SMSF Setup

Setting up an SMSF can be complicated.  Not getting it right can materially affect your financial situation and retirement plans.

The first question you need to be sure about is whether an SMSF is the right fit.  Seeking specialised financial advice can help you determine this answer. Some considerations include:

Low balances

You must ensure you have an appropriate superannuation balance before considering an SMSF. While a low balance can be a red flag, it is not always a barrier to entry.  Establishing an SMSF with a small balance may not be in your best interests. This is because SMSFs tend to be more cost efficient with larger balances. Therefore, before rolling over your superannuation balance to an SMSF, you should establish and justify that by doing so you are likely to end up in a better position in retirement.


You must also understand your motivation for establishing an SMSF. The most common motivation SMSF trustees indicate is control. Control of an SMSF allows individuals to have a wide range of investment choice, flexibility and engagement with their superannuation. However, superannuation law is complex and you need to ensure your ambitions are allowed under the law and will be able to achieved in an SMSF.

Costs and time

SMSFs incur a wide range of costs in establishment and the day to day running of the fund. Ensure you are across the estimated establishment, accounting and audit costs that will be incurred by your SMSF. Speak with your advisers so you are across all other incidental costs, which unlike large super funds generally occur with fixed rates rather than as a proportion of your balance.

SMSFs also require dedicated attention from trustees which will take time out of your daily life to manage. Understanding from the outset your legislated responsibilities and obligations before establishing an SMSF is important.

Establishment process

Once you have decided that an SMSF is right for you, the process of establishing the fund can commence. A Specialist SMSF adviser is the best person to help you with this process which generally involves choosing a trustee structure, selecting a trust deed, completing the ATO registration,  opening the fund back account and arranging for rollovers to the fund to occur.

Investment Strategy and Insurance

Upon establishment you must also create an investment strategy which must be regularly reviewed.

Your investment strategy should be in writing and must consider:

  • Diversification (investing in a range of assets and asset classes).
  • The liquidity of the fund’s assets (how easily they can be converted to cash to meet fund expenses).
  • The fund’s ability to pay benefits (when members retire) and other costs it incurs.
  • The members’ needs and circumstances (for example, their age and retirement needs).
  • Whether to hold insurance in your SMSF.

Property investment

It is also common for SMSF trustees to be motivated by investing in property when establishing an SMSF. You should be sure that any investment in property, particularly when gearing is involved, is appropriate for your circumstances. Holding properties in an SMSF can also require some complex structures to ensure the law is being followed and specialist advice may be needed before making an investment choice. A lack of diversification, low balances and inappropriate property investments can have a detrimental impact on your retirement savings.

Frequently asked questions

An SMSF is a superannuation trust structure that provides benefits to its members upon retirement.

The main difference between SMSFs and other super funds is that SMSF members are also the trustees of the fund.

One of the main advantages is the level of control that trustees have when it comes to tailoring the fund to meet their individual needs.

This is especially advantageous when you are ready to purchase a commercial property for your business.

The setup of an SMSF is not as expensive as many think.

With a corporate trustee registration, including ASIC fees, TFN and ABN application you are looking at fees of $1,650. Keep in mind, that you also need a statement of advice directing you to setup an SMSF (this is the important part, as you would not want one if it wasn’t right for you), which costs $1,100.

There are additional costs if you need a bare trust setup for limited recourse borrowing.

For SMSFs to be cost-effective, generally you need a starting balance of at least $300,000 and an expectation that the fund will continue to grow (for example if you plan to work and contribute to your super for the years to come).


In addition to establishment costs, including a trust deed and creation of a company to act as a corporate trustee (if applicable), some of the ongoing costs associated with running an SMSF include

  • an annual tax return
  • independent audit,
  • ATO fees
  • and investment fees.

As most of these costs are set, the more you have within the fund, the less it costs you to administer the fund percentage-wise.

Whilst SMSF are great investment vehicle, there are many things to consider as they come with plenty of responsibilities.

“Self managed” means just that, meaning that as SMSF member and therefore trustee, you are responsible for:

  • investments
  • legal and administrative responsibilities (annual return, investment strategy)
  • Insurance
  • Compliance with legislation

Consequently, you need to take an active part and have understanding of the investments and legislation.

An SMSF can currently have up to four trustees/members, although there has been discussion about increasing that number to six in future.

To be eligible to become a member (and therefore a trustee) of an SMSF, a person must consent to becoming a trustee and accept their responsibilities by signing a trustee declaration.

SMSF members/trustees cannot:

  • Be a registered bankrupt
  • Have previously been disqualified as an SMSF trustee by a court, the ATO or ASIC
  • Have an employer/employee relationship with another fund member (unless they are a relative).

Young people under the age of 18 can become members of an SMSF provided they are represented by a trustee who agrees to act on their behalf. This is generally a parent or guardian.


Is SMSF right for you?
How much do you need to start SMSF?
Does SMSF need an ABN?