Self Managed Super Funds: Setup, Costs and Control

Quick Look

Focus: What it really takes to run your own super fund—from rules and costs to responsibilities.

Key Takeaways:

Setting up an SMSF requires a formal trust structure and ongoing legal responsibilities.
Costs vary but typically range from $1,500 to $4,000+ per year, depending on complexity.
SMSFs offer more control—but only make sense for balances over $250,000.
Reading Time: ≈ 5minutes

Introduction

A Self-Managed Super Fund (SMSF) gives you full control over how your super is invested—but that control comes with legal, financial and administrative responsibilities.

They’re not for everyone. But for some Australians, an SMSF can offer strategic tax planning, direct property investment, or more flexibility in retirement.

Let’s break down what’s involved so you can decide if it’s worth exploring further—or better left to the professionals.

Context & Problem

Many Australians like the idea of “taking charge” of their super. But managing your own fund means playing by strict rules.

If you don’t understand these rules or break them—even accidentally—you could face serious penalties, including losing your fund’s tax concessions. Although the Australian Tax Office provides more than ample opportunity to rectify deficiencies, if the tax concessional treatment is lost eventually lost, the implications are huge. The highest marginal tax rate (which is currently 47%) is applied to all contributions and earnings over the lifetime of the fund and the fund would then incur the 32% tax difference on its total value and, depending on how much is in the fund, this could be a figure of hundreds of thousands of dollars.

An SMSF only makes sense when:

You have a high enough balance to justify the costs
You’re willing to spend time staying compliant and appoint a professional accountant or adviser
You know why you want the control, and how you’ll use it

It’s not a “set and forget” structure. The ATO treats SMSFs like small businesses—with annual audits, trustee duties, and legal obligations.

Strategy & How To

1. SMSF Setup: The Legal Structure

An SMSF is a trust set up to manage retirement savings. It must:

Have no more than six members (most have1–2)
Have each member also act as a trustee (or director of a corporate trustee)
Be set up with a trust deed—the legal document that governs the fund
Be registered with the ATO and get a TFN and ABN
Set up a separate SMSF bank account

2. Trustee Duties

Trustees are legally responsible for:

Following the trust deed and super laws
Acting in the best financial interest of all members
Keeping proper records (up to 10 years for some documents)
Lodging annual returns and arranging an independent audit
Creating and maintaining an investment strategy

3. Independent Audit Requirement

Each year, your SMSF must be audited by an ASIC-registered SMSF auditor. Audits typically cost between $400 and $800, depending on complexity. Further more, direct real estate must have a verifiable valuation every year

4. Allowable Investments

You can choose where to invest, but there are rules. SMSFs can invest in:

Listed shares
Term deposits
Managed funds
Property (residential and commercial)
Collectables (like art or wine—strict rules apply)

But:

You can’t use assets for personal benefit (e.g. live in an SMSF-owned property)
All investments must be made on a commercial, arm’s-length basis
Related-party transactions are heavily restricted

5. Typical Costs

Ongoing SMSF costs may include:

Annual audit: $400–$800
Accounting and tax returns: $1,000–$2,500+
ATO supervisory levy: $259(as at July 2024)
Optional financial advice: varies widely

So even a basic SMSF may cost $1,500–$4,000+ per year—and more for complex funds.

6. When Does an SMSF Make Financial Sense?

Most experts suggest SMSFs are only cost-effective when you have a super balance of $250,000+. Below and above that, retail or industry funds tend to offer better value.(Source: ASIC’s Money Smart SMSF calculator)

Many proponents of SMSF promote them to access the benefits of the leverage of borrowing to invest in property to accelerate growth of the fund value. (refer to our library of articles about this).

Case Study

Case: Jill and Marcus, both age 52, combined super balance $580,000 Jill wants to invest in listed ETFs (a bundle of direct shares) and a commercial property for her business to occupy. They set up an SMSF with a corporate trustee for flexibility. First-year costs: Setup and legal: $2,200 Audit: $600 Accounting and tax: $1,800 Total: $4,600 Outcome Their fund now holds an ETF portfolio and a commercial unit leased to Jill’s business (at market rates). They review compliance with their accountant annually. Their SMSF gives them full control, but they spend about 10 hours a quarter on paperwork and administration.

Common Questions & Misconceptions

Can I buy a house in my SMSF and live in it later?

No. Residential properties in an SMSF can’t be used by members or related parties, even after retirement.

Is an SMSF always cheaper than a retail fund?

Not necessarily. SMSFs become cost-effective only when your balance is high enough to spread the fixed costs.

Can I run my SMSF like a trading account?

You can actively manage investments, but excessive trading may breach your fund’s investment strategy or attract ATO scrutiny.

What happens if I make a mistake?

The ATO can issue fines, disqualify trustees, or remove your fund’s tax concessions. Getting professional help is critical.

Conclusion

Running your own SMSF can offer unmatched control— but it’s not a shortcut to better super performance.

It requires discipline, time, and a solid understanding of legal duties. If you’re just after lower fees or better returns, a low-cost super fund might still be a better fit.

But if you’re clear on your strategy, willing to do the work, and have a balance that justifies the costs—an SMSF could be a powerful way to take ownership of your financial future.

Is your super invested in the right option?

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Disclosure: General information only. Consider your objectives, financial situation and needs, and seek professional advice before acting.

How We Keep It Trustworthy

Every article includes a Review & Fact Check section below—so you know exactly where our facts come from, what’s uncertain, and whether there’s any bias.

Review & Fact Check

1. Fact References

SMSF rules and trustee duties: Australian Taxation Office (ato.gov.au)
Typical audit and administration costs: Money Smart SMSF guide (moneysmart.gov.au)
Investment rules and restrictions: ASIC SMSF education (asic.gov.au)
ATO supervisory levy and SMSF statistics: ATO (updated 1 July 2024)

2. Unverified or Inconclusive Items

Case study based on hypothetical scenario—not from official source
Estimated balance threshold for cost-effectiveness ($250,000) supported by ASIC guidance but not a fixed rule

3. Time Sensitivity

ATO levy and concessional caps updated 1 July 2024—check latest ATO figures annually
Audit costs and thresholds may change over time depending on market

4. Bias Assessment

Article is neutral and educational. Mentions specific services (Money GPS and Planning IQ) with clear disclosure—appropriate for general audience.