Self-managed super funds (SMSFs) are private superannuation funds managed by individuals. They're created to offer financial support to members upon retiring. SMSFs are also meant to provide for and protect your loved ones after your passing away. An SMSF can't have over six members, and as a member, you're the fund's trustee, or you can consider getting a corporate trustee. 

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While SMSF members have complete flexibility and control over how they invest their money, understanding everything about them can help you make an informed investment decision. Discussed below is everything you need to know about self-managed super funds.

1. Setting up and managing a self-managed super fund costs money

An SMSF's setup and ongoing costs can be high, and while some expenses might be tax deductible, most are out-of-pocket. The fees paid for SMSFs might be higher than you would pay in other types of super funds. Each year you have a self-managed super fund, and you must pay for independent audits plus supervisory levies. Most super funds also pay for extra help, including:

SMSF’s asset valuation

SMSF annual return preparation

Financial advice

Members’ insurance

Help with fund administration

Legal fees
Since the fees can be hefty depending on your fund’s complexity, it's essential to look at pricing for self-managed funds before saving in these funds to ensure you can keep up.

2. Who regulates SMSFs?

As an SMSF trustee, you’re solely in control of your fund, so it’s important to know the laws and regulations governing SMSF operations. While the Australian government sets the laws, the SMSFs are regulated by government agencies.

The Australian Taxation Office is responsible for administering the tax system and managing the SMSFs according to the SIS Act

ASIC (Australian Securities and Investments Commission) regulates financial services such as insurance, super, and investment while enforcing laws to ascertain honesty and fairness in Australian financial products, companies, markets, and services ATO and ASIC work in partnership with one another to manage SMSFs.

3. Why set up an SMSF?

SMSFs are a popular retirement saving option that offers multiple benefits, including:

A secure retirement income: SMSFs are primarily established to ascertain that holders have secure, stable income when they’re no longer working. Once an SMSF member is over 60 years old, their pension income, when triggered, is tax-free. Additionally, they don't have to lodge personal tax incomes yearly

An investment opportunity: As an SMSF trustee, you have the power to choose investments for your fund, provided you meet the relevant superannuation regulations plus the SMSF strategy surrounding investment choice. Your self-managed super fund can invest in commercial and residential properties, government bonds, shares, overseas investments, gold, startups and more

Estate planning: The SMSF is one of the most tax-effective, targeted, and flexible mechanisms to provide a member's spouse, children, or grandkids with income streams or lump sums following the member's death

Flexibility and control: Since SMSF members are the trustees too, there's the flexibility to tailor the SMSF rules to suit their particular circumstances and needs. Also, you're in control of your fund investments, which lets you make fast changes concerning your portfolio to leverage unexpected investment opportunities or due to market changes

4. How to set up a self-managed super fund

Once you’ve settled on an SMSF as your retirement saving option, you must set up the fund. It involves:
Establishing a trust

To register your SMSF with ATO, you must establish a trust first. The trust should have:

Identifiable beneficiaries


Intention to develop a trust

Getting the trust deed

This document sets the conditions and rules under which the fund will run. A trust deed should be prepared by an acknowledged deed provider or legal practitioner who understands SMSF-related superannuation laws. It should also be established to offer trustees optimal flexibility and control. Once the trust deed is ready, the trustees should execute it based on the rules relevant to their state

Signing a declaration

If you're an SMSF trustee or corporate trustee director, you must sign a declaration form indicating that you're aware of your responsibilities, duties, and obligations. This declaration should be in the certified form and completed within 21 days of becoming a trustee. The completed declaration must be kept for no less than ten years. Also, you should avail it to ATO whenever requested.

Lodging an election with ATO

Within 60 days of an SMSF’s establishment, trustees should lodge an election to be ATO-regulated. Failure to lodge an election notice will result in the SMSF not being considered a complying fund for tax reasons. As such, the super fund is taxed at the maximum marginal tax rate.

Create a cash account

Opening a cash account enables the SMSF to accept contributions, investment earnings, and rollovers. You'll also need the account to pay taxation obligations, accounting fees, and other expenses.

5. Your responsibilities

Once you create an SMSF, you are in control, meaning you’re responsible for the fund’s investment choices and tax and super laws' compliance. Failure to adhere to these laws may result in:

The SMSF losing concessional tax privilege


Getting disqualified from the fund



SMSFs are perfect for retirement savings, so knowing everything about them can help you determine if it’s the best option for you.