happy retired couple sitting at desk with laptop

Top 20 Things to Consider When Setting Up an SMSF

The superannuation system is the cornerstone of retirement planning and an important tool for lowering tax burdens for Australians. It doesn't matter if your retirement savings are held in a conventional superannuation fund or if you're thinking about establishing a self-managed superannuation fund (SMSF), which can offer a variety of advantages not available with conventional superannuation funds, achieving the highest possible rate of return on your investments is dependent on selecting the appropriate investment mix and fee structure.

Have you been giving any thought to establishing a self-managed super fund (SMSF) for a while now? You might have overheard a coworker gushing about his most recent real estate investment, or perhaps your broker casually brought it up in conversation. In either case, you just can't seem to shake the idea that it's about time you took charge of your savings for old age. It is essential to confirm if a self-managed super fund (SMSF) is suitable for you before you gallop through the gates like a horse.

SMSFs give you the flexibility to grow your retirement funds however you see fit by allowing you to invest in whatever you choose. Nevertheless, the management of an SMSF and the investments it holds is not a simple undertaking. As a member of a self-managed super fund (SMSF), you put yourself in a position where you face more risk than you normally would with a traditional superfund, despite the fact that there is a chance that your investments will provide outstanding returns. For this reason, it is essential to take into consideration both the positive and negative aspects of establishing an SMSF.

Over one million investors have made the switch to a self-managed super fund (SMSF) in the past decade, and the Australian Taxation Office (ATO) reports that SMSFs now account for 29 percent of the total value of all superannuation assets in Australia.

However, before you go ahead and establish a self-managed super fund (SMSF), it is essential to figure out whether or not such a fund can assist you in getting more out of your retirement savings.

The following are some things to think about when you evaluate whether or not an SMSF could be beneficial to your financial situation.

Self-managed super funds are becoming increasingly popular in Australia, where there is a market worth $700 billion and close to 600,000 funds are already available (SMSFs).

Here are a few pointers to get you started if you are interested in joining their ranks in the next fiscal year.

What is an SMSF?

A self-managed superannuation fund, or SMSF, is a specific kind of private trust that is established and managed in order to give its members access to retirement benefits. When you establish a self-managed superannuation fund (SMSF) and accept the position of trustee of an SMSF, you are ultimately responsible for the following items:

  • Ensuring that your fund is in compliance with all applicable tax and superannuation regulations;
  • Making judgments on investments for the fund.

The Australian Tax Office (ATO) is in charge of regulating SMSFs; however, they do not have the same level of regulatory scrutiny as funds such as AustralianSuper. For instance, self-managed superannuation funds (SMSFs) are unable to petition the government for compensation (which is funded through an industry fee) in the event of investment fraud or theft, although APRA-regulated funds are permitted to do so. In addition, SMSFs are not subject to the jurisdiction of the Superannuation Complaints Tribunal. This is the body responsible for settling disagreements over superannuation matters, including who is entitled to a death benefit, at no cost to the parties involved.

The Australian Taxation Office (ATO) notes that the administration of an SMSF is subject to a number of stringent regulations. It is against the law, for instance, to use an SMSF in order to gain early access to your superannuation, to purchase a vacation home, or to purchase artwork with which to adorn your home3. Once they have achieved their "Preservation Age," members of an SMSF are allowed to access the money that is held in the fund.

Understand the super landscape

New limits of $25,000 for contributions made before taxes and $100,000 for contributions made after taxes were implemented as part of a slew of reforms made to the superannuation system in 2017. These reforms also increased the financial penalties for SMSF trustees who broke the superannuation rules.

As of the beginning of the 2018–19 fiscal year, new guidelines will be in effect for homeowners in Australia who want to sell their property in order to increase their retirement savings.

Before deciding on an acceptable plan for your retirement savings, you should first familiarize yourself with the current state of the super landscape. The federal budget that was released in May 2018 included even more proposals for reforms to the super system.

Why Do You Want to Set Up a Self-Managed Superannuation Fund?

Where did you first learn about SMSFs, and what prompted you to get started with one in the first place? SMSFs have been gaining more attention than the most recent Kardashian pregnancy – well, almost. This is largely due to the fact that the property market has been booming in many parts of Australia. When you learn the fundamentals of self-managed super funds (SMSFs) or hear about someone else's experience with an SMSF, it's not unusual to immediately begin planning your future as an investing phenomenon.

However, it is imperative that you exercise caution with regard to any advice that is provided to you. Because SMSFs are considered licensed financial products, the only people who are legally permitted to recommend them to you are individuals who have certain qualifications in the financial industry. Talk to a registered financial advisor if you want an accurate and legally sound conversation on whether or not a self-managed super fund (SMSF) is good for you.

Will investing in an SMSF work out to be more affordable than other options?

Every investment choice ought to be as cost-efficient as possible. If switching from your current traditional superannuation fund to a self-managed superannuation fund (SMSF) will result in a lower net return than what you are currently achieving, then establishing an SMSF may not be the best thing for you to do at this time. However, if the costs involved in switching to an SMSF are comparable, then making the change could be very beneficial because it will open the door for greater control, transparency, and diversification with your superannuation. If the costs involved with switching to an SMSF are comparable, then making the change could be very beneficial.

If you already have a substantial amount saved in superannuation, selecting SMSF could provide you with a favourable cost-benefit ratio.

Establishing a self-managed superannuation fund (SMSF) does not require a minimum balance; however, according to information provided by ASIC on self-managed superannuation funds, balances of less than $200,000 may not be cost-effective.

Having said this, one of the primary advantages that SMSFs have over conventional superannuation funds is that the annual charges are often levied at a flat accounting rate rather than being dependent on a percentage of the fund's assets. This means that the expense involved with maintaining your SMSF is not dependent on your superannuation balance, unlike the cost required to run a standard superannuation fund. This is in contrast to the cost required to manage a typical superannuation fund. You should be aware, on the other hand, that the specifics may change depending on the balance, contributions, and objectives you have set for your retirement.

It is essential that you carry out a cost comparison specific to your situation before establishing an SMSF. This will allow you to determine whether or not the SMSF has the potential to be a financially rewarding choice.

Is the type of retirement savings you already have a defined benefit?

When your last average income and the number of years you worked for a company or a government department are factored into the calculation of your superannuation balance, you have what's known as a defined benefit. This type of benefit can be provided by a corporation or a government agency.

A little less than ten percent of Australians have accounts with specified benefits for their superannuation, while the remaining ninety percent have accumulation accounts.

There are potential repercussions associated with rolling over portions of your superannuation benefits from a defined benefit super fund into a self-managed super fund (SMSF), despite the fact that you might be entitled to do so. It is vital to seek guidance before establishing a self-managed super fund (SMSF) if you already have a super fund with a defined benefit. There is a complexity that needs to be evaluated by a trained professional who has the experience to assist you in making an informed decision.

Assemble your team

Another issue you need to ask yourself is whether or not you have the time and the knowledge to handle a self-managed super fund (SMSF), which includes the administration, the selection of investments, and the management of taxes. If this is not the case, it is highly likely that you will require the advice of a financial advisor, broker, or accountant.

Because SMSFs demand specialized knowledge, while choosing the members of your team, you should inquire about their prior experience and credentials in this field. You can search for SMSF specialists in your area with the use of the "Find a Specialist" tool, which is made available to you by the SMSF Association.

A reliable online administration system makes it easy to administer your self-managed super fund (SMSF). It provides accurate benchmarks, real-time reporting, and data-swapping between all parties involved, such as your bank, accountant, financial adviser, and online broker.

Are You Ready to Take on the Responsibilities?

Additional obligations come into play when you take control of your own retirement savings and invest them in a self-managed super fund. For instance, it is up to you to perform an exhaustive study into the many investment possibilities available to you and devise an investment strategy that is appropriate for your retirement savings. When you have a self-managed super fund (SMSF), as opposed to a traditional super fund, you are the one who is accountable for how well your investments do. This implies that you and your level of investment expertise will determine whether or not your investments are profitable.

In addition, depending on the asset you choose to invest in, you may have additional duties to take into consideration. If you decide to use your SMSF to make an investment in real estate, for instance, you will be responsible for purchasing the property, finding tenants for the property, maintaining the property, and ensuring that tenants pay their rent on time. If, on the other hand, you choose to invest your SMSF in cryptocurrencies, you will be responsible for purchasing the cryptocurrencies from the appropriate exchange, securing the storage of your cryptocurrencies, and regularly monitoring the investment in order to ensure that you do not miss any key trades.

It is essential that you are aware that, in the majority of cases involving self-managed super funds, you will be the one who is accountable for the auditing, compliance, and tax duties of your fund.

Senior Happy Couple Shaking Hand With Financial Advisor

Are you familiar with the duties involved in managing your Superannuation fund?

Setting up a self-managed super fund (SMSF) and maintaining it both come with a set of legal responsibilities, and just like the sole purpose test, these responsibilities are there to ensure that your superannuation fund remains compliant while still providing you with a benefit when you reach retirement age.

Because the SMSF Trustee is responsible for handling certain obligations, if you decide to establish an SMSF, you will either need to be prepared to undertake the work on your own or have the appropriate professional support available to you.

Principal Responsibilities Assumed by SMSF Trustees:

  • Taking responsibility for ensuring that a yearly tax return for the Self-Managed Super Fund is prepared and submitted to the ATO;
  • observing the rules that apply to the SMSF trustee;
  • Maintenance of precise records;
  • determining the fair market value of the fund's holdings;
  • ensuring compliance with applicable legal duties and ensuring that your Self-Managed Superannuation Fund is on track to meet the requirements of its members once they reach retirement age;
  • Putting in place and maintaining an investment strategy that is kept up to date;
  • taking into account the most suitable insurance protection for the fund's participants;
  • Putting into action and documenting choices regarding how the fund should invest its money, as well as frequently reviewing the performance of investments.

Before you set up a self-managed superannuation fund (SMSF), you should probably consult with a financial advisor. This person will take you to step by step through the legal requirements, and they can help you put everything in place to make sure that your SMSF continues to be compliant. It is essential to keep in mind, despite the presence of professional assistance, that the duty for your SMSF continues to legally lie with you in your capacity as a trustee.

Establish the groundwork for success

Choosing the number of trustees for your fund is a necessary step before establishing a self-managed super fund (SMSF). You have the option of being the only trustee, but you could also choose to include your spouse or other members of your family. You also have the option of selecting a corporate trustee.

With a self-managed super fund (SMSF), in contrast to traditional super funds, you and up to three other individuals can pool your super fund balance. Even if you individually have the assets that are given to you inside the fund, the remaining balance can also be invested as a whole, giving you the opportunity to invest in assets that have a higher value.

However, it is essential to keep in mind that sharing investments with other people is fraught with its own set of inherent dangers. You are all obligated to take on a proportionate amount of the duty for maintaining the Superfund, and you must be ready to deal with any contingency, be it a member's passing, bankruptcy, or a decision on their part to dissolve the fund.

The next thing to do is to sign a declaration, and then you'll need to get a trust deed drawn up. The trust deed lays out the operational guidelines for the fund, including the authorities granted to trustees and the requirements that must be met before members can receive rewards.

It is crucial to make sure that your deed is adapted to satisfy the specific requirements of your fund; therefore, it is recommended that you seek the counsel of a lawyer.

After putting together your fund, the next step is to register it with the ATO, during which time you will also need to acquire an Australian Business Number and a Tax File Number. After then, it will be necessary for your fund to submit an annual tax return, have an annual audit conducted, and pay an annual supervisory levy.

A management strategy for combined SMSF balances

In the context of the accounting for the SMSF, the individual members' superannuation balances are still kept separate from the combined amount that is invested jointly, despite the fact that the combined balance is invested. The annual reporting requirements of the SMSF require that a calculation be performed that determines the percentage of each member's holdings. This calculation takes into account not only the various starting balances but also the various amounts that each member contributed to the fund over the course of the year. The members of the SMSF each receive a percentage of the income generated by the fund in proportion to the number of funds they hold.

It is important to keep in mind that a Self-Managed Superannuation Fund (SMSF) can have a Pension account for one or more members, even if the members of the fund have different retirement ages, and that those members can continue to contribute to their accumulation account even if there is a difference in the ages of those members (s). In addition, this indicates that one or more members can withdraw a pension stream from the SMSF, even while the remaining members can keep making contributions to their accumulation account, which is a component of the same SMSF

Are you considering transferring assets from your name into a Self-Managed Superannuation Fund?

When you make a contribution to your retirement fund in the form of an asset rather than cash, this is known as an in-specie contribution. It is possible to transfer a wider variety of asset classes into a superannuation fund if the fund is managed by a self-managed super fund (SMSF), despite the fact that all superannuation platforms have the capacity to accept contributions made "in-specie." An in-specie transfer of business property is one illustration of a transfer that is possible.

Be aware that in-specie donations can only be used for investment purposes, and that, with a few exceptions, the members of an SMSF are prohibited from using the assets for their own personal use and enjoyment (please refer to the sole purpose test outlined above). You may be able to consolidate investment assets under the tax-advantaged umbrella of a Self-Managed Super Fund through the use of in-specie transfers. This means that rather than being taxed at the rate of your marginal tax bracket, you will only be taxed at the standard SMSF tax rate of 15 percent on the returns achieved from the investments after the transfer has been completed. red into an SMSF account.

investment growth with coins with house

Plan the next steps to take

SMSF trustees are required by law to create and implement an investment plan for their fund, as well as to regularly evaluate and assess the effectiveness of that strategy.

When developing a plan for your investments, you should take into consideration the following areas:

  • What are the goals that the fund is trying to accomplish? Providing members with benefits from their superannuation plans that will meet their needs in retirement is one example of a responsibility that falls under this category. Other responsibilities include maximizing the fund's effectiveness with regard to taxation and ensuring that the fund can cover its costs.
  • Which categories of investments are eligible to be held by the fund, and what percentage of total assets should each category represent?
  • Will your fund provide its members with insurance coverage, such as life insurance or disability insurance?
  • What is the level of risk that the fund is willing to take? For instance, when exactly do the members intend to retire, and to what extent are they willing to expose themselves to risk and volatility in the market?

Is Your Super Balance High Enough to Make it Worthwhile?

At Klearpicture, our goal is to give all Australians, regardless of the amount of money in their super fund, the ability to exercise control over their retirement savings.

Having said that, it may not be beneficial for you to establish a self-managed super fund (SMSF) if you do not already have a substantial amount of money in your existing super fund. That is not to say that you are unable to exercise control over your finances on a more manageable scale. Rather, it's possible that your ability for returns will be outweighed by the continuous expenditures of administering an SMSF.

Before establishing a self-managed superannuation fund (SMSF), you should consult a trained financial advisor about the specific fees that your investment strategy would incur. You should also consider if your existing fund will outperform an SMSF and for how long this would be the case. Even if a self-managed super fund (SMSF) is not the perfect choice for you right now, there is still a chance that it will be in the future.

Are you considering using an SMSF to borrow?

Because of the "instalment warrant provisions," both traditional superannuation funds and self-managed superannuation funds (SMSFs) are now authorized to take out loans. This translates to the fact that all superannuation funds are permitted to utilize margin loans in order to engage in shares. The capacity to borrow money under a limited recourse borrowing arrangement in order to make direct property investments is the primary value proposition that self-managed superannuation funds (SMSF) bring to the table (LRBA).

In order to put into action a limited recourse borrowing arrangement (LRBA), an SMSF will need to establish a new "bare trust" to facilitate the financing arrangements with the lender. While the SMSF will hold a beneficial interest in the property, the bare trust will be responsible for the legal obligations associated with the property.

An SMSF will be in violation of the governing guidelines and could lose its compliant status if the borrowing structure is not set up correctly. This can happen if the structure is not set up correctly. The SMSF stands to lose up to roughly half of the market value of its existing assets if it is found to be in violation of such requirements, which can result in penalties. To this aim, ensuring that the borrowing structure is appropriate from the very beginning is essential to ensuring the members' safety.

You will need to consider insurance

When you establish a Self-Managed Super Fund, one of the responsibilities you have is to ensure that you have appropriate life and total and permanent disability insurance in the event that you pass away or become permanently unable to work as a result of an accident, illness, or injury. Because maintaining SMSF compliance is a necessity, it is essential that your consideration for insurance be documented and reviewed together with your investment strategy. This is because it is a requirement that is included under the heading "Investment Strategy."

It is important to take into account any major shifts in your health status that have occurred since the insurances in your present superannuation fund were set up (or updated, as the case may be) before evaluating your options for insurance coverage. To determine whether your current cover is superior to any replacement cover that you will be able to source, it is important to examine the benefits that are associated with your insurance in your existing fund. This can be done by looking at the benefits associated with your insurance in your existing fund.

You can get assistance with this from a financial advisor, and if you want to keep your current insurance, you can keep a small balance in your existing superannuation fund to maintain your insurance coverage while transferring the majority of your funds into a newly established SMSF. If you do this, you will be able to keep your existing insurance.

Put it in action

Since you've already laid the groundwork, it's time to start making investments.

Making certain that your SMSF diversifies its holdings in an appropriate manner is one of the best things you can do to reduce portfolio risk and boost profits. Investing in a limited number of Australian companies, which leaves the portfolio excessively dependent on the performance of just one or two industries, is a mistake that is made by many trustees of SMSFs. This is a prevalent issue.

A well-balanced investment portfolio will comprise both high-risk investments, such as global and Australian shares and property, and lower-risk assets, such as cash and fixed income. High-risk investments come with the potential for higher returns.

Remember that establishing a self-managed super fund (SMSF) is not a "set it and forget it" strategy; rather, it needs to be reviewed on a regular basis to ensure that it is providing the anticipated retirement results for all of its members.

sold sign on house

In what do you plan to make an investment?

When you join a typical super fund, the majority of your money will most likely be invested in cash and shares. A Self-Managed Superannuation Fund, on the other hand, enables you to diversify your investment portfolio into a variety of assets, including real estate, collectibles, cryptocurrencies, and so on. Therefore, you need to ask yourself, "What am I going to invest in?"

Due to the fact that many Australian real estate markets have outperformed other investment classes in recent years, many people start an SMSF with the intention of investing in real estate. While it is essential to have a clear vision of where you want to direct your investments, it is equally essential to maintain an open mind and consult with an SMSF specialist. It's possible to end up with a fund that's not very diversified if you start your SMSF with the intention of investing in real estate. Think of your Self-Managed Superannuation Fund (SMSF) as a long-term investment project. This project may initially entail real estate, and it may eventually include other investments to help you better balance and strengthen your portfolio.

Also, you should investigate the credibility of the sources from which you obtain advice. As was just indicated, the only legitimate SMSF advice you should take is that given by a trained professional. When it comes to real estate, in particular, you'll find that everyone has an opinion about the property to share with you over a sausage sizzle. Because investing in an SMSF is considerably different from investing in a personal account, you should approach each recommendation with a healthy dose of caution.

Are You Aware of the Limitations That Apply to the Assets That Are Held Within the Fund?

This is a vital question to ask yourself if you've decided to start an SMSF because you have a strong interest in a certain type of investment. According to the legislation governing SMSFs, trustees are prohibited from participating in any investment activity that fails the sole purpose test.

The single purpose test examines each investment to see whether or not it is considered to have the sole goal of contributing to the expansion of your retirement savings.

Therefore, if you want to utilize your SMSF to make investments in vintage cars, houses, or collectibles that you intend to use or maintain yourself, an SMSF is probably not the best plan for you to adopt. It is against the rules for members of an SMSF or anyone else linked with the SMSF to improve, maintain, utilize, or occupy assets that are owned by the SMSF. Sorry, but your dream vacation house can't be owned by your SMSF.

What is the strategy behind your investments?

You need to have a documented investment strategy in order to start an SMSF. Even while you might not be able to definitively answer this question in the very beginning phases of determining whether or not an SMSF is appropriate for you, you still need to make sure that you are prepared to do so in the future. Members of an SMSF must provide evidence of their intended investments and the rationale behind those choices as part of the fund's investment strategy. This requires having a solid understanding of investment procedures and the profits that may be expected from those procedures.

You can decide to go with a cash flow investment plan, which entails choosing investments depending on whether or not an asset has the potential to provide positive cash flow for the investor. Capital growth investing is a strategy that involves making investment decisions based on an asset's potential for value growth for resale. This strategy is preferred by some investors but not all.

Are you thinking about investing in real estate with a self-managed super fund (SMSF)?

When a Self-Managed Superannuation Fund (SMSF) invests in direct property, it is prudent for the fund to retain a minimum level of liquidity in the form of cash, bonds, or shares to pay any continuing costs. If your self-managed superannuation fund (SMSF) uses borrowed money to purchase investments, the fund will have certain minimum liquidity requirements that you will be responsible for meeting.

The required level of liquidity might vary from lender to lender. For example, some lenders ask that 10 percent of the SMSF's net assets be held in liquidity, while others need that 10 percent of the loan amount be retained in liquidity. Lenders' liquidity requirements are generally in addition to deposit requirements. These liquidity and deposit criteria must to be taken into consideration while formulating the investment plan for your SMSF.

The sole purpose test explained

According to the sole purpose test, the Self-Managed Super Fund should only be maintained for the purpose of paying retirement benefits to its members and the members' dependents. This indicates that there are limitations and regulations regarding the types of investments that an SMSF can make as well as the ways in which these investments can be used while the SMSF is in possession of the assets.

If you are trying to establish an SMSF so that you may buy a home to live in, purchase a business that you can operate, or even buy a one-of-a-kind AC Shelby Cobra so that you can enjoy the odd Sunday drive, the unfortunate reality is that you cannot!

In addition, it is highly likely that there has been a violation of the sole purpose test if a trustee of a super fund, a member of a super fund, a relative of a member, or anyone else connected to a member of the fund enjoys a benefit, either directly or indirectly, from their superannuation before meeting a condition of release.

There are several exceptions to this rule, such as the business real property exception, which enables a related party of an SMSF to purchase a commercial property (with money from the SMSF) that is then rented back to their own firm. When establishing an SMSF, it is important to be aware of the specific criteria that must be satisfied in order to ensure that this exception to the rules governing the acquisition of in-house assets and those from related parties is exercised in a compliant manner. This can provide business owners with an attractive incentive, but it is also important to note that there are specific criteria that must be satisfied.

Trustees of a self-managed superannuation fund (SMSF) are responsible for developing an investment strategy for the fund that takes into account both the methods and investments that will be necessary to realize the fund's goals.

A Self-Managed Superannuation Fund (SMSF) is required by law to have an investment strategy in order to comply with the appropriate superannuation legislation. An investment strategy for an SMSF lays out the goals that your fund has for its investments and details the different kinds of investments it is allowed to undertake.

Your SMSF investment strategy needs to be documented and should take the following into consideration:

  • The degree of risk that the member is willing to take
  • This boils down to whether or not everyone involved can get a good night's rest without being troubled by concerns about the potential loss of the money they've invested.

The SMSFs liquidity requirements

The needs of the fund in terms of liquidity will be determined by factors such as the members' individual situations and stages of life. If you use borrowed money to buy investments for a self-managed super fund (SMSF), you will need to make sure that there is sufficient liquidity available to satisfy the needs of the lender and pay the borrowing expenses.


Trustees of self-managed superannuation funds (SMSFs) are now required to consider whether the fund should hold insurance cover on the lives of the members, as a result of changes made to the Superannuation Industry Regulations 1994 Act in response to a finding by a Super System Review Panel in 2010 that only 13 percent of SMSFs have insurance coverage. Along with the investment strategy of the fund, this requirement needs to be examined on a consistent basis. This topic is elaborated upon in the following discussion.

Distribution of Assets

During the near term, returns on various asset classes might vary greatly from one another; however, over the course of a longer period of time, these returns tend to converge toward one another with a significantly smaller spread. This is one of the reasons why it is essential to have a diverse investment portfolio that is invested for the long term. It is important that the asset allocation of an SMSF reflect both your risk profile and your retirement goals. This will ensure that the SMSF provides you with the appropriate asset mix to help you achieve your retirement goals while maintaining an acceptable level of risk.

Which Type of Organizational Structure Will You Choose?

There are two different organizational structures that SMSFs can take on: individual or corporate. Both structures have the potential to incorporate a large number of members, however, in the case of the individual structure, there must be a minimum of two members. Because of this, if you want to establish an SMSF by yourself, you will need to select a corporate structure as the organization type.

Although an individual structure could be less expensive, it is typically more difficult to add or remove members from a trust when using an individual structure. As a direct consequence of this, it may also be challenging to transfer ownership of your possessions. On the other side, if you have your own individual structure, you could have to comply with a less number of regulations. However, the penalty fees will apply to each and every participant in the fund if your trust is penalized by the ATO for not being compliant with the regulations.

In contrast, a corporate structure necessitates the establishment of a firm that will serve in the capacity of a trustee for the fund. When the fund is organized as a corporation, it is typically simpler and less expensive to get new members on board or kick out existing ones. When members are joined or withdrawn from the fund, the legal ownership of the assets will not change because the fund is being managed by a corporation that is also functioning as a trustee for the fund. Your SMSF will be required to comply with corporate legislation if it is structured as a corporation. On the other hand, any penalty costs imposed by the ATO on the SMSF will only apply to the corporate trust and not to each individual member of the fund.

If you are thinking about establishing an SMSF, the following checklist can assist you in determining whether or not it would be beneficial for you:

  • Where can you get the best profits from your superannuation? Will the performance of an SMSF be superior to that of your present fund?
  • Would the ongoing expenses of your self-managed super fund be more or fewer than those of a traditional super fund?
  • Do you feel that you have the time as well as the motivation to administer and run the SMSF?
  • Do you have the knowledge and experience necessary to run the fund, including in the areas of finance and the law?
  • Do you wish to take on the responsibility of operating the fund, which includes the responsibilities related to legal matters and reporting, as well as the possibility of having to pay fines if something goes wrong?
  • Will the benefits you receive from your existing funds, such as subsidized life, income protection, or disability insurance, be affected?
  • In the event that your relationship with the other trustees should become irreconcilable, would you be able to continue managing the SMSF?


Before establishing a self-managed super fund (SMSF), all of the ten considerations that have been outlined above should be taken into account. However, as is the case with all decisions regarding superannuation, the deciding factor should be whether or not an SMSF will better enable you to achieve your retirement goals and objectives.

One of the most important things you can do to strengthen your financial position for retirement is to ensure that your superannuation is set up to function as well as it possibly can throughout your working life. A self-managed superannuation fund (SMSF) has several advantages over a regular superannuation fund. The extent to which you may reap these benefits, however, will be influenced by factors such as your current financial standing, the types of investments you choose, and the amount of time you have available to make investments.

If you do decide to establish a self-managed super fund (SMSF), doing so is a fantastic opportunity to have a greater degree of control over your superannuation and to personalize an investment strategy that is uniquely tailored to the aims and ambitions you have for your retirement.

Scroll to Top