The Pros and Cons of Setting Up a Self-Managed Super Fund (SMSF) in Australia

The Pros and Cons of Setting Up a Self-Managed Super Fund (SMSF) in Australia

Who does not like the correct investment strategies? One such strategy for getting complete control over your investment is SMSF. With a Self-Managed Super Fund (SMSF) you get to choose where your money is invested and you can also make alterations to your investment strategy whenever you need to. Along with this, you can also get benefits like lower fees and various tax benefits. But when are there any drawbacks of SMSF? Well, in this blog post, we will check out the pros and cons of setting up a Self-Managed Super Fund (SMSF) in Australia. 

What is a Self-Managed Super Fund (SMSF)?

An SMSF is a type of superannuation fund that is managed by its members. It will allow you to take control of your retirement savings in a way that you can invest them you want giving you complete freedom to achieve your financial goals. 

Pros of Self-Managed Super Funds 

Complete control of your investments 

This is among the major advantage you get when you set up an SMSF. It gives you a variety of investment options compared to other superannuation funds. Barring just a few exceptions, an SMSF can invest in anything if it meets the sole purpose test and also adheres to the regulations. It even includes investing directly in properties. 

Lower fees

The next advantage you get is the lower fees. The fees charged in SMSF are comparatively lower than compared to other traditional superannuation funds. A simple reason behind this is that you are self-managing your super funds so you can choose the investments that have lower fees.

Estate Planning 

SMSF is an ideal tool for estate planning. That’s because when you get the chance to nominate anyone whom you want to receive your superannuation benefits when you die. Along with this, you can also set up binding death benefit nominations to ensure that your superannuation benefits are distributed according to your wishes.

Tax Benefits 

SMSF offers you several tax benefits which are as follows: 

  • The tax rate on your personal tax rate can be as high s 46% whereas the SMSFs are taxed at a maximum rate of 15% on investment earnings. This is significantly lower. After subtracting costs and accounting for capital gains from the sale of the property, this rate is determined. 
  • Next tax benefit you can be eligible for CGT exemptions. You might be exempted from paying CGT while selling assets you have held for more than 12 months. 
  • If the members of the super fund are contributing to the fund by sacrificing their salary, you might be eligible for some extra tax benefits as well. 

Cons of Self-Managed Super Funds 


Before getting into SMSF, you will first have to research a suitable investment path. Also running SMSF is a daunting task and you have to look forth on various fronts and you need to look into investment performance. You need to ensure various compliances like legal requirements, including lodging annual tax returns, auditing the fund, and keeping accurate records.

No protection against fraud or theft

SMSF is not covered by the government’s superannuation guarantee scheme. And if you lose money through theft or fraud, you will not get any compensation from the government. You may also lose insurance if you move from industry or a retail super fund. 


SMSF is a fantastic way to take control of your retirement savings and invest in a way that suits your financial goals. But as you have read in this article, there are a variety of pros and cons involved in it. So make yourself well aware of those before getting ahead with it. And if you require any assistance in managing your SMSF, you can rely on KPG Taxation which is a renowned company that offers reliable SMSF advice to give you complete peace of mind and help you achieve your fiscal goals. 

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