How much do I need to start an SMSF?
Setting up a self-managed super fund does come with a few costs, but can be a cost competitive alternative to retail and industry funds in some situations. People often start by asking if their superannuation fund balance is large enough.
How much super do I need to start an SMSF?
There is no minimum balance required to set up a self-managed superannuation fund (SMSF) according to regulation. The ATO may reject some applications due to a low balance as part of registering a new SMSF as a complying fund. Some SMSF providers may implement a minimum balance figure for potential clients.
SMSFs come with a few annual fixed costs, meaning the arrangement is not always cost-effective. There is an ongoing public debate about exactly how much is needed and the figures are generally taken to be general ideas rather than strict guidance.
Media reports have mentioned numbers such as $500,000, but recent studies have indicated these balances could be lower. SMSF Association and the Australian Taxation Office (ATO) commissioned the University of Adelaide to research the performance of SMSFs, one finding was that SMSFs might become financially viable for balances of around $200,000.
In 2020, the SMSF Association also worked with Rice Warner to update their 2013 report about the costs of operating an SMSF and brought similar results to the table.
They found that SMSFs with less than $100,000 were not competitive with APRA regulated funds, which refers to normal retail or industry funds. Depending on whether the SMSF used a low-cost service provider or undertook some of the administration themselves, SMSFs could become a competitive alternative with balances from around $150,000. SMSFs with approximately $200,000 were found to be cost-competitive even after considering all administration expenses. SMSFs were generally the cheapest option when compared to an industry or retail fund of around $500,000.
The relationship between potential fees per year and the SMSF balance is shown below.
Total superfund balance
Stake Super annual costs | Standard SMSF annual costs | $100,000 | $200,000 | $300,000 | $400,000 | $500,000 |
|---|---|---|---|---|---|---|
$990 | $1,000 | 1.00% - $1,000 | 0.50% - $1,000 | 0.33% - $990 | 0.25% - $1,000 | 0.20% - $1,000 |
$990 | $1,500 | 1.50% - $1,500 | 0.75% - $1,500 | 0.50% - $1,500 | 0.38% - $1,520 | 0.30% - $1,500 |
$990 | $2,000 | 2.00% - $2,000 | 1.00% - $2,000 | 0.67% - $2,010 | 0.50% - $2,000 | 0.40% - $2,000 |
$990 | $2,500 | 2.50% - $2,500 | 1.25% - $2,500 | 0.83% - $2,490 | 0.63% - $2,520 | 0.50% - $2,500 |
$990 | $3,000 | 3.00% - $3,000 | 1.50% - $3,000 | 1.00% - $3,000 | 0.75% - $3,000 | 0.60% - $3,000 |
$990 | $3,500 | 3.50% - $3,500 | 1.75% - $3,500 | 1.17% - $3,510 | 0.88% - $3,520 | 0.70% - $3,500 |
One important thing to note is that the annual SMSF fees are a fixed cost, unlike an APRA fund which uses percentage fees.
What is the average balance for self-managed super funds?
SMSFs need to complete an annual audit and provide their financial details to the ATO, which gives the government agency insights into trends for the sector.
At the end of FY24 there were over 625,000 SMSFs, which made up around 25% of superannuation assets according to ATO data.
The average amount of assets in a SMSF was $1,550,571 and the median figure was $877,498 for FY23. As only 9% of all SMSFs had balances over $1m at this time, the average balance might be affected by a few very large SMSFs.
The most common size of a SMSF by assets was between $200,000 and $500,000, as 34.6% of all funds fell into this category during the period. For SMSFs established in FY2023, the average amount of assets was $442,573 and the median balance was $291,694.
Can I set up my own SMSF?
It is possible to do most of the tasks for setting up a SMSF yourself, but some professional support is mandatory over the long-term. SMSF trustees and members should consider how much time they have for various tasks and whether they feel comfortable completing them or would prefer to seek professional help. If the SMSF is set up incorrectly, it may not be eligible for tax concessions, being able to receive contributions and administration can become complicated.
Setting up an SMSF requires a trust deed, a legal document that outlines rules for the fund that should be prepared by a competent person. An independent annual audit of the SMSF also needs to be completed to remain compliant with Australian Taxation Office (ATO) regulations.
There are various types of SMSF offerings, ranging from low-cost admin providers focused on taking care of bureaucracy to full-service financial advisers that also manage investments.
Speak to a specialist
Want to know more about Stake Super or have questions? Speak to one of our SMSF professionals.
What are the set up costs of a SMSF?
The costs to set up an SMSF can vary depending on the specifics of the fund. Service providers can bundle SMSF set up expenses together or break them down into several fees. Some might decide to go with a low cost admin provider, while others might want more personalised financial advice.
SMSF providers can do tasks such as applying for an Australian Business Number (ABN) and Tax File Number for your SMSF and registering it to receive contributions and transfers. The following process can also be completed by them: setting up a bank account to receive contributions, transferring your existing superannuation fund and providing ongoing support throughout.
SMSF establishment costs can be affected by whether it is structured as either an individual or corporate trustee (read about SMSF trust structures). The Australian Securities and Investments Commission (ASIC) does charge a fee to register a company for the first time, which is needed for the corporate trustee option. There are also additional documents and costs associated with borrowing to invest in property through a SMSF.
On-going running costs of SMSF
There are specific laws applicable to SMSFs and they need to undergo an audit process every year. This means there are annual compliance costs, such as the accounting and independent audit fees, an ATO supervisory levy and company maintenance fee for corporate trustees. Existing SMSFs would have an annual levy of $259 and a maintenance fee of $63 in FY 2024/2025. There are other annual costs to consider as well, as service providers and financial advisors could also have other annual expenses.
Platforms could come with access, tasks and administration costs. Depending on the decisions and investment strategy, SMSFs could have transaction costs, potential investment management fees and costs for financial advice. Some taxes need to be prepaid and the insurance offerings are different to those connected with APRA regulated funds.
SMSF annual costs will vary depending on the type of investment strategy. How often transactions are made and whether the SMSF decides to invest in shares, ETFs or other asset classes have an impact from a cost perspective. Buying an investment property or business property through an SMSF requires additional approvals and often comes with higher upfront costs than investing in equities.
This might all sound like a lot but with a cost-effective SMSF like Stake Super, all the administrative heavy lifting is done for you and the only cost from us is a yearly payment starting at $990.
How long does it take to set up a self-managed super fund?
It can take between 1 and 3 weeks to set up a self-managed super fund.
This timeframe will depend on several factors and approval processes. Having clear ideas and the necessary information could help streamline the process.
Thinking about what kind of structure and investment strategy is wanted, as well as who will be members of the self-managed super fund ahead of time could be useful. To help ensure a smooth SMSF setup, make sure you have no outstanding tax obligations or overdue tax payments.
Service providers can complete many of the administrative tasks and these can usually be completed online within a reasonable timeframe. SMSFs need to be registered with the ATO, and receive an ABN and Australian Company Number in the case of corporate trustees. A bank account and trading account can also be set up as part of the process. The rollover of superannuation balances can take around one week.
SMSFs are a long-term investment set up, shortening this process by a week or two usually does not provide many benefits. Changing the structure or reversing investment decisions requires additional costs and time. SMSFs also come with annual requirements such as audits to remain compliant with regulations and ongoing responsibilities around investment management.
Frequently asked questions
Yes, it is possible to start a self-managed super fund with $100,000. There is an ongoing public debate about this as SMSFs have a number of fixed annual expenses, and it's not always the optimal choice from a cost perspective.
Investors should look at their financial situation, retirement and income goals before making any major decisions. SMSFs come with setup and ongoing costs, which can be researched and compared to the amounts commanded by retail and industry funds.
There is no minimum super requirement to set up a self-managed super fund (SMSF) with Stake Super, however, setting up a SMSF comes with responsibilities.
Consider what superannuation balance would be financially viable with SMSF fees. If the estimated expenses related to an SMSF amount to a higher percentage of the potential fund balance than those for retail and industry funds, it may not be a cost-effective alternative. There are switching costs involved and reversing the decision to set up an SMSF will cost even more money.
Many people are attracted to SMSFs due to the level of control they provide and this comes with risk.
Superannuation savings usually grow every year, while the option to start an SMSF will remain there. Just starting to think about why you want to set up your own SMSF and what kind of investments can streamline the actual process in the future.
Before making a decision, please see our SMSF Risks.
This is not financial product advice, nor a recommendation that a self-managed super fund (‘SMSF’) may be suitable for you. Your personal circumstances have not been taken into account. SMSFs have different risks and features compared to traditional superannuation funds regulated by the Australian Prudential Regulation Authority (‘APRA’). Stake SMSF Pty Ltd, trading as Stake Super, is not licensed to provide financial product advice under the Corporations Act. This specifically applies to any financial products which are established if you instruct Stake Super to set up an SMSF. When you sign up to Stake Super, you are contracting with Stake SMSF Pty Ltd who will assist in the establishment and administration of an SMSF under a ‘no advice model’. You will also be referred to Stakeshop Pty Ltd to enable your trading account and bank account to be set up in order to use the Stake Website and/or App. For more information about SMSFs, see our SMSF Risks page.
Ciara is a Commercial Manager at Stake Super, with over 10 years of experience in the SMSF industry and an MA in Accountancy and Finance from Heriot-Watt University in Edinburgh, United Kingdom. Having previously worked at a chartered accounting firm and one of the largest SMSF administrators in Australia, Ciara has extensive knowledge of SMSF compliance. She is also a current member of the SMSF Association.
