What are the setup and running costs for an SMSF?

There has been much debate around the minimum balance required to make a self-managed super fund (SMSF) cost effective, with the consensus, even among regulators, now being somewhere between $200,000 and $500,000.

According to the Australian Taxation Office’s own case studies (last updated two years ago), there may even be instances where a balance of $172,000 is suitable for a couple, with these provisos:

• They have an interest, willingness and available time to play an active part in the management of their finances
• Understand that specialist knowledge and expertise is required to manage a diversified investment portfolio, and
• Have a strong surplus cash flow position.

On the flip side, another ATO case study suggests an SMSF may not be suitable for couple with a balance $512,000 if it would be more time-consuming than their existing superannuation arrangements and the couple’s primary retirement goal was to have a simpler life in retirement.

In other words, the decision to run your own super fund is about more than your starting balance and costs. But if you’re thinking of starting up an SMSF, you do need to have a fairly good idea of thecosts involved so you can make an informed decision.

Setup fee

Setup fees are the costs incurred for establishing an SMSF and will include costs for things such as the trust deed, ATO application forms, investment strategy and general trust advice. If an SMSF decides to use a corporate trustee structure instead of an individual trustee, there will be some additional establishment costs for setting up the company structure.

The good news is that SMSF setup and admin fees haven’t risen at the same rate as inflation over the past three to four years, according to Sonas Wealth managing director, SMSF specialist advisor and financial planner, Liam Shorte.

 “Fees have gone up a little bit, but the competition keeps the pressure on,” he said.

Range of potential set up costs for an SMSF

Ongoing administration fees