Getting Started with a Self-Managed Super Fund

Launch Finance - Getting started with a self-managed super fund

As the name would suggest, a self-managed super fund (SMSF) allows you be in charge of your superannuation. So, for those of you who love the idea of managing your own fund and have the time, drive, and resources to do so, setting up a SMSF can be greatly rewarding.

How does a Self-Managed Super Fund work?

A SMSF is a form of trust designed to provide income to its members when they retire. You can choose between two structures: one that is composed of individual trustees or a corporate trustee.

Here are some of the features of each structure:

Individual trustees

  • Must have 2-4 members where each member must be a trustee, and trustees must be a member of the fund.
  • Lower establishment and administrative costs since there are no Australian Securities and Investments Commission (ASIC) fees.
  • Assets of the SMSF must be in the fund’s name and must not be combined with personal assets of members.

Corporate trustees

  • May have 1-4 members where up to 2 members can be a director of the corporate trustee, and directors must be a member of the fund.
  • ASIC charges a one-time fee when registered as a corporate trustee, plus an annual review fee, where the cost depends on whether the corporate trustee acts only as a super fund trustee or performs other functions at the same time.
  • The SMSF’s assets must be in the fund’s name and can’t be combined with the director’s personal assets.

What types of investments can I make with a SMSF?

SMSFs must adhere to a strict government compliance law, some investment opportunities, include and are not limited to shares, managed funds, term deposits, and property.

There are strict rules regarding investment in property. For example, SMSFs may not be used to redevelop or resell properties, and cannot buy property owned by members, their family or their friends.

How much is needed to start a Self-Managed Super Fund?

Setting up and maintaining, as well as investing with a SMSF involves considerable resources. It is important to determine whether you have enough in superannuation for a self-managed superfund to be cost-effective and achieve investment diversification. To make a self-managed superfund effective, opinions vary as to how much superannuation money you need. The value of the fund can be the sum of superannuation from up to 4 members. As your fund balance increases, it reduces the relative costs. There are ongoing investment costs to consider, such as funds for the maintenance of the SMSF’s investment properties.

Interested in a Self-Managed Super Fund?

Prior to setting up a SMSF, it is important that you seek professional advice to ensure that your fund meets all the requirements set by the ATO and ASIC. You must speak to either an accountant or financial planner who holds an AFS license, you can search the ASIC register to find out if an SMFS auditor is registered here . Our experienced brokers are able to recommend one of our partners who specialise in this area. If you have an SMSF set up and require SMSF lending, get in touch to talk to one of our expert brokers.