Understanding Self-Managed Superannuation Funds: What to Know

Every employee in Australia has a superannuation fund, as this is an arrangement the government set up to encourage more people to accumulate funds and secure an income stream when they retire. If you want to be more in control of your finances, you can turn this superannuation into a self-managed super fund or what is known as SMSF. 

Before you proceed with this arrangement, you must learn everything you need to know about this setup. This article will answer some of the frequently asked questions about SMSF to give you a better understanding.

Getting to Know SMSF: What Is It?

An SMSF is a trust where all funds and assets are held and managed on behalf of four individuals. The purpose of this trust is to provide future retirement benefits to employees. 

All of its members should be trustees of the fund or directors of the fund’s corporate trustee, which sets it apart from other super funds. It means that the members are responsible for complying with the superannuation and tax laws and can run it for their sole benefits. They have full control when it comes to tailoring their fund to meet their specific, individual needs. 

The Benefits of SMSFs

  1. SMSF exists to give employees full control and flexibility over their investment choices. As the trustee of your fund, you have the power to make decisions on your fund’s investment strategy and what type of assets you want to hold within it. 
  2. SMSF also gives you the ability to make investments not customarily found in a public super fund. It allows you to customise your investment fund to meet every members’ retirement requirements. However, this particular benefit is subject to certain restrictions.
  3. Like all other super fund options, SMSF is taxed at a concessional rate. For investment earnings, the top tax rate is about 15 per cent. However, you should note that this tax concession is only available for complying funds. These are SMSFs that abide by all the rules set by the Australian Taxation Office (ATO), the Superannuation Industry Supervision (SIS) Act 1993, and the SIS Regulations. 

Rules and Obligations You Need to Know About SMSFs


  • As an Investor: Understand your fund’s investment philosophy


You need to establish what you will consider as your acceptable rate of return and how much risk you are willing to take. All these will serve as your guide in decision-making.


  • As a Trustee: Review your investment strategy regularly


You need to be on top of your investment game and consider getting insurance for the members of your fund.


  • Consider getting the service of a specialist administrator


Many investors who transitioned into an SMSF hire a specialist administrator. They can be in charge of facing strenuous compliance activities on behalf of your fund. Through this method, you get full control in terms of your investment and flexibility but without the burden of taking care of the administration work. 


  • Your fund should be compliant with the superannuation law


You are legally accountable for ensuring that your fund complies with all the set rules, whether you hire professional management or not. In terms of assets, the fund must be separated accordingly. Failure to comply is a clear violation of the super legislation and its associated regulations. 


  • Do not forget your primary purpose


Always remember that the sole purpose of having superannuation is to provide retirement benefits to fund members. You need to make sure that all trustees are aware of the necessity to give diversity and sufficient liquidity in the fund. 


Before transitioning your current superannuation fund into a self-managed one, make sure to discuss it first with your financial advisor. They can help you decide whether a self-managed super is ideal for you. 

If you have more questions about SMSF or any other financing in investing concerns in Perth, please don’t hesitate to consult with us. All of the Finance Managers at FinanceCorp are fully qualified, trained, and experienced mortgage professionals who live and breathe finance. Connect with us today!