SMSF Strategy

There’s no legal minimum, but as a rule of thumb an SMSF becomes cost-competitive somewhere between $250K and $500K. Below that, the fixed costs (accounting, audit, ASIC fees) are too high as a percentage of the balance. A well-run SMSF with $750K+ can be genuinely cheaper than a retail fund. Under $250K, you’re almost always better off in a good industry fund.

As trustee, you’re personally responsible for ensuring the fund complies with the Superannuation Industry (Supervision) Act: keeping an investment strategy current, separating fund assets from personal assets, meeting contribution and benefit rules, lodging annual returns and audited financials, and paying ASIC and ATO fees. The ATO can impose personal penalties for serious breaches, including disqualification as a trustee.

Yes, but with significant restrictions. You can’t buy it from a related party, live in it, or rent it to a related party. If borrowing to buy property, you need a Limited Recourse Borrowing Arrangement (LRBA), which has strict rules. Commercial property (business real property) has more flexibility and can be leased back to your own business at market rates. Property concentration risk is a real issue for many SMSFs, so we always stress-test the strategy.

A Limited Recourse Borrowing Arrangement lets an SMSF borrow to buy a single acquirable asset (usually property). The lender’s recourse is limited to the asset itself, protecting the rest of the SMSF. LRBAs are complex and generally need a holding trust, a compliant loan, and careful documentation. They also have liquidity implications for the fund, especially as members approach retirement.

Once a member meets a condition of release (usually age 60 plus retirement, or age 65), the SMSF can start paying them an account-based pension. Up to the transfer balance cap ($1.9M in 2025-26 per person), earnings on assets supporting the pension are tax-free. You can segregate specific assets to the pension account, or use the proportional method across all assets. There are minimum annual drawdown percentages that increase with age.

The transfer balance cap limits how much super you can move into tax-free pension phase. For 2025-26, it’s $1.9M per person (it indexes in $100K steps). Amounts above the cap must stay in accumulation phase, where earnings are taxed at 15% rather than 0%. Couples effectively have $3.8M of combined tax-free pension capacity, which is a significant planning lever.

The federal government has proposed an additional 15% tax on earnings attributable to the portion of a super balance above $3M, including unrealised gains. The proposal has been subject to significant political debate. If legislated in its current form, it starts from 1 July 2025 with the first tax assessment in 2026-27. We track the legislation closely and adjust client strategies as it settles.

Yes, and it’s common. An SMSF can have up to six members, all of whom must be trustees (or directors of the corporate trustee). Couples running an SMSF together can share costs and coordinate strategy across both balances, which can be powerful for estate planning and pension-phase planning.

If you have good advisers, 10 to 20 hours a year for meeting minutes, investment reviews, contribution and rollover admin, and sign-offs on audit/accountant documents. If you’re making active investment decisions, it can be considerably more. If the thought of that sounds tedious, an SMSF probably isn’t for you.

Yes. Once you meet a condition of release, your SMSF can pay you an account-based pension, transition-to-retirement pension, or in some cases a defined benefit pension. Account-based pensions are the standard and provide flexibility in drawdown above the required minimum. Earnings on pension assets up to your transfer balance cap are tax-free.