Setting up a Self-Managed Superannuation Fund (SMSF) can be a powerful way to take control of your retirement savings, but it’s not suitable for everyone. The Australian Taxation Office (ATO) expects trustees to fully understand and comply with all legal obligations. If you’re considering an SMSF, it’s essential that you assess your own readiness and capability to manage one.

Here’s a breakdown of whether an SMSF might be right for you.

Is an SMSF Right for You?

Key Considerations Before You Start

Before establishing an SMSF, the ATO recommends that individuals:

• Understand the legal obligations of being a trustee or director of a corporate trustee.
• Evaluate their financial literacy, time availability, and willingness to manage the fund.
• Seek professional advice where necessary to ensure compliance and strategic alignment.

The decision to establish an SMSF must be made by the individual, based on their own circumstances, goals, and capacity to meet ongoing responsibilities.

The following is our assessment of what makes a successful SMSF Trustee:

• Mindset & Motivation: You need to be motivated to learn and apply your knowledge. Running an SMSF requires active involvement and a willingness to understand your role as a trustee.
• Time Commitment: SMSFs demand more time than traditional super funds. You’ll be responsible for investment decisions, compliance, and administration.
• Financial Literacy: You should have a good grasp of financial concepts to manage investments effectively. If you’re not confident, professional support is essential.

Trustee Eligibility & Responsibilities

To be a trustee or director of an SMSF, you must:

• Be at least 18 years old.
• Not be a disqualified person (e.g., bankrupt, convicted of dishonest offences).
• Sign a Trustee Declaration within 21 days of appointment, confirming you understand your duties.

Trustees are legally responsible for:

• Acting in the best interests of all members.
• Ensuring the fund complies with the sole purpose test—providing retirement benefits only.
• Keeping accurate records and maintaining separation between personal and fund assets.

Ongoing Compliance Obligations

Running an SMSF involves:

• Annual independent audit by a registered SMSF auditor.
• Lodging an SMSF Annual Return (SAR) with the ATO.
• Maintaining a compliant investment strategy, including diversification and liquidity.
• Valuing fund assets at market value annually.
• Reporting transfer balance cap events and PAYG withholding obligations if applicable.

Non-compliance can result in:

• Trustee disqualification.
• Financial penalties.
• The fund being made non-compliant, leading to higher tax rates.

Self-Assessment: Are You Ready?

An SMSF may be suitable if:

• You want full control over your retirement investments.
• You have the time, skills, and motivation to manage the fund.
• You’re committed to ongoing compliance and record-keeping.
• You understand the legal risks and responsibilities involved.

If you’re unsure, consider completing an ATO-approved trustee education course and consulting with a licensed SMSF adviser to support your decision-making.

Supervision Group always recommends the help of a licenced financial adviser if you need to determine if an SMSF is right for you. The above is general information only. If you want to find out more, please reach out to Supervision and we can provide the details to a licenced financial adviser that can provide personal financial advice.