Self-managed super fund (SMSF)

Self managed super fund banner

Some people want the control that comes with managing their own super, but taking control means being responsible for managing your retirement funds which will involve significant time and effort.

SMSFs can be suitable for people with a lot of super and extensive skills in financial and legal matters. 

You must understand your legal responsibilities and the investments you make because even if you employ professionals to help you, at the end of the day you are still the one responsible.

What is a self managed super fund (SMSF)?

An SMSF is a private superannuation fund you manage yourself, regulated by the Australian Taxation Office. SMSFs can have up to four members. All members must be trustees (or directors if there is a corporate trustee) and are responsible for decisions made about the fund. If you have an SMSF, you are responsible for managing it and complying with all relevant laws.

SMSFs are different from mainstream funds regulated by the Australian Prudential Regulation Authority (APRA) which pool members' savings and invest the money for them.

How self-managed super funds work

SMSFs are a legal tax structure with the sole purpose of providing for your retirement. SMSFs are regulated by the Australian Taxation Office (ATO)

A self-managed super fund can have one to four members. Each member is a trustee (or director if there is a corporate trustee).

Running your own fund is complex. When you run your own SMSF you must:

  • Carry out the role of trustee or director, which imposes important legal duties on you
  • Set and follow an investment strategy that ensures the fund is likely to meet your retirement needs
  • Use the money only to provide retirement benefits
  • Keep comprehensive records and arrange an annual audit by an approved SMSF auditor. 


If you decide to set up an SMSF you are personally liable for all the decisions made by the fund even if you get help from a professional or another member makes the decision.

If you're running a self-managed super fund  you will typically need:

  • A large amount of money in the fund to make set up and yearly running costs worthwhile
  • To budget for ongoing expenses such as professional accounting, tax, audit, legal and financial advice
  • Enough time to research investments and manage the fund
  • The financial experience and skills to make sound investment decisions
  • To organise life insurance, including income protection and total and permanent disability cover.

SMSF advisers

You can pay an adviser a fee to do the administration or help with the investment decisions for your SMSF. However, make sure you understand what your adviser is doing because you cannot pass on the responsibility of being a trustee or director. 

If your accountant provides advice about your self-managed super fund, you should check they are licensed by asking for their Australian Financial Services Licence (AFSL) number and searching for their name on ASIC's financial advisers register to check what products they are allowed to advise on.

Financial advisers register

Find out more about the licensing of accountants on the ASIC website.

Video: SMSFs - You can't do it all yourself

Video about SMSF's.

SMSFs are often called 'do-it-yourself funds' but that isn't really the case. Meet the people who you will have to work with or who can help you meet your obligations as an SMSF trustee in this ATO video.

Don't forget that your accountant must have an Australian Financial Services Licence if they are advising you about your SMSF from 1 July 2016.

Transcript: SMSFs - You can't do it all yourself

Questions to ask about SMSFs

Before setting up an SMSF, ask yourself these questions:

Have you considered other do-it-yourself (DIY) super options?

Many professionally managed super funds have DIY investment options which let you choose which assets you'd like your super invested in such as shares, exchange traded funds and term deposits. This gives you some control over your specific investments without the legal and administrative requirements of running an SMSF.

Have you considered other super funds or investment options?

If you're thinking about setting up an SMSF because you're not happy with your current fund or the way your money is invested, consider changing to another fund or investment option first. See choosing a super fund.

Will your self-managed fund outperform your current fund?

Super funds use highly skilled professional managers to invest your super money. Can you do better than the professionals? Consider whether the investments you choose will perform as well as your professionally managed super fund. Are you confident you can accurately measure returns?

Have you considered the costs?

Like all super funds, your SMSF will have costs associated with running the fund. These include the cost of investing, accounting and auditing for your SMSF, which may be much higher than what you are currently paying. These costs cut into your retirement savings.

Will you lose valued benefits?

Super funds usually offer discounted life and disability insurance. If you set up an SMSF you will have to purchase your insurance separately. Make sure you look into your insurance options before closing your current super account as age and health issues can limit your ability to buy a new policy and increase your premiums.

Do you know enough?

Are you aware of all your legal responsibilities? Do you understand the different investment markets? Can you construct and manage a diversified portfolio of investments?  Do you know the tax implications?

Take our investing challenge to test your investment knowledge.

Investing challenge

What if your relationship with others in the fund changes?

If there is more than one member in your SMSF, have you written a plan outlining what will happen in the event of ill health, death, relationship breakdown, or waning interest?


If an SMSF member loses money due to theft or fraud they do not have access to any special compensation schemes. Also, SMSF members do not have access to the Superannuation Complaints Tribunal to resolve disputes.

SMSF investments

Having access to a broader range of investments is often a reason for starting an SMSF. Through a self-managed super fund you can invest in the usual investments such as shares, term deposits, managed funds and property. You can also hold alternative assets such as antiques and artwork in a self-managed super fund.


The ability to choose your own shares may have been a driver for setting up an SMSF, but unless you have a lot of money to invest, you are unlikely to be as diversified as a fund manager, who has the advantage of using pooled funds to buy a broad range of shares. 


Some people use their SMSF to invest in property. For information on the rules around property investment within super and the costs involved go to our SMSFs and property webpage. 


Many SMSFs hold collectibles such as artwork, jewellery, antiques, coins, stamps, vintage cars and wine. There are very strict rules on holding these assets in your self-managed super fund.

These assets, when held within an SMSF, must be insured and they cannot provide a present day benefit. This means that artwork cannot be displayed in your home or business, you cannot drive a vintage car, you cannot wear jewellery or drink the wine.

For more information, see the ATOs webpage on collectibles and personal use assets.

Memory loss, dementia and SMSFs

Many of us experience some form of memory loss as we age. However, when you run your own super fund, the financial consequences of significant memory loss, from illnesses such as dementia, can be very serious.

As trustee of your SMSF, you should plan for the possibility that some form of impairment could stop you from being able to properly manage your fund. Waiting until your health deteriorates before you make contingency plans is not a good idea. It is better to make a plan while you are fully capable and able to make the best decisions.

The first thing you will need to decide is what to do with your super if you are not able to run your fund. Your options might include:

  • Transferring your SMSF assets to a managed super fund
  • Withdrawing your super assets and investing these elsewhere, or
  • Appointing a person you trust to take over your trustee responsibilities as your legal personal representative

You might need to get professional financial advice or legal advice to help make this decision.

If you decide to nominate another person to act as trustee on your behalf, you will need to give them all the information required to perform this role. This includes:

  • Your SMSF documents,(such as trust deeds, bank account details, tax returns)
  • Passwords to access your SMSF accounts
  • Contact details of any professionals you deal with, such as your SMSF auditor or actuary

Visit our page on Memory loss, dementia and your money for more information on what you can do now to protect your finances in the future.

SMSFs and bankruptcy

By law, if you or another trustee of your self-managed super fund becomes bankrupt, that person can no longer remain a trustee, director or member of the super fund. SMSFs have a 6-month grace period to remove the bankrupt trustee and make arrangements to deal with their super assets.

If you are the only member of your SMSF, a new director will need to be appointed to manage the fund on your behalf while you are disqualified.

You should get legal advice about the actions you need to take to deal with bankruptcy and your SMSF.

SMSF scams

Be wary of people who approach you to set up a self-managed super fund  with the aim of withdrawing some or all your super to pay off debts. These arrangements are illegal.

See superannuation scams for more information.

SMSF courses and further education

If you're thinking of running an SMSF, consider completing a free Self Managed Superannuation Fund Trustee Education Program designed to assist trustees in understanding their role and responsibilities.

The ATO has a section about self-managed super funds and a range of other useful resources listed below, that you can download from their website or order a hard copy.

If you do get SMSF advice make sure you get it from an expert, for example a member of the Self-Managed Super Fund Association.

If you're thinking about setting up an SMSF you need to be 100% committed. Before you make that decision, do some research and ask yourself what the real benefit is.

Related links

Last updated: 13 Dec 2016