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What is an SMSF?

Learn what a Self-Managed Super Fund (SMSF) is, how it differs from other super funds, and explore its key structures and features. Understand your responsibilities and decide if an SMSF is right for you.

Couple reading about self-managed super funds

Thinking about taking control of your super? A Self-Managed Super Fund (SMSF) might be worth exploring.

While superannuation funds such as retail, industry, corporate, and public sector funds are professionally managed on your behalf, an SMSF allows its members to directly manage and make decisions about how their retirement savings are invested.

What is an SMSF?

Superannuation is designed to help Australians save for retirement.

SMSFs offer flexibility, allowing members to tailor their investment strategy to suit personal goals. You can invest in a wide range of assets, including:

  • Australian and international shares
  • Residential or commercial property
  • Term deposits
  • Collectables (with strict rules)
  • Cryptocurrency
  • Business premises (if eligible)

What makes an SMSF different?

All super funds aim to grow your retirement savings. The difference is in who manages the fund.

With an SMSF, as both a member and a trustee, you’re responsible for shaping the funds investment strategy. You’ll be handling its reporting and ensuring it meets all compliance obligations.

SMSF Structures

An SMSF is a type of trust set up to provide retirement benefits to its members. It can have up to six members, and each member is typically a trustee (or a director of a corporate trustee).

There are two main structures for SMSFs:

  1. Individual trustees
    • Each member must be a trustee
    • Generally simpler and cheaper to set up
    • All trustees must be individuals
  2. Corporate trustee
    • A company acts as the trustee
    • Each member must be a director of the company
    • May offer more flexibility and easier succession planning

When you become part of an SMSF structure, as a trustee, you are legally responsible for making sure the fund complies with laws such as super and tax.

Key Features of an SMSF?

  • Control how your super is invested and manage the fund
  • Visibility over your fund’s performance
  • Flexibility to tailor your own investment strategy
  • Responsibility to comply with legal obligations, incl. annual audits and reporting

What are the risks?

While SMSFs can offer control, they also come with risks:

  • No government protection: If your SMSF loses money due to fraud or theft, there’s no compensation scheme
  • Personal liability: As a trustee, you are responsible for all decisions, even if you get professional help
  • Time commitment: Managing an SMSF requires a significant and ongoing time investment, with trustees responsible for overseeing compliance, administration, and strategic decision-making.
  • Legal consequences: Breaches in the compliance of an SMSF can lead to penalties, disqualification, or higher tax rates

Next steps

If you’re ready to explore SMSFs, consider speaking with a professional such as a financial adviser, accountant or legal professional. They can help you decide if it’s the right fit.

Find out more from the ATO.

Is an SMSF right for you?

Read more

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Distributed by Commonwealth Bank

Things you should know

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