Setup an SMSF | Setup a Self-Managed Super fund (SMSF)

For some people, hands-on control of their superannuation through a self-managed super fund (SMSF) is a rewarding and financially fulfilling alternative to work towards their retirement needs.

However with added control comes added responsibility and workload.

SMSFs are set up under strict rules regulated by the Australian Taxation Office (ATO) and may only be suitable for people with an understanding of super and financial and legal matters.

You must be prepared to research and track your super investments regularly if you want to manage them yourself. 

Having a SMSF can also provide the best vehicle to grow your superannuation to ensure you have financial freedom in your retirement.

Are you considering setting up a self managed super fund (SMSF)?

With widespread media coverage and attention on the potential shortfall of many Australian’s retirement savings, self-managed super funds are growing in popularity. According to the ATO there are now over 500,000 SMSFs in existence and over 1 million trustees. (what is the source of these stats/according to who?)

The reality is, how you manage your superannuation and retirement savings today will have a significant impact on the choices you will create for yourself in retirement. Which is why SMSFs are rapidly becoming a favourite for Australians who want greater control of their retirement plan.

So why are so many Australians choosing SMSFs and why should you consider setting up a SMSF? Here are a few of the benefits MRD clients have experienced utilising a more hands on approach to managing their superannuation:

Control and transparency

For many Australians, superannuation is their largest investment asset behind their family home – so naturally they want to have more control and direct influence over its investment decisions. With a SMSF, you can decide how and where you would like to invest your retirement savings. With growing technology in the SMSF space, in many cases you can view your retirement savings in real time and control payments going out and investment income coming in.

Investment choice

SMSFs typically open up a wider range of investment options than traditional retail or industry super funds. With a SMSF, you can invest in direct Australian and international shares, cash accounts or term deposits, direct residential or commercial property, unlisted assets and more, and have the ability to borrow funds to invest in assets. Find out more about what SMSF's can invest in >

Borrow to control a larger asset base

Under current legislation, SMSFs have the ability to utilise their current balance and borrow funds, with the objective of investing in certain asset classes. This can be very advantageous, as it allows you to increase and control a larger asset base through leveraging your existing balance. Similarly to investing outside of your superannuation, for example buying your family home, you can use a cash deposit (in this instance, your superannuation balance) to invest in direct residential property that is owned and run by your SMSF through a trust structure.

This strategy requires specialised expertise in both the administrative setup and finance arrangements and should be considered in the context of an overarching investment strategy so it’s suitable and relevant to your retirement goal planning.

Contact MRD today and begin a discussion to determine whether or not the setup of a SMSF is in fact a suitable investment strategy for you or not.

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Pool family assets

Unlike traditional retail or industry superannuation funds, SMSFs provide a unique avenue to pool your super assets with a partner or direct family members. With an SMSF, you manage and pool your retirement savings with up to four members. Typically these will be family members or very close lifelong friends, however, it could be with any four Australian residents.

This ability to consolidate multiple super accounts allows the members to create a larger pooled balance. Being in control of a larger asset base gives the members the opportunity to invest into higher value assets which individually, may have been outside their reach. It also drastically reduces their costs; having the one SMSF between the members means only one set of administration and investment fees are paid.

Tax benefits

As with a traditional retail or industry super fund, SMSFs enjoy significant taxation benefits on investment earnings. The value this adds to your investment strategy can be significant.

Additionally, as you transition to retirement, there are various financial planning strategies you can use with your SMSF to help reduce your tax liability.


An SMSF is not necessarily cheaper to run than a public super fund. A key benefit an SMSF gives you, however, is greater control of the administration costs. Your competency level in this space - i.e. how much you can ‘do-it-yourself’ - will determine how cost effective your SMSF can be. Find out more about the costs of running an SMSF >

Estate planning

SMSFs can allow you control over how your superannuation benefits are distributed upon death. With a SMSF, you can create a tailored strategy for your family that will include them as beneficiaries. This is a very specialised area so depending on your individual circumstances it is probably best that you first seek out legal advice from a professional estate planning specialist. MRD is able to assist in this area.

You don’t need to be an expert investor to have an SMSF

It is important to note that MRD can guide you through the process of:

  • Tracking down lost super

  • Setting up your SMSF

  • Ongoing management and administration

  • Compliance and legal requirements

  • Investment advice and assistance

  • SMSF Administration

  • SMSF Auditing

  • SMSF Estate Planning

How do you set up an SMSF?

Limited Recourse Borrowing Arrangements (LRBA) have increased the popularity of property purchases in SMSFs.

SMSFs can use the limited recourse borrowing arrangement to borrow funds to purchase an investment property. The SMSF trustees receive the beneficial interest in the purchased asset but the legal ownership of the asset is held in a trust (also know as a the holding trust).

The upside is that with an LRBA, your whole super fund is not at risk if the loan is defaulted. There are also restrictions on the way a debtor can recover their funds. Meaning if you utilize say 70% of your fund for the property purchase, with borrowed funds, and then have the remaining 30% of your fund in shares or term deposits, your other 30% would not be in danger should the worst happen with your property.

Before you set up an SMSF you need to ask yourself:

·       If you use your SMSF to buy property, what sort of property should it be?

·       Is it going to be cost effective to set up an SMSF to purchase property?

·       Can I meet the regulatory requirements of maintaining the fund’s compliance requirements, or do I have the capital to pay someone to look after this for me?

What are the advantages?

There are significant advantages to investing in property through your SMSF, including tax – your SMSF will only be taxed at 15 per cent – which is considerably lower than most people’s marginal tax rate.

Along with a reduced tax rate, your SMSF may be subject to lower capital gains tax when sold, or none if sold after retirement.

Should the investment property be sold during the accumulation phase of your superannuation, the capital gains tax that is due is calculated at a discounted rate. If the asset is sold while the super fund is in pension phase, it’s tax-free.

Still looking to set up an SMSF?

Great! Lets chat about getting the right structure in place from the start and let us help you with the compliance, paperwork and assistance to get started!

So how can MRD help you with your SMSF?

Do you ever feel like your retirement plan is out of your control? A SMSF may be a great way to take control of your retirement savings and get a solid plan in place to support your efforts to reach your retirement and lifestyle goals.

If you're considering whether or not rolling your super over into a SMSF is the right strategy for you, or you simply have questions about how the process works, MRD has a licenced financial advisor who can offer the right professional advice, do the sums and explain the process and ongoing work involved.

Being empowered with the right information will allow you to make decisions that are in the best interest of your financial future.

If you have already done your homework and decided that a SMSF is the right strategy for you, MRD is able to set up your new structure, track down any lost super and rollover the balances from any fund you have to your new SMSF.

The most important value add we offer is to work with you to develop a great investment strategy that reflects your investment and risk profiles to see you reach your financial goals faster. Contact MRD today >

Find out more about SMSF