All You Need to Know About a SelfManaged Super Fund
In a nutshell, selfmanaged superannuation funds, also known as SMSFs, are a means to financially plan for your retirement. Here, we uncover everything you need to know to get a clear idea about a self-managed super fund.
Running an SMSF involves various costs that depend on factors such as the trustee structure, investment choices, and whether borrowing is involved. Knowing these costs upfront helps ensure compliance and informed decision-making.
Categories of SMSF Costs
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SetUp Costs Preliminary Expenses: These include legal, tax, financial, and investment advice, creation of the trust deed, and establishment of a corporate trustee if applicable. Example: Avoid making any financial transactions, such as property deposits, before the SMSF is legally established as this could breach compliance.
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Ongoing and Operational Costs Compulsory Costs: These are annual expenses like the SMSF supervisory levy, annual audit fee, and the lodgement of financial statements and tax returns. Variable Costs: These include advice fees for investments and compliance, general accounting and bookkeeping fees, asset valuation, and Australian Taxation Office ATO reporting fees. There are also tax liabilities and additional costs for managing assets and legal requirements. Investment, Borrowing, and Insurance Costs: Costs depend on the funds investment strategy and borrowing structure. Examples include documentation and amendments to the investment strategy, management fees for purchasing or selling assets e.g., property, and insurance premiums such as life and income protection policies for members.
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WindUp Costs This involves realising assets, paying final tax liabilities, and deregistering corporate trustees. Final audits and reporting requirements must be completed to ensure compliance.
Average SMSF Costs by Fund Size
Based on fund size, the following table summarizes total SMSF expenses per annum (2021/22):
Fund Size
Total Costs
$1–$50k: $4,225
$50k–$100k: $5,450
$100k–$200k: $8,650
$200k–$500k: $13,059
$500k–$1m: $13,417
$1m–$2m: $15,125
$2m–$5m: $22,045
Tips for Managing SMSF Costs
- Compare Providers: Shop around for competitive rates on accounting, auditing, and administration services.
- Leverage Technology: Use SMSF management software to automate compliance tasks and reduce bookkeeping fees.
- Plan for Future Costs: Ensure the fund has sufficient cash reserves to meet annual expenses and windup costs if necessary.
- Review Investment Strategies: Balance high-cost investments such as property with low-cost options like ETFs.
