Like other superannuation (super) funds, self-managed super funds (SMSFs) are a way of saving for your retirement. The difference between an SMSF and other types of funds is that, generally, the members of an SMSF are also the trustees. This means the members of the SMSF run it for their own benefit.

The ATO is the regulator of SMSFs in Australia.

Thinking about self-managed super

SMSFs are not for everyone and you should think carefully before deciding to set one up. It is a major financial decision and you need to have the time and skills to do it. There may be better options for your super savings. Either way you should get professional advice.

Setting up an SMSF

When you set up an SMSF, you become a trustee of the fund (or a director of a company that is a trustee). In either case, you will be responsible for managing it according to its trust deed and the laws and rules that apply to SMSFs. The key principle is that you run your SMSF for the sole purpose of providing retirement benefits to members.

Managing your fund’s investments

You need to manage your fund’s investments in the best interests of fund members and in accordance with the law. The SMSF’s investments must be separate from the personal and business affairs of fund members, including your own.

Accepting contributions

As an SMSF trustee, you can accept money contributions for your members from various sources but there are some restrictions, mostly depending on the member’s age and the contribution caps. Generally, you cannot accept an asset as a contribution from a member, though there are some exceptions.

Reporting, record keeping and administration

As a trustee, you will have a number of administrative obligations – for example, you will need to arrange an annual audit of your fund, keep appropriate records and report to us on the fund’s operation.

Accessing your super

When paying benefits, your SMSF generally can only pay a member’s super when the member reaches their ‘preservation age’ and meets one of the specified conditions of release – for example, they retire. There are very limited circumstances, such as death or a terminal medical condition, where a member’s super can be accessed before this. There are significant penalties for unlawfully releasing super benefits.

Understanding tax and SMSFs

The income of your SMSF is generally taxed at a concessional rate of 15%. To be entitled to this rate, your fund has to be a ‘complying fund’ that follows the laws and rules for SMSFs.

Winding up an SMSF

At some point, you may need to wind up your SMSF. This could happen if all the members and trustees have left the SMSF or all the benefits have been paid out of the fund.