Are you thinking about using a self-managed super fund (SMSF) service to help you get your SMSF up and running? SMSF establishment services can offer a number of benefits, but there are a few risks to be aware of too.
We'll outline what these services are as well as the key benefits and risks of using an SMSF service in this guide.
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What is an SMSF establishment service?
An SMSF service is a product offered by some companies and financial institutions to assist people who are looking to start their own SMSF. These services can differ between companies, but they usually offer support with establishing your SMSF and trustee structure and help with opening dedicated bank accounts and trading accounts in your fund's name. Some SMSF services also provide ongoing admin and reporting support to help your fund meet its tax obligations.
What products and services does an SMSF service offer?
SMSF set-up and admin solutions can offer some or all of the following services.
Support establishing the SMSF
An SMSF service can help you set up your SMSF from the start including registering it with the Australian Taxation Office (ATO) on your behalf and setting up the fund's Australian Business Number (ABN) and Tax File Number (TFN). The service can also help your fund establish its trust deed and set up the trustee structure.
SMSF bank account set-up
An SMSF service can help you open dedicated bank accounts and online investment trading accounts for your SMSF. As your SMSF will operate as a type of trust, you cannot use your existing, personal bank accounts.
Superannuation balance rollover
Instead of having to contact your existing super fund and organise for your balance to be rolled over to your new SMSF, an SMSF service can do this for you and the other SMSF members (if there are any).
Ongoing administration support
Managing an SMSF comes with a lot of admin work to ensure it remains complaint, which you can read about in our separate guide. An SMSF service can help manage the ongoing administration of the fund, and ensure the fund is meeting its reporting obligations with the ATO.
Ongoing tax support
As well as general ongoing admin support, an SMSF service can help your fund prepare its annual financial statements and lodge its tax return with the ATO.
Annual SMSF audit
Your SMSF needs to be audited each year to remain compliant with the ATO. An SMSF service can help facilitate this audit by linking your fund with a professional SMSF audit service (or sometimes the SMSF service may offer auditing services itself, too).
Ongoing reporting services
An SMSF service can help your SMSF keep on top of its investments and member contributions via online reporting tools, dashboards and reports. These can also be shared with your fund's accountant, for example, to assist the fund with its tax reporting.
Is it compulsory to use an SMSF service?
No, you're not obliged to use an SMSF service and it is not compulsory to do so. They're an optional service for anyone starting an SMSF who wants some extra help getting the fund established and with meeting the ongoing legal obligations set by the ATO. These are paid services that usually attract some initial setup fees as well as an annual fee.
How much does an SMSF service cost?
SMSF services can cost anywhere from a few hundred dollars to more than $2,000 a year. The cost varies from service to service and can depend on what's included in the service you opt for.
For example, if you opt for an SMSF service that helps get your fund established with no ongoing admin or reporting support, it'll be cheaper than a full-solution service that includes things like your annual SMSF audit fee.
Benefits of an SMSF service
It can save you time. There's a lot to keep on top of when you're managing your own SMSF. An SMSF service can take some of the admin work off your hands to save you time.
It can make the process less stressful. Having a service that makes sure you're meeting your obligations with the ATO can be a lot less stressful than managing it yourself and trying to keep track of your various reporting deadlines.
Links you to other services. An SMSF service can also help link your SMSF to other services that you might need, for example accountants or a registered SMSF auditor.
Risks and downsides of using an SMSF service
Some providers are less reputable. Some SMSF services are less reputable than others, so it's important to do your research before you choose one. Reading online reviews of the service and seeing if there's any news reported about the service is a good way to start your research.
It can be expensive. Setting up and managing an SMSF comes with a number of one-off and ongoing expenses, and it can cost up to $12,000 a year to run. The cost of using an SMSF service would be an additional expense that you'll need to factor into your overall costs.
Providers are chosen for you. An SMSF service will often be offered by, or partnered with, a particular bank or financial institution. This means that when the service sets up your fund's bank accounts and trading accounts, you'll likely receive accounts from that bank and won't be able to choose your own. This is the same with other services like accountants and auditors; the SMSF service will likely have its preferred partners that it links you with.
Alternatives to using an SMSF service
Do it yourself. You're not obligated to use an SMSF service. If you're organised, you can manage your SMSF yourself and reach out for ad hoc support when you need it.
Financial planner or adviser. A professional financial planner or adviser who specialises in SMSFs will be able to help you set up and manage your fund, as well as help your fund develop and maintain its investment strategy and file its annual tax statements.
Looking for more information on SMSFs? Our dedicated SMSF hub has lots of information on how to set up your SMSF, what fees and costs you can expect to pay, how to choose your trustee structure and how to develop your fund's investment strategy.
Frequently asked questions
The "5% rule" for SMSFs refers to the in-house asset rule, where the fund cannot invest more than 5% of its total value in related-party assets, such as shares in a business owned by the members of the SMSF.
Disadvantages of SMSFs include higher setup and ongoing costs, time-consuming management and strict legal obligations. Poor management could also lead to penalties or suboptimal returns if professional advice is not sought.
Yes, having an accountant for your SMSF is highly recommended as they help with tax returns, financial statements, and ensuring compliance with the ATO's strict regulations.
An SMSF is self-managed, allowing members to have control over investment decisions, whereas a standard superannuation fund is managed by a financial institution. SMSFs also have stricter compliance rules and greater administrative responsibilities.
While not mandatory, it is advisable to consult a financial advisor when managing an SMSF. Advisors can offer expert guidance on investment strategies, compliance, and long-term financial planning.
The information and general advice in this guide is neither an endorsement of, nor recommendation for, self-managed super funds. Obtain independent financial advice and consider your own circumstances. SMSFs involve additional administrative and legal obligations. For more information about the risks and liabilities, visit the ATO's website.
Alison Banney is the money editorial manager at Finder. She covers all areas of personal finance, and her areas of expertise are superannuation, banking and saving. She has written about finance for 10 years, having previously worked at Westpac and written for several other major banks and super funds. See full bio
Alison's expertise
Alison has written 625 Finder guides across topics including:
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