What is an SMSF? A plain-English guide to Self-Managed Super Funds

How an SMSF works

An SMSF is a superannuation fund with up to six members, where every member is also a trustee (or a director of a corporate trustee). The fund holds its own bank account, owns its own investments, files its own tax return, and is independently audited each year. The Australian Taxation Office — not APRA — is the regulator, and the rules sit in the Superannuation Industry (Supervision) Act 1993 (SIS Act) and SIS Regulations.

The trade-off versus an industry or retail super fund is control vs convenience. In an APRA fund a professional trustee invests on your behalf inside a fixed product menu, and you pay a percentage of your balance forever. In an SMSF you choose the investments — direct shares, ETFs, term deposits, managed funds, and direct property (bought outright, or with a Limited Recourse Borrowing Arrangement for commercial premises) — and you pay a fixed annual admin fee instead.

How an SMSF is set up: choose members and trustee structure, establish the trust deed, complete the ATO applications (TFN, ABN and the election to be a regulated super fund), lodge the ASIC company application if you're using a corporate trustee, open the fund's bank account and Electronic Service Address for SuperStream, document an Investment Strategy that satisfies regulation 4.09 of the SIS Regulations, and roll over your existing super. easySMSF is a private firm that prepares the documentation and lodges these applications on your behalf as your appointed agent for a single fixed professional fee — the ATO applications are free to lodge yourself and ASIC charges its own published fee. See the SMSF setup guide for the detailed walkthrough.

Are SMSF setup costs tax deductible? No — establishment costs (trust deed, ASIC registration, ATO registrations) are capital costs of the fund and are not deductible. Once the fund is running, however, ongoing administration, audit, actuarial certificate, tax agent and ASIC annual review fees are deductible to the fund each year against its assessable income.

• Private super fund — up to 6 members, all trustees
• Regulated by the ATO under the SIS Act
• You choose the investments and the strategy
• Independent annual audit required
• Fixed admin fee replaces percentage-of-balance fees
• Setup costs are capital (not deductible); ongoing admin and audit fees are deductible
• Most cost-competitive from around $200,000 in combined balances (ASIC guidance)