About SMSFs

What is an SMSF?

A self-managed super fund (SMSF) is a type of trust set up for the sole purpose of providing retirement benefits to its members.

When you set up an SMSF, you and the other trustees are in charge. You must make investment decisions that are in the best financial interests of all members.

You are also personally responsible for ensuring your SMSF complies with superannuation and tax laws. If it does not comply, there are a range of consequences that may apply, including disqualification, penalties and tax consequences. This is the case even if you rely on another trustee or a professional to help run the SMSF.

Be aware of illegal SMSF schemes

You might be approached by people promoting early release of super schemes. They might offer to help you withdraw your super before retirement to pay for personal expenses like paying off a debt or buying a house. These schemes are illegal.

If you or another member of the SMSF access super before you are legally entitled, significant penalties can apply. You will also need to pay income tax on super you access before you are entitled to it.

For more information on illegal early access of super, see illegal early access to super.

Is an SMSF right for you?

An SMSF can be an attractive option for people who want control over their
retirement investments. However, managing an SMSF is a major responsibility and getting it wrong can have financial impacts.

You must understand your obligations as an SMSF trustee and be certain you have the knowledge, time and skills to do it before you start. Your obligations include:

• keeping up to date with the rules and regulations of superannuation and income tax laws
• developing, implementing and regularly reviewing an investment strategy
• administration and record keeping, for example, meeting minutes noting trustee decisions
• completing financial statements and lodging tax returns or reports.

It also costs money to set up and run an SMSF. Every year that you have an SMSF, you'll need to pay for an independent audit and a supervisory levy.

You also need to consider costs for:

• tax agents to help prepare your SMSF annual return
• valuations of your SMSF's assets
• actuarial certificates, if required
• legal fees
• an SMSF administrator
• insurance
• financial advice.

You should:

• review our latest statistics on the health and performance of the SMSF sector
• compare SMSFs with other super funds
• consider seeking professional SMSF advice.

We recommend you seek financial advice from a licensed financial adviser. They can help review your existing investments and work out if an SMSF is suitable, given your circumstances.

The Australian Securities & Investments Commission provides information on how to choose a financial adviserExternal Link. They also have general resources on investingExternal Link.