What is a Self Managed Super Fund?

A self managed super fund is often referred to as a SMSF or “Do It Yourself” (DIY) super funds.  Similar to other superannuation funds, Self managed super funds invest contributions made by members, provide benefits to members when they retire and provide death benefits to beneficiaries in the event of a member’s death.

what is a smsfThe main difference between a self-managed super fund and other types of superannuation funds is that the members of a SMSF are also the trustees, or directors of a corporate trustee.  This means they are required to prepare and implement an investment strategy for their fund, accept contributions and manage the payment of benefits.

Self managed super funds (SMSF’s)  also provide a broader investment choice than other super funds, with options such as direct property, managed investments and direct shares included.

The trustees (members) of a self managed super fund (SMSF) must appoint approved auditors, and may also choose to involve tax agents, accountants and financial advisors as well as administrators.  But ultimately the legal responsibility for the fund’s ongoing compliance rests with the individual trustees.


What are the requirements of a SMSF?

  • A SMSF must be maintained for the sole purpose of providing retirement benefits to member.  Investments must be entered into with a view to achieving a commercial rate of return, not for lifestyle or private purposes
  • A SMSF must have no more than 6 members
  • All members must be trustees
  • If your SMSF is a single member fund, you will need to appoint a company as trustee or a second person to act as an individual trustee
  • No member of the fund can be an employee of another member of the fund, unless those members are related
  • No SMSF trustee of the fund can receive any remuneration for services as trustee
  • A SMSF can not lend money or give financial assistance to a member
  • The SMSF can not acquire an asset from a member of the fund, or any other person related to the trustee, with the exception of listed shares, managed funds, and business real property.
  • SMSFs are prohibited from borrowing.  There are some limited exceptions.
  • Self managed super fund trustees are required to set out the fund’s objectives and to formulate an investment strategy to show how those objectives will be met.  This must be in writing and regularly reviewed.

What are the advantages of SMSF?

Advantages include:

  • Increased control over your retirement funds and how they are invested
  • Wider investment choice than public offer funds including property
  • Your SMSF can move with you from job to job, and from generation to generation
  • Tax concessions
  • Estate planning
  • Affords opportunities for estate planning and benefit payments


Are there any drawbacks of having a SMSF?

Drawbacks include:

  • Each trustee bears a high degree of responsibility to ensure all trustee duties are exercised in the best interest of fund members
  • There is a risk of tax penalties for non-compliance, so it is necessary to have sufficient knowledge and expertise
  • Running  a SMSF can be time consuming and demanding
  • SMSFs incur a range of additional costs, eg tax and regulatory return, administration, auditing of accounts, supervisory fees

Is a Self Managed Super Fund what I need?

If you want control over your superannuation assets and retirement plan, then self managed super is an excellent opportunity to assist in planning for families, but has the attendant regulatory requirements and responsibilities for trustees of managing their investments. A Self managed fund can offer advantages to small business owners as well as high net worth individuals. Our team can help to identify whether a SMSF is an effective tool for you.

How long does it take to set up a Self Managed Super Fund?

As soon as we receive your signed self managed super documentation your super fund can be set up within 5 business days. To set up a self managed super fund click here and speak with our team.

What needs to be done to establish a Self Managed Super Fund?

Once you have signed the self managed super fund documentation, spoken with our super specialists and decided on the name of the super fund we shall complete all the necessary requirements for you, including:

  • Obtaining a SMSF trust deed and appointing trustees (who must be members)
  • If necessary, setting up a trustee company and obtaining an ABN
  • Elect to become a regulated fund
  • Obtain all the necessary registrations from the ATO
  • Set up bank account for the self managed super fund
  • Assist you in establishing a superannuation investment strategy and other requirements for the fund
  • Obtaining your rollover or transfer monies from your existing superannuation funds
  • We give you SMSF training to assist your understanding of your responsibilities

Who are the Trustees for a Self Managed Super Fund?

In most cases, all members of the self managed super fund need to be a permanent resident of Australia and either a trustee or director of the trustee company, so it’s important to make sure all members are eligible to be trustees. Generally, anyone aged 18 years or over and not under a legal disability (such as bankrupt, a minor, or with a mental impairment) can be a trustee.

For single member self managed super funds, there are a number of options. As a SMSF cannot have a sole individual as a trustee the member can appoint a second person (not an employer) to act as the trustee of the fund, or else the single member can be the sole director of the trustee company.

Where a trustee company is appointed, all super fund members must be directors of the trustee company. Where a member is under a legal disability a member’s legal representative can act as trustee.

What are the SMSF trustee’s role and responsibilities?

All the duties for self managed super funds trustees are governed by the Superannuation Industry Supervision (SIS) Act 1993, and include to:

  • Act honestly in all matters concerning the self managed super fund
  • Exercise the degree of skills and judgement of an ordinary prudent person when handling the financial affairs of another person
  • Act in the interests of the super fund members and their beneficiaries
  • Meet the requirements of SIS (Superannuation Industry Supervision Act 1993)
  • Maintain records and discharge ATO requirements (the ATO, and not APRA, is the regulator for SMSFs)
  • Comply with investment restrictions
  • Accept superannuation contributions and pay benefits according to superannuation and tax laws
  • Appointing an approved SMSF auditor each year
  • Reviewing and updating the self managed super fund’s trust deed and investment strategy

What is the sole-purpose test?

A self managed super fund must be maintained for the sole purpose of paying retirement benefits to self managed super fund members when they have reached eligibility, or to their dependants in the case of a member’s death before retirement.

What contributions can be included in a SMSF?

A superannuation contribution is a payment made to your self managed super fund in the form of money or an asset other than money (called an ‘in specie’ contribution). You need to accept superannuation contributions according to the following:

  • Your self managed super fund trust deed
  • The ‘contribution standards’ in the super laws
  • The contribution limits that apply (called ’contribution caps’)
  • Any investment restrictions

Provided that governing rules of your super fund allow it, your self managed super fund can generally accept the following:

  • Employer contributions
  • Personal contributions
  • Salary sacrifice contributions
  • Super co-contributions
  • Eligible spouse contributions

As a trustee of a self managed super fund, you generally can not acquire non-cash assets from related parties, such as fund members, their families and partners and related companies and trusts. There are some significant exceptions including listed shares and securities and business real property (land and buildings used wholly and exclusively in a business).

What is a self managed super investment strategy?

An self managed super fund investment strategy sets out the fund’s investment objectives and how you plan to achieve them. It provides SMSF trustees with a framework for making investment decisions to increase member benefits for their retirement. There is no prescribed format for the SMSF investment strategy but it needs to be in writing and needs to reflect the purpose and circumstances of the fund.

What can Self managed super funds invest in?

With self managed super you can invest in a broad range of investments, all of which must be held by the fund and must be purchased with the intention of providing benefits in retirement for the members and are subject to the super fund’s investment strategy.

Speak with our

Self Managed Super Fund Specialists

1300 587 673

Speak with our Self Managed Super Funds Specialists Today  on 1300 587 673 or email for a self managed super fund information pack to  success@leenanetempleton.com.au