What is a Self-Managed Super Fund?

Investors have long sought ways to take control of their superannuation and tailor their retirement savings to better meet their individual needs. One such vehicle that has gained increasing attention is the Self-Managed Super Fund, or SMSF. But what exactly is an SMSF, and how does it work? This blog post aims to give you a comprehensive guide to understanding SMSFs, their benefits, and the things you need to consider before setting one up.

What is a Self-Managed Super Fund?

A Self-Managed Super Fund (SMSF) is a type of superannuation fund that is regulated by the Australian Taxation Office (ATO). Unlike traditional super funds, which are managed by external entities, an SMSF allows you to take direct control over your retirement savings. You make the investment decisions for the fund and are responsible for complying with the super and tax laws.

Key Features of an SMSF

  • Control: Members act as trustees and have complete control over investment decisions.
  • Flexibility: A wide range of investment options, including property, shares, and collectibles.
  • Tailored Investment Strategy: Ability to create an investment strategy that suits your specific retirement goals.
  • Tax Benefits: Like other super funds, SMSFs benefit from concessional tax rates.


How Does an SMSF Work?

Establishing an SMSF

Setting up an SMSF involves several steps, including:

  • Trustee Structure: Decide whether the trustees will be individuals or a corporate entity.
  • Trust Deed: Create a trust deed that complies with superannuation laws.
  • ABN & TFN: Apply for an Australian Business Number (ABN) and Tax File Number (TFN).
  • Bank Account: Open a bank account in the name of the SMSF to manage its cash flow.
  • Investment Strategy: Develop a documented investment strategy that outlines how your fund will achieve its investment objectives.



Members can make contributions to the SMSF, which are then invested according to the fund’s investment strategy. Contributions can be made in various forms, including:

  • Employer Contributions: Super guarantee payments from an employer.
  • Personal Contributions: Voluntary contributions made by members.
  • Rollovers: Transferring super savings from another fund into the SMSF.


One of the most appealing aspects of an SMSF is the broad range of investment choices available:

  • Real Estate: Direct property investment.
  • Shares: Australian and international shares.
  • Collectibles: Art, jewellery, and other tangible assets.
  • Cash and Bonds: Term deposits and fixed-income securities.


Compliance and Reporting

Compliance is critical for the operation of an SMSF. Trustees must ensure the fund adheres to all regulations set by the ATO. This includes:

  • Annual Audits: Must be conducted by an independent approved auditor.
  • Financial Statements: Preparation of annual financial statements.
  • Lodgement: Annual tax return and superannuation return must be lodged with the ATO.

Advantages of an SMSF

  • Control Over Investments: One of the most significant benefits of an SMSF is the control it offers. As a trustee, you have the authority to choose how your superannuation is invested and can adapt your strategy as needed.
  • Cost-Effectiveness: For larger balances, SMSFs can be more cost-effective compared to traditional super funds. The fixed costs become less significant as the fund size grows.
  • Tax Optimisation: SMSFs offer opportunities for tax planning. The income within the fund is taxed at a concessional rate, and there are various strategies to minimise tax liabilities.
  • Estate Planning: SMSFs provide greater flexibility in estate planning. You can create specific provisions within the trust deed to ensure your superannuation benefits are distributed according to your wishes.

Disadvantages and Risks of an SMSF

  • Complexity and Responsibility: Running an SMSF is complex and comes with significant responsibilities. Trustees must understand superannuation law and ensure ongoing compliance.
  • Costs for Smaller Balances: For smaller balances, the costs of running an SMSF can outweigh the benefits, making it less economical compared to traditional super funds.
  • Regulatory Risk: Non-compliance with superannuation regulations can result in severe penalties and the loss of the fund’s concessional tax status.
  • Time-Consuming: Managing an SMSF can be time-consuming. Trustees need to be actively involved in the investment strategy, compliance, and administrative tasks.

Is an SMSF Right for You?

Before deciding to set up an SMSF, consider whether you have the time, expertise, and interest in managing your superannuation. It’s essential to weigh the benefits and drawbacks and to seek advice from financial and legal professionals.

Factors to Consider

  • Investment Knowledge: Are you confident in making investment decisions?
  • Time Commitment: Do you have the time to manage the fund effectively?
  • Professional Advice: Have you consulted with a financial adviser or accountant?

A Self-Managed Super Fund can offer unparalleled control and flexibility for those who want to take charge of their retirement savings. However, it also comes with significant responsibilities and risks. By understanding the intricacies involved, you can make an informed decision about whether an SMSF is the right choice for you.

Interested in learning more about how to establish an SMSF and navigate the complexities involved? Reach out to our team of experts today for personalised advice and guidance tailored to your unique financial situation.

If you would like to improve your current investment strategies or are looking to start your investment journey, click here to organise a complimentary 20-minute phone call with an EPG Wealth adviser.



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