Self-managed superannuation funds (SMSFs) have surged in popularityAn SMSF is a private superannuation fund that you manage yourself, rather than having a large super fund manage it on your behalf.
Self-Managed Super Funds (SMSF): Is It Right for You?
Self-managed superannuation funds (SMSFs) have surged in popularity across Australia — and it’s easy to see why. Unlike an industry or retail super fund, an SMSF puts you in the driver’s seat, giving you direct control over where and how your retirement savings are invested.
But with that control comes responsibility. Before you set one up, it’s worth understanding exactly what’s involved. Here’s what you need to know, courtesy of the SMSF specialists at CBD Accountants.
What Is an SMSF?
An SMSF is a private superannuation fund that you manage yourself, rather than having a large super fund manage it on your behalf. It can have up to six members, and typically, all members are also trustees (or directors, if a corporate trustee is used), meaning they’re legally responsible for running the fund and making sure it complies with super and tax laws.
Why People Choose an SMSF
1. Investment control SMSFs let you choose exactly where your super is invested — shares, property, term deposits, and even certain collectables — rather than being limited to the options offered by a retail or industry fund.
2. Flexibility You can tailor your investment strategy to your personal goals, risk appetite, and timeline, adjusting it as circumstances change.
3. Potential tax advantages SMSFs are taxed at the standard concessional superannuation rate, and with the right strategy, this can be an effective way to manage tax across accumulation and pension phases.
4. Ability to pool resources With up to six members, families can combine their superannuation into a single fund, potentially reducing costs and increasing investment opportunities — for example, purchasing property that would be out of reach for an individual fund.
5. Estate planning SMSFs can offer more control over how your superannuation is distributed to beneficiaries when you pass away.
What to Consider Before Setting One Up
An SMSF isn’t the right choice for everyone. Before jumping in, weigh up:
- Time commitment — Running an SMSF requires ongoing involvement in investment decisions, record-keeping, and compliance
- Costs — Setup, accounting, audit, and advice fees can make SMSFs less cost-effective for smaller balances
- Compliance obligations — SMSFs must comply with strict superannuation and tax laws, including annual audits, and trustees can face significant penalties for breaches
- Investment knowledge — You (or an adviser you engage) need enough knowledge to manage investments responsibly
- Insurance — Unlike many retail/industry funds, SMSFs don’t automatically include life or income protection insurance — this needs to be arranged separately
As a general guide, the ATO and industry bodies suggest an SMSF tends to become cost-effective at higher balances, though the right threshold depends on your specific circumstances and investment strategy.
Setting Up an SMSF: The Basics
Setting up an SMSF generally involves:
- Choosing a trustee structure (individual trustees or a corporate trustee)
- Creating a trust deed
- Registering the fund with the ATO and applying for an ABN
- Opening a dedicated bank account for the fund
- Developing an investment strategy
- Arranging insurance considerations for members
- Setting up ongoing compliance, accounting, and audit processes
Each of these steps needs to be done correctly to keep your fund compliant from day one.
Ongoing SMSF Obligations
Once established, an SMSF requires:
- Annual financial statements and tax returns
- An independent annual audit
- Ongoing compliance with superannuation and tax legislation
- Regular review of the fund’s investment strategy
This is where having an experienced accountant on your side makes a real difference — both in terms of compliance and in maximising the benefits of your fund.
Is an SMSF Right for You?
An SMSF can be a powerful tool for building and controlling your retirement savings — but it’s not a decision to make lightly. The right choice depends on your super balance, financial knowledge, time availability, and long-term goals.
Get Expert SMSF Advice from CBD Accountants
At CBD Accountants, we provide comprehensive SMSF setup, advice, and audit services to clients across Sydney CBD, Blacktown, Liverpool and Newtown. We’ll help you assess whether an SMSF suits your circumstances, and if it does, guide you through setup and ongoing compliance so your fund stays on the right track.
Contact CBD Accountants today to find out if an SMSF is the right move for your retirement savings.