An SMSF, or Self-Managed Superannuation Fund, is a superannuation fund where the member or members make all of the investment decisions themselves (hence “self-managed”). Unlike traditional superannuation accounts where your contributions are invested as the fund you’re registered with chooses, an SMSF allows you to guide your own investment decisions, giving you the ability to decide where your super is invested. This means more flexibility in investment strategies and potentially lower overall costs. SMSFs can have up to six members and they are regulated by the Australian Taxation Office (ATO). 

SMSFs can be a great choice for those looking to take control of their retirement. That being said, they require more work and commitment than traditional super funds. So is an SMSF right for you? What are the pros and cons? How do you set one up? Let’s take a closer look.

Is an SMSF Right for You?

To determine whether an SMSF is right for you, let’s look at some pros and cons. 


More Control Over Your Investment Strategies

With an SMSF, you have control of the investment strategies. This includes a wide choice of investment options such as property, shares, crypto and fixed income products.


An SMSF can be cost-effective, especially for larger balances, usually around the $300,000 mark. This is because the costs of running an SMSF are relatively stable, so as the SMSF grows, the cost to benefit ratio improves. 

Tax Advantages

SMSFs offer significant tax advantages by allowing members to control the timing of realised capital gains, avoiding taxes until assets are sold, unlike public offer funds.

Estate Planning

SMSFs provide greater flexibility in estate planning. Members can more precisely direct how and to whom their superannuation benefits are distributed upon death, which can be a crucial consideration for many trustees.

Pooling of Resources

By allowing up to six members, SMSFs enable families to pool their resources to achieve investment diversity or purchase significant assets like property that may otherwise be out of reach.


Complex Regulations and Compliance

Running an SMSF requires navigating complex legal and tax regulations. Trustees are responsible for ensuring the fund complies with all applicable superannuation and tax laws, which can be both time-consuming and challenging.

Investment Risk

SMSF trustees bear the sole responsibility for their investment choices. Poor investment decisions can significantly impact the retirement savings of all fund trustees, and there’s no access to compensation schemes for fraud or theft.

Time and Knowledge

Managing an SMSF requires a significant time investment and a good understanding of financial and legal matters. Trustees must be prepared to keep up-to-date with changing regulations, manage investments, and maintain accurate records.

Insurance Considerations

SMSFs need to separately arrange for life, total and permanent disability, and income protection insurance for their members, which might be more complex and potentially more costly than insurance offered by public super funds.

The Verdict

An SMSF might be right for you if you want more control over your investments and believe you have the financial literacy to achieve better returns. Another factor to consider is if your superannuation balance has grown to a point where the benefits of managing your own fund justify the time and cost involved. It’s important to remember the cons however and only choose to start an SMSF if you are willing to take on the risks. If you need assistance or want to find out more, contact us today.

How to Set Up an SMSF

If you think an SMSF is right for you, then here are the steps you need to take to set one up for yourself. 

Consider Appointing Professionals to Help You

Establishing an SMSF is a significant financial decision requiring expertise in accounting, tax, and superannuation law. JD Scott + Co can provide the necessary guidance and support, helping you navigate the complexities of SMSF setup and ongoing management. Contact us today to find out more. 

Choose Individual Trustees or a Corporate Trustee

Decide whether your SMSF will be managed by individual trustees or a corporate trustee. Each option has its legal and administrative implications. Be sure to choose the right structure for your circumstances and long-term goals.

Appoint Your Trustees or Directors

Once you’ve decided on the trustee structure you need to appoint the trustees or directors. Take care with this step as trustees hold the legal responsibility for the fund’s management.

Create the Trust and Trust Deed

An SMSF is a type of trust, and so requires a trust deed. This document outlines the fund’s objectives, membership rules, and operational procedures. 

Check Your Fund is an Australian Super Fund

To receive tax concessions, your SMSF must meet the definition of an Australian super fund for the entire financial year. This involves ensuring the fund is established in Australia, and the central management and control are ordinarily in Australia.

Register Your Fund and Get an ABN

Your SMSF needs to be registered with the Australian Taxation Office (ATO) to get an Australian Business Number (ABN). This step is crucial for tax purposes and for your fund to be recognized as a legitimate super fund.

Set Up a Bank Account

Your SMSF needs a unique bank account to receive contributions and income and pay expenses. Ensure it’s separate from personal and business accounts and properly registered to safeguard members’ benefits.

Get an Electronic Service Address

An electronic service address (ESA) is needed to receive electronic messages and notifications, a requirement for the SuperStream system. This ensures the efficient and secure transfer of information. It is usually integrated into the superannuation administration software you choose.

Prepare an Exit Strategy

While it may seem premature at the setup stage, having an exit strategy is crucial. This includes understanding the processes and implications of winding up the fund should circumstances change.

Contact Us to Get Holistic SMSF Accounting Services

If you’re ready to take charge of your retirement savings and can handle the rules and management involved, an SMSF could be a good choice. JD Scott + Co can help make setting up and running your SMSF simpler. So if you want clear, expert advice, contact us today.