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The Self-Managed Super Fund SMSF and why you should have one


Planning for retirement is a crucial aspect of your financial arrangements, perhaps more so today than ever.

With so many options for securing investment returns, finding the right investment vehicle, or suite of options, to suit your needs can be both challenging and confusing. 


However, while there are numerous managed options available, for those looking to take some control over their investments, the Self-Managed Super Fund (SMSF) can seem like an attractive option.

As with most investments, there is often a lot of misunderstanding or misinformation surrounding many of the options available, so before jumping in, we will look at Self-Managed Super Funds in more detail.

1. Basic Structure of a Self-Managed Super Fund

Also known as DIY super funds, an SMSF is a private super fund that members can manage themselves.

It is created in the form of a trust, and as such requires a trustee to be the legal owner of the fund’s assets, and also take responsibility for all necessary decision making for the fund.

The role of a trustee can be held by an individual or a company, but there must be a trustee for the fund to operate.

Each Self-Managed Super Fund can have up to four members. If the fund has individual trustees, then all members must be trustees, likewise, if the trustee is a company, then all members must be directors of the company.

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If the Self-Managed Super Fund is set up with just one member, and also decides to have individual trustees, them while the member must be a trustee, the fund must also appoint a second, non-member, to act as a trustee too.

That non-member must be given identical responsibilities as the member trustee and carry out the same role. If a single member fund chooses a company as the trustee, that single member can be a sole director of the organization.

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2. Individual or Company Trustees

When setting up a Self-Managed Super Fund, a choice that has to be made is whether the fund is administered by individual trustees or by a company.

All members of the fund must be trustees, or in the case of a company, must be directors of the trustee business.


On the first examination, having individual trustees can appear the ideal solution. It costs less minimum amount to set up and reduces paperwork significantly, however as an investment fund, it is vital that all aspects of the process are looked at for their impact over time, and the choice of trustee structure is no different.


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 While a corporate trustee approach incurs higher initial costs, it also means the administration is more efficient throughout the life of the fund, while governance can be carried out more effectively.

Taking all this into account, a corporate trustee arrangement, using a company where all members, from one to four people, are directors, can save costs over the life of the fund.

3. Legal requirements for the Self-Managed Super Fund

Every Self-Managed Super Fund must create a deed that outlines the rules the fund is bound by throughout its life.

All Self-Managed Super Funds are covered by the SIS Act and Superannuation Industry supervision regulations. As these laws change, the deed should be updated to reflect those changes to ensure that the fund complies with the prevailing legal structure for such investments.

In addition, Self-Managed Super Funds are also regulated by the Australian Tax office. Each fund must submit financial statements and an annual tax return, independently audited by an ASIC registered organization to ensure accuracy. 

Failure to provide these documents can result in the registration of the fund being removed, which prevents employers from paying contributions into the fund, in addition to causing problems when trying to rollover funds.

With that in mind, having all reporting and accounting provision in place as part of the set up of the fund ensures seamless functioning when needed.

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4. The fund must be exclusively for retirement

Any Self-Managed Super Fund must be used exclusively for the sole purpose of delivering benefits for its member’s retirement or to provide for beneficiaries upon their death. 

To ensure this, trustees must understand and follow the Sole Purpose Test when making any decision about the fund.

A breach in this exclusivity, such as if a member of the fund or any party related to them benefits from an investment choice made by the trustees in any way, can have severe consequences.

The fund can be declared as non-compliant, which results in tax concessions being lost and as a result, all assets and, excluding concessions, contributions, being taxed at the highest marginal tax rate.

Self Managed Super funds

That significantly reduces the value of the fund as retirement provision, so for any Self-Managed Super Fund, always remember the Sole Purpose test.

5. Investment rules for Self-Managed Super Funds

Investments are strictly regulated, however, for Self-Managed Super Funds there is specific additional regulation that applies, and as such maintaining compliance here is essential.

Maintaining this compliance is one of the more common issues trustees of Self-Managed Super Funds have, and it is the main cause of compliance failure.

  • Self-Managed Super Fund cannot lend unless under very specific circumstances.

Personal and Fund assets must be kept completely separate at all times.

First, it is important to understand that assets held by a Self-Managed Super Fund cannot be used in the same way that assets of a family trust or other investment vehicle.


  • Self-Managed Super Fund assets cannot be personally used by a member or any party related in any way to a member. This includes residential properties but does exclude business property, although proof of market rate commercial arrangements may need to be provided.
  • The Self-Managed Super Fund cannot purchase assets of any kind from a member or any person or entity related to them. The only exception is listed shares or commercial property.
6. The advantage of a Self-Managed Super Fund

There are four obvious benefits to using a Self-Managed Super Fund as a vehicle for retirement provision.

  • Reduced taxation – In common with other super fund arrangements, Self-Managed Super Funds benefit from concessional tax rates that allow members to enjoy tax deductions on their contributions.
  • Choice – You make the investment choices, meaning that they can be aligned with your existing ideas, or aligned with other goals that you have.
  • Control – Perhaps the most obvious and attractive benefit of a Self-Managed Super Fund is that you are in control. Essentially as a trustee, you become your own fund manager, within certain limits and regulations. For long term investments in an uncertain financial environment, this can give confidence.
SMSF advantages
  • Adaptability – A Self-Managed Super Fund is designed as a long-term investment vehicle to deliver results for retirement. Because nothing is certain, that means a significant period of time, and during that time situations can change rapidly. The trustee or trustees of a Self-Managed Super Fund can quickly adapt to changes in market conditions or personal situations to ensure the fund continues on target to deliver its intended goals.

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7. Starting a Self-Managed Super Fund

While the idea of a self-managed approach, and the control it provides, are attractive, it is essential that the fund is set up correctly once the decision is made.

 It is important that you have the time and investment expertise to manage the funds well, it is a long-term commitment that investors must stand to buy throughout the life of the fund.

In addition to understanding the expectations and duties of a trustee, those looking to form a Self-Managed Super Fund will require upfront expense to cover:

  • Professional Advice
  • Legal Fees
  • Banking Costs


Guidance is important here, having everything in place as the Self-Managed Super Fund is launched ensures that ongoing administration is much easier and less prone to breach any legislative restrictions.

Finding the right advisor includes ensuring they are registered with appropriate regulators and offer the kind of service you are looking for. Some have a traditional face-to-face service, others operate entirely online, many combine the two. The right approach is purely down to personal taste and situation.

If you have set up an SMSF and are looking for Transparent Investments which Target 20% p.a net returns.

Here are the steps to get started:

1. Schedule an appointment (Conference Call) with an Investment Manager

2. Submit a Managed Discretionary Account (MDA) application with Walker Capital Australia.

3. Open a trading account with the Walker Capital Australia’s executing broker.

4. Select from our range of investment strategies and choose your asset allocation between the choices of accounts.

5. Once all accounts are opened, and funds have been chosen, our team gets to work and begins trading.

We welcome you to give our team a call to discuss your investment goals and objectives.

You can call Walker Capital Australia on +61 2 8076 2210, and we’ll see how we can help you achieve your investment goals.