Self-Managed Super Fund (SMSF)

A Self-Managed Super Fund (SMSF) is a private super fund that you manage yourself, regulated by the ATO (not APRA like retail and industry funds). SMSFs can have up to 6 members (increased from 4 in 2021), and all members must be trustees (or directors of the corporate trustee). This structure gives you full control over investment decisions, including the ability to invest in direct property, unlisted assets, and alternative investments not available through retail or industry funds.

SMSFs are subject to the same tax rules as other super funds — 15% tax on concessional contributions, 15% tax on investment earnings (10% on long-term capital gains), and tax-free earnings in the retirement phase. However, SMSFs come with significant responsibilities: you must develop and follow an investment strategy, keep proper records, have the fund audited annually by an approved SMSF auditor, and lodge an annual return with the ATO.

SMSFs are generally only cost-effective for larger balances — typically $200,000+ — because the fixed costs of administration, audit, and compliance are the same regardless of balance size. Running costs typically range from $2,000 to $5,000 per year. For smaller balances, a retail or industry fund is usually more appropriate. The ATO actively monitors SMSFs and can impose significant penalties for compliance breaches, including making the fund non-complying (which results in the fund's assets being taxed at 45%).