Costs and Fees on Running an SMSF

A report from the Australian Securities and Investments Commission (ASIC) says that 32% of Self-managed Superannuation Fund (SMSF) members found that setting up their SMSF is costlier than expected. Also, 38% of SMSF owners said that it was time-consuming to set up than anticipated.


But because of the significant benefits of SMSF, like flexibility and tax strategies, many people are taking the task of growing their money into their hands.


If you want to handle your fund, you must understand the work and costs associated with managing an SMSF. There are four major areas where fees go:


1)      Initial advice fee

Contacting a Financial Planner or an SMSF Specialist Advisor is recommended in setting up your SMSF. You can also consult these specialists for advice regarding the management of your super, insurance, investment, or debt.


The average rate of specialists is around $2,400. For easier problems, fees can go as low as $1,870. However, complex situations will also call for longer resolutions and costlier fees which can go as high as $8,800.


2)      Establishment costs

Once-off setup fees will depend on whether you want to create an individual trustee or a corporate trustee. It’s recommended to go for a sole purpose corporate trustee as it’s more efficient and has greater asset protection.


A corporate trustee will cost around $1,000 to $1,500, inclusive of the $450 ASIC Incorporation Fee. On the other hand, an individual trustee will cost around $500 to set up, and that includes the Trust Deed and all other documentation.


To establish the fund and legalize it, it must be registered as a Complying Super Fund. The fund should also be applied for an ABN and a TFN.


A Bare Trust and a Trustee company are both needed when borrowing property through an SMSF. For corporate trustees, the cost of the process will range from $1,400 to $2,000, inclusive of the ASIC Incorporation Fee. There’s no need to apply for a TFN and ABN for a Bare Trust.


3)      Ongoing Administration Cost

The cost will depend on the size and complexity of your fund. Basically, you’ll be paying 2 types of fees. The first is the Account Keeping Fee which deals with the management of your tax return. The other is the Audit Fee which will be used to annually audit your super since you’re the trustee of the fund.


For simple funds, the average Ongoing Administration Cost will be around $2,000 per year, while complex ones may cost as much as $5,000. Good thing that online providers are now offering competitive rates of $80 to $180 per month, and already cover both Account Keeping and Audit fees. Make sure you thoroughly research the background of these online service providers to guarantee their capability of handling your account.


4)      Ongoing Strategy Advice

Enlisting the professional expertise of accountants and financial advisors is highly recommended if you want to grow your SMSF. Of course, these services come at a cost and will vary depending on the provider, as well as the size and complexity of your fund.


Running an SMSF can be costly and time-consuming. Unless you have a large balance to manage, it’s better to go with ordinary super funds. Even if you manage to seek help from financial advisors, you’ll remain fully responsible with whatever happens to the fund.

Still, it’s better to have the guidance of experts in the field. There are numerous firms that offer advice and education on investments that will help you grow the fund. You just have to shop around and find one that suits your budget and needs.

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