Considering a SMSF? Here's what you need to know.

16 May Considering a SMSF? Here's what you need to know.

Posted at May 16, 2022 11:33:44 AM in articles by yield advisory

It’s always a good idea to think about your retirement. Many people in Australia use a Super Fund to manage their retirement savings. But some people opt to do something a little different, and set up a self-managed super fund (SMSF). 

According to the latest ATO statistics, over 1.1 million people have an SMSF that hold over 25% (3.3 trillion) of super assets.

Some of the benefits include:

    • Greater flexibility with tax.
    • Greater control over investments (A lot of clients in this space hold either direct shares, residential or commercial property)
    • Potentially lower fees on higher balances
    • Estate Planning benefits


What is an SMSF? 

At a basic level, setting up an SMSF means creating a trust which has either individual or corporate trustees. These trustees manage the fund assets, and look after legal compliance, including auditing and reporting obligations. 

For people who are prepared to look after the legal and financial elements of running a fund, entering into an SMSF can mean more control over how funds are invested, over fees paid and over what insurance is taken out. 


What is an SMSF for? 

Any SMSF must have the same purpose. That is, to provide retirement benefits for fund members and their dependants. Any decisions made by trustees must be in line with this aim. Using the funds of an SMSF for anything else isn’t just unethical but is actually illegal. 

An SMSF isn’t for: 

  • Early access to superannuation 
  • Investing in art or collectible for decorative purposes or personal use. 
  • Buying holiday homes. 

Becoming a trustee 

One of the main differences between an SMSF and other types of funds, is that in an SMSF the members are also the trustees and assume the compliance risk. If the SMSF is found to have breached the law, the trustees or the director, can be personally fined. 

In addition, if there are disputes between the members, the ATO will not become involved. If the situation is serious enough, mediation or court may be an avenue but these routes will be at the members’ expense. 

Understandably, the decision to become a trustee is a major one and needs careful consideration and professional consultation. 


Updates to SMSF fund structures 

Changes on 1 July 2021 mean that SMSFs can now have a maximum of six members, an increase from four. It’s important to note that as an SMSF is a type of trust, the number of trustees may still be restricted to less than six by existing state and territory laws. As always, it’s a good idea to seek professional advice before structuring your fund. 

Learn more from the ATO 


We recommend you speak to one of our advisors to help you determine whether a self managed super fund might be right for you. Contact us today to make an appointment.