Key Factors to Consider Before Starting an SMSF
Many Australians are turning to self-managed super funds (SMSFs) to take greater control of their retirement savings. As of 30 June 2024, over 625,000 SMSFs with more than 1.1 million members held a combined $990 billion in assets—representing a quarter of all Australian superannuation assets.
But is an SMSF the right choice for you? Before making the switch, there are important factors to consider.
Potential Benefits of an SMSF
An SMSF can offer several advantages, including:
✅ Control Over Your Retirement Planning – You have the flexibility to tailor your investment strategy to match your goals and risk tolerance.
✅ A Wider Range of Investment Options – Unlike retail or industry super funds, SMSFs can invest in direct property, shares, term deposits, and even certain collectables.
✅ Tax and Estate Planning Benefits – SMSFs provide opportunities for strategic tax planning, particularly around investment timing and retirement withdrawals. They can also enable more sophisticated estate planning strategies.
Key Considerations
While an SMSF offers control and flexibility, it also comes with responsibilities. Ask yourself:
🔹 Costs & Expertise
- Have you factored in the setup and ongoing costs, such as auditing, tax, and financial advice?
- Do you understand your legal obligations as a trustee?
- Do you have sufficient financial and investment knowledge, or will you need professional guidance?
🔹 Time & Commitment
- Can you dedicate enough time to managing the fund?
- Are you prepared to stay informed about super regulations and market trends?
🔹 Practical Considerations
- Are you comfortable making investment decisions and handling fund administration?
- Have you considered how your insurance needs (e.g., life, TPD, income protection) will be met?
- Will an SMSF provide a financial benefit compared to your current superannuation arrangement?
ATO Support & Resources
The ATO provides a range of educational resources to help individuals understand SMSFs at every stage:
📌 Starting a Self-Managed Super Fund – Covers setup requirements and helps determine if an SMSF is right for you.
📌 Running a Self-Managed Super Fund – Explains trustee obligations, contributions, investments, and administration.
📌 Winding Up a Self-Managed Super Fund – Outlines the process of closing an SMSF when the time comes.
You can access these resources via the ATO website under Self-Managed Super Fund Education Products or through the Small Business Education Portal.
Final Thoughts
Before deciding to set up an SMSF, it’s crucial to weigh the benefits against the responsibilities.
Seeking advice from a qualified financial professional can help you determine if an SMSF aligns with your long-term retirement strategy.
For expert advice and assistance in dealing with your Business Structures and Tax in Australia, please contact Mathews Tax Lawyers on 1800 685 829
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.