 per hour for strategic advice however make sure the person is suitably qualified and experienced in SMSF’s.




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