9 Reasons You Should Consider Setting Up A Self Managed Super Fund

I’m seeing more and more property investors setting up a SMSF with the intention of using it as a vehicle to buy a property investment.

Of course before doing this, it’s important to get independent advice from a suitably qualified professional, but if you’re interested to know some of the benefits the following article from e-superfund.com.au should be of interest:

Benefit 1: Total Control

A SMSF gives you total control of your Super by allowing you to choose where you invest your Super Benefit

Invest in Shares, Property, Term Deposits, Cash, CFDs and more!

Many of our clients who are disappointed with their Superfund’s performance or simply think that they can do a better job investing their Super Benefit themselves are choosing to establish and manage their own SMSF.

Benefit 2: Lower Fees

SMSFs can be the most cost effective type of Superannuation Fund. For example, a Superannuation Fund charging 1% in fees will double their fees from $2,000 to $4,000 per annum when your Super Benefit doubles from $200,000 to $400,000.

Benefit 3: Add thousands to your Final Super Payout

Consider that an average retail Superfund can charge up to 2% p.a. in fees and that you will pay around $500,000 in fees over your working life.

Benefit 4: Ownership

A recent analysis indicated that sometime in the near future major Retail and Industry Superfunds will experience payout difficulties due to insufficient liquidity as baby boomers begin to retire and worker contributions are insufficient to meet retiree withdrawals.

The reason that this can occur is that you are not the owner of the assets in a retail and industry Fund.

You simply have an entitlement in the Fund assets as a Member.

It may be that this risk is exaggerated but it is a risk nonetheless you can do without.

A SMSF eliminates this risk entirely.


Because in a SMSF you are the owner of all SMSF assets and you decide when you can access your own Super Benefit.

Benefit 5: Consolidate Multiple Member Accounts

A SMSF can have up to 4 Members and each of these Members can contribute to the one SMSF.

This means that instead of each Member paying separate fees in their Fund (or in multiple Funds) you can rollover and consolidate 4 persons Super Benefits, which can then be managed under the one SMSF.

Benefit 6: Accumulation and Pension Fund in one

With Retail and Industry Funds your benefit is typically invested separately in a Pension or Accumulation Account.

This means that when you wish to drawdown your Super Benefit as a Pension your Super Benefit will need to be transferred to a separate Pension Account and any additional contributions you make will be added to a completely separate Accumulation Account. 

Each Account is managed separately with separate investments and a separate fee structure.

Usually the more Funds you have the more fees you pay!

A SMSF is a Pension and Accumulation Fund in one.

You can commence a Pension and continue contributing to the same SMSF.

There is no need to split your Super Benefit into multiple Funds.

Benefit 7: Taxation Benefits

When you commence a Simple Account Based Pension or Transition to Retirement Pension, the SMSF tax rate falls to NIL on earnings and capital gains.images tax

This means that you can generate unlimited income and capital gains and will pay NO tax on them after you commencing pension.

This also means that your SMSF is entitled to receive any franking credits on Australian Share Dividends in cash from the ATO.

Given that the company has paid 30% tax and your SMSF tax rate in pension mode is Nil, the entire 30% tax paid is refundable to your SMSF.

This is not the same in Retail and Industry Superfunds that can decide how to allocate the tax refund or retain it if they choose.

Benefit 8: Consolidate Investments

It is possible for Members to make contributions of assets into a SMSF instead of cash (called in specie contributions).

Importantly only certain assets listed in the super regulations can be transferred in specie by a Member to a SMSF, such as Shares, Managed Funds and Commercial Property.

In specie transfers allow you to consolidate your Family Assets under the one SMSF tax advantaged umbrella.

We note that taxation and capital gains tax issues should be considered and these are considered here.

Benefit 9: Succession Planning

A SMSF allows you to conveniently and legally pass a Members Super Benefit to their beneficiaries in the event of the Members death.

This can keep your SMSF assets under the same SMSF tax advantaged umbrella even after a Members Death.

Read more at esuper.com.au 

Also published on Medium.

Want more of this type of information?


Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au

'9 Reasons You Should Consider Setting Up A Self Managed Super Fund' have 2 comments

  1. November 7, 2015 @ 3:28 pm Damien

    While there is no doubt that SMSFs are a good superannuation vehicle for certain people, I find some of the comments in this article to be irresponsible.
    For example, Benefit 4: Ownership
    “Because in a SMSF you are the owner of all SMSF assets and you decide when you can access your own Super Benefit.”
    No one “decides” when they can access their super benefit. This is regulated by law. This line should really be clarified as it borders on misleading in my opinion.
    Benefit 7: Taxation Benefits
    “When you commence a Simple Account Based Pension or Transition to Retirement Pension, the SMSF tax rate falls to NIL on earnings and capital gains.”
    This is no different to an industry or retail super fund, yet there is nothing in the article to say that this is the case.
    Finally, if you are going to provide an article on SMSFs related to purchasing property, how about you address the disadvantages of purchasing investment property inside super. i.e. lower tax deductibility, the issues that can occur when a member/trustee of the SMSF dies.
    C’mon guys, I’m all for detailing the benefits of SMSFs but you need to be a little more transparent with some of your comments.


  2. April 29, 2016 @ 6:19 pm MICHAEL

    Yes, the downside of SMSF must be equally presented, as all students of jurisprudence know.


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