A self managed super fund (SMSF) puts you in charge of your own retirement savings: what the fund invests in, who manages it and how much it costs to run. It also makes you legally responsible for keeping the fund compliant every year. This guide explains how to set up an SMSF in Australia, what it costs, how much you realistically need, and the steps from decision to first contribution.
Is an SMSF right for you?
There is no legal minimum balance for an SMSF, but most of the running costs are fixed. Accounting, the independent audit, the ATO supervisory levy and ASIC fees cost roughly the same whether the fund holds $150,000 or $1.5 million, so the smaller the fund, the bigger the bite those costs take out of returns. An SMSF tends to make sense when:
- You and up to five other members have enough combined super for the fixed costs to be a small percentage of the balance
- You want to hold assets a retail or industry fund cannot, such as direct property, business real property or a specific portfolio of shares
- You are prepared to spend time on the fund each year and to follow the superannuation rules, or to pay an accountant to keep it on track
An SMSF is not a way to access super early, pay off a home or fund a business. The sole purpose test requires every decision to be made for the members’ retirement benefits, and the ATO treats breaches seriously.
Step 1: choose individual or corporate trustees
Every member must be a trustee (or a director of the corporate trustee), and every trustee must be a member. You can have individual trustees, which costs nothing to set up but requires at least two people, or a company as trustee, with the members as its directors. A corporate trustee costs more up front (the ASIC registration fee for a company is around $636 from 1 July 2026, plus a reduced annual review fee of about $70 for a special purpose SMSF trustee company) but it makes changing members, holding assets and dealing with a member’s death much simpler. Most accountants recommend a corporate trustee, especially for single-member funds.
Step 2: prepare the trust deed
The trust deed is the fund’s rule book. It sets out who can be a member, how benefits are paid, what the trustees can invest in and how the fund is wound up. It must be prepared by a lawyer or a reputable document provider, signed and dated by all trustees, and kept up to date as the super laws change. The deed is the first thing an auditor asks for, so an old or generic deed causes problems later.
Step 3: sign the trustee declaration
Each new trustee or director must sign the ATO trustee declaration within 21 days of being appointed. It confirms you understand your duties, and the fund must keep it for at least 10 years. Anyone who has been convicted of dishonesty offences, is an undischarged bankrupt or has been disqualified by the ATO cannot be a trustee.
Step 4: register the fund with the ATO
Once the deed is signed and the fund holds an initial asset, the fund applies for an ABN and TFN and elects to be regulated by the ATO. The election must be made within 60 days of the fund being established. Without it the fund is not a complying fund and cannot receive rollovers or employer contributions, and it loses the 15% concessional tax rate. If the fund will hold commercial property or run a business activity it may also need to register for GST.
Step 5: open a bank account and electronic service address
The fund needs its own bank account in the fund’s name, kept completely separate from members’ personal and business accounts. It also needs an electronic service address (ESA) so it can receive contributions and rollovers through SuperStream. Your accountant or an SMSF administration provider can supply an ESA.
Step 6: write the investment strategy
Trustees must prepare a written investment strategy before investing and review it regularly. It should cover the fund’s investment objectives, the risk and expected return of each asset class, diversification, liquidity (the fund must be able to pay pensions and expenses as they fall due), and whether to hold life insurance for members. A strategy that simply says “the trustees may invest in anything” does not satisfy the rules.
Step 7: roll over existing super and start contributing
With the fund registered and the bank account open, members can ask their existing funds to roll their balances across through SuperStream, and employers can be given the fund’s details for super guarantee contributions. Check the contribution caps before making personal contributions, and consider whether to keep some insurance in the old fund before closing it.
What an SMSF costs to run each year
| Cost | Typical amount |
|---|---|
| ATO supervisory levy | $259 a year ($518 in the first year, covering two years) |
| ASIC annual review (corporate trustee) | About $70 for a special purpose company |
| Independent audit | Varies by fund; every SMSF must be audited every year |
| Accounting and annual return | Depends on the number and type of investments |
| Actuarial certificate | Only where the fund has both pension and accumulation balances |
| Investment costs | Brokerage, property management, valuations, insurance |
Frequently asked questions
How many members can an SMSF have?
Up to six. All members must be trustees or directors of the corporate trustee, and a member cannot be an employee of another member unless they are relatives.
Can trustees be paid for running the fund?
No. Trustees cannot be paid for their trustee duties. The fund can pay professionals such as accountants, auditors and advisers at arm’s length rates.
Can I live overseas and keep my SMSF?
Only with care. The fund must remain an Australian superannuation fund, which includes tests on where the trustees make their decisions and where the active members live. Get advice before any extended move overseas.
How long does set-up take?
Usually two to four weeks from signing the deed to having an ABN, bank account and ESA ready to receive rollovers, depending on how quickly the ATO processes the registration.
SMSF set-up in Melbourne’s west
Kennedy Tax & Business Services helps trustees in Footscray, Williams Landing and across Melbourne decide whether an SMSF suits them, set the fund up correctly and keep it compliant through our SMSF accounting service. Contact us to book an appointment.
This article is general information only and does not take into account your personal circumstances. Setting up an SMSF is a significant financial decision; speak to a registered tax agent and, where appropriate, a licensed financial adviser before acting.
