5 Things You Need to Know About Self-Managed Super Funds

5 Things You Need to Know About Self-Managed Super Funds


With close to one million members Australia-wide, it’s no wonder that Self-Managed Super Funds (SMSF) are one of the fastest growing superannuation industry segments today. Deciding to take control of your super can be one of the biggest financial decisions you make, so it pays to have all the facts to ensure your fund is working for you.  With that in mind, here is our super list of 5 things you need to know before setting up a self-managed super fund.


What exactly is a SMSF?

A SMSF is a superannuation account where you are nominated as the trustee and have the ability to direct the fund’s investment strategy.  This allows you to take a more active approach to your super, investing it how you see fit and watching your retirement nest-egg grow thanks to your efforts.  The main difference between having a SMSF and regular industry or retail super funds is that the industry and retail funds are focused on the needs of a large group of people, meaning decisions are made based on collective interests rather than any individual.


What are the advantages of a SMSF?

The biggest advantage of setting up a SMSF is control.  Many industry funds are very vague in letting you know how your money is invested. Your superannuation is a large and vital sum of money for your future retirement, so it’s no wonder you want to know exactly how it is being invested for you.  Managing your own super fund allows you to further diversify and invest your money, whether that be solid and stable investments or risky and high-return options. There are many other benefits to managing your own super, including:

  • More control of tax liabilities
  • Various tax minimising strategies which are available to SMSFs
  • SMSFs have the ability to borrow money to purchase property, including business premises

You need to trust your trustee(s)

You cannot be a sole member of a SMSF because if something happened to you, someone else must have control and responsibility to administer your account. When it comes to appointing trustees, you have two options:

Option 1: Individual Trustees

The individual trustees structure is the most popular SMSF structure, with over 70% of SMSFs being set up this way.  This is because they cost less to establish compared to a corporate trustee structure.  An individual trustee fund must have a minimum of 2 or a maximum or 4 individual trustees, who can be a spouse, a child (over 18) or a trusted friend who will have equal responsibility for the running of the SMSF.

It is quite common for individual trustees to engage with a SMSF specialist for help with the accounting, auditing, tax reporting and general investment advice for their fund, though the decisions remain the sole responsibility of the trustees.

Option 2: Company Trustee

Alternatively, a registered company can be set up to act as the corporate trustee for your SMSF. With this structure, all members must be directors of the company and all directors must be members of the fund.  Using the corporate structure, you can be the only member of your fund, but you must be either the sole director or one of only two directors of the corporate trustee.


You need an investment strategy

One of the biggest benefits of managing your own super fund is the freedom to integrate your own investment strategy.  The first decision you need to make is deciding just how stable, risky or diversified you want your strategy to be.  Having a certain level of diversity within your fund is often preferred as it protects your assets from any severe fluctuations which are bound to occur.  How safe or risky you are with your investment will probably also depend on your portfolio timeline, being how close you are to retirement as well as the level of risk you are comfortable exposing your funds to.


You need to keep track of rules and regulations

Managing your own super fund is a commitment. You need to keep yourself up to date with regulations as well as reviewing your investment strategy regularly so that it’s always in line with your goals. Because you are the trustee of your own super fund, you need to make sure you comply with all the tax and superannuation laws.

Depending on your situation, setting up a self-managed super fund can be beneficial for both the control it allows and the concessions only available to SMSFs.

If you would like more information on what super or investment strategy is suitable for your situation, get in touch with the friendly team at Conrad Carlile on (07) 3871 1522 or send an online enquiry here.


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