Is a Self Managed Super Fund (SMSF) right for me?

In this post, I just wanted to touch very briefly on a couple advantages and costs of running a SMSF. There is a huge amount of material available on the web, if you would like to read more, or please get in touch if you would like to discuss this with your own situation.

Key Points

  • Set up costs for an SMSF is about $3,000
  • On-going administration, tax and audit from SMSF starts at $1,500 per year
  • A SMSF provides flexibility, choice and a large range of investments options
  • There are significant tax advantages to buying residential or commercial property in a SMSF
  • Many people are paying double the price because they have an investment portfolio owned by the SMSF and then pay an accountant too
  • Speak to us for a complimentary review to see if a SMSF is something that would meet your goals or if you have your existing fund set up the best way possible


The ATO’s most recent data states there are currently 577,236 registered Self Managed Super Funds in Australia with 1,087,841 members. This accounts for 599,071,000,000 in net assets invested in Australia and overseas. The number of SMSF’s registered in Australia is growing by roughly 6% per year. So, with these staggering figures, is an SMSF something that you should consider?


What are the benefits?

  • Cost savings to manage and maintain your superannuation
  • Greater flexibility and choice of investment options, including residential and commercial property
  • Ability for a small business to own commercial property in their super and rent it through their business
  • Estate planning
  • Flexibility and choice


What are the costs?

Depending where you go to set up a SMSF and what features / options you chose, you could expect to pay anywhere between $2,500 – $8,000. The price depends on whether you are receiving advice or not and then the complexity of the advice. At Nest Advisory, you could expect to pay about $3,000, which includes a statement of advice, implementation, rollovers, trust deed, investment strategy and recommendations, binding nominations, trading account set up, and everything online ready to go, which is super great value!

Generally, there are four on-going costs to consider when thinking if an SMSF is going to be cost effective. These are the annual tax return, annual audit, administration and advice. For a basic SMSF option with us, you could expect to pay about $1,500 per year for tax, admin and audit per fund and the advice fee is based on 1% of the SMSF balance with a maximum of $5,000 per year. All of these costs are tax deductable.

To compare that to a typical industry fund, you would need a balance of approximately $200,000 between 2 members to make an SMSF a cheaper option.

I often see advisers unnecessarily putting clients in an investment platform owned by the SMSF and then have an accountant complete the tax return. This can dramatically increase the costs of maintaining the fund because the platform usually charges a percentage-based fee to provide the administration and tax preparation of the portfolio and then the accountant charges again for the same thing. This can now be rolled into one easy online solution, so you are not doubling up on fees. There may be some circumstances where it is advantageous to have a platform. If you are unsure how your fund is set up or you are doubling up on fees, get in touch with us for a complimentary review.


Greater investment options and choice

Generally speaking, there are no restrictions on what assets or investments a fund can hold. There are complex rules that govern what can be transferred in and how it is maintained, but that’s for another post.

Many people choose to start a SMSF because they want more choice, flexibility and transparency of their investments. Typically, with many super funds, you have 5 to 8 choices of what to invest in. These usually range from a cash, conservative, balanced or growth option. The fund usually restricts you to investing in their investments only, so you end up with all your super with one provider and it’s all held in their investment option. Whilst we trust the money is being managed by a professional team that is experienced, you don’t know for sure what you invested in. For example, some of my clients do not like to invest in industries, such as tobacco or gaming. It is impossible to know if your money is invested in these types of industries through a “balanced” option portfolio so there is no transparency.

According to ATO data, approximately 30% of the money invested through SMSF in Australia is in Australian listed shares. The second biggest piece of the pie is in cash and term deposits, which accounts for 25%. The 3rd biggest asset class is residential and commercial property making up about 15%.

While there are several super funds that will allow you to invest directly in shares and term deposits, you can only buy commercial or residential property using a SMSF. A popular strategy to implement is to hold this property for the long term and then when you convert your super into a pension, you can sell that property without paying any capital gains tax. Using a SMSF can be a great way to benefit from long term property growth without impacting on your take home pay.

In Summary

A SMSF may become a cost-effective way to manage your superannuation when you have a combined balance of $200,000 plus. Some advantages of using a SMSF oppose to an industry fund or retail fund, is that you have endless investment opportunities. You can only hold direct residential or commercial property in a SMSF and there are some significant tax advantages to do so when compared to buying outside of super.

Maintaining a SMSF used to be complicated, but now with advancements in processes and technology, it has become very simple to run your own SMSF online.


If you would like to discuss your SMSF strategy or would like to know more information if this is something that would be beneficial to you, please don’t hesitate to get in touch.



Nick Lucey BAppEc (financial planning)
Director | Financial Adviser

Nest Advisory Group

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