The Benefits And Challenges of a Self Managed Super Fund

Independent Financial Advice

"Self managed super funds are just that, self-managed.  This allows for an extra level of control over the funds that you wouldn't be afforded with a regular super fund."


A Self Managed Super Fund (SMSF) is a retirement savings mechanism in the form of a trust.  Its purpose is similar to that of a regular superannuation account, but you have more control on how you can invest your funds in an SMSF.  Your SMSF is still regulated by the Australian Taxation Office (ATO), so it is imperative that you have a full understanding of your legal obligations, as well as extensive financial planning and tax knowledge.  In most cases, it would be ideal to employ an Independent Financial Planner to give you personal and expert advice on your SMSF.

There can be up to four members of a Self Managed Super Fund.  Each of whom is responsible for the decisions made about the Self Managed Super Fund and legal obligations around it.  The set-up and maintenance cost of a Self Managed Super Fund can be quite high, so they are most suitable for people with a larger balance to be cost effective.  There is also the benefit of lower fees for some. For this benefit to apply, you should have more than $400,000 in your Self Managed Super Fund.  The average expense ratio of a Self Managed Super Fund with $200,000 - $500,000 is approximately 2.84% per annum, according to the ATO.  IF you have less than this amount in your Super but still wish to explore if a Self Managed Super Fund is right for you, contact your financial planner to discuss your options.

Self-managed super funds are just that, self-managed.  This allows for an extra level of control over the funds that you wouldn't be afforded with a regular super fund.  With a Self Managed Super Fund you are able to take responsibility for the risk profile and investment choices of all of your assets.

There are many tax benefits of having investments in superannuation, primarily giving you the opportunity to reduce income tax on investment income and capital gains.  Your income from your superannuation fund is usually taxed at a concessional rate of 15%, however, to receive this rate you must comply with all of the legislation around an SMSF.  Tax involving your superannuation fund can become incredibly complicated, so it is best to seek advice specific to your situation from an accountant or financial planner.

Another tax benefit is that Franking credits reduce tax on super, as they can be claimed back in a Self Managed Super Fund, which then reduces the tax liability of the SMSF.  To read more on franking credits, read here.

A Self Managed Superannuation Fund Trustee must understand the rules around superannuation and how to apply them. You are required to keep detailed records and complete annual financial statements and have the fund audited. Self Managed Super is not for everyone and it is important to get professional advice to decide if it is right for you.

If you choose to go down the road of a Self Managed Super Fund to provide retirement benefits to you and your family, we recommend you seek the advice of a licensed, and qualified professional to ensure you have all of your responsibilities covered.


Our Independent Financial Planners can help you decide if an SMSF is suitable for you and guide you through the process.  To speak to an expert, contact us today!