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SMSF Costs: Everything you need to know

SMSF Costs: Everything you need to know

Opting for a self-managed super fund instead of keeping your savings in a large public super fund gives you control and flexibility, but takes time and effort. Before you consider this option,  you will need to know the cost to set up a self-managed super fund and fees on every step of the way.

Most setup and operational expenses incurred by your SMSF are tax deductible from the fund’s assessable income.

How much does it cost to set up an SMSF?

There are multiple legal and regulatory compliances to be completed when you’re setting up your SMSF. You may want the help of professionals to take care of these, so you'll need to get cost estimates from a few before you select anyone to assist you. 

Unless you are confident that you can handle these responsibilities yourself, you may require the following professionals:

  • An accountant to set up the fund's financial systems and, later, maintain accounts and operating statements.
  • A fund administrator to manage operations, reporting and administrative obligations.
  • A legal practitioner to draw up the fund’s trust deed.
  • A financial adviser to prepare the investment strategy.
  • An approved SMSF auditor to audit your fund. It may be helpful for you to have some reference costs, and the ATO has released data showing that the average SMSF audit fee in 2018-19 was $686.
  • A tax agent (who could also be your accountant) to lodge your SMSF annual return, provide tax advice and represent you to the ATO

There are some service providers who offer SMSF setup packages that include some of the above. A setup package could range anywhere from $350 for an SMSF with individual trustees to $1300 with corporate trustees, with costs varying by the provider and your situation. You may also find some service providers who offer a basic SMSF setup package free of cost. 

If you opt for a package, ensure that the trust deed complies with the legal requirements and check that all your regulatory obligations are fulfilled.

What are typical self-managed super fund costs?

The ATO has released key statistics and analysis of Australia's SMSF sector for the 2018–19 financial year. This data can help you estimate your typical expenses. You can see that an SMSF with more assets will have higher total expenses.

Total Expenses   2018-2019 
Average $15,472
Median $8,116

As you can see from the table below, the average expenses increase as the SMSF’s assets increase.

Total Expenses 2018-19
>$0 - $50k$ 4,245
>$50k - $100k$ 5,853
>$100k - $200k$ 10,545
>$200k - $500k$ 12,844
>$500k - $1m$ 12,500
>$1m - $2m$ 14,577 
>$2m$ 29,777
All Funds$ 15,472

Median total expenses by 
_________________________________

SMSF asset range

Total Expenses 2018-19
>$0 - $50k$ 1,965
>$50k - $100k$ 2,723
>$100k - $200k$ 4,686
>$200k - $500k$ 7,140
>$500k - $1m$ 8,090
>$1m - $2m$ 9,853
>$2m$ 16,162
All Funds$ 8,116

How much supervisory levy does the ATO charge SMSFs?

SMSFs must pay the ATO an annual supervisory levy of $259. This amount has remained unchanged since 2014.

Questions you may have

What are ethical investment superannuation funds?

Ethical investment funds limit themselves to making ‘ethical’ investments (which each fund defines according to its own principles). For example, ethical funds might avoid investing in companies or industries that are linked to human suffering or environmental damage.

Am I entitled to superannuation if I'm a contractor?

As a contractor, you’re entitled to superannuation if:

  • The contract is mainly for your labour
  • You’re over 18 and earn more than $450 before tax in a calendar month
  • You’re under 18, you work more than 30 hours per week and you earn more than $450 before tax in a calendar month

Please note that you’re entitled to superannuation even if you have an Australian business number (ABN).

How much extra superannuation can I add to my fund?

There is an annual limit of $25,000 for concessional contributions – that is, money paid by your employer and extra money you pay into your account through salary sacrificing. There is also a limit on non-concessional contributions. Australians aged between 65 and 74 have a limit of $100,000 per year. Australians aged under 65 have a limit of $300,000 every three years.

Is superannuation paid on overtime?

As the Australian Taxation Office explains, there are times when superannuation is paid on overtime and times when it isn’t.

Here is the ATO’s summary:

Payment type Is superannuation paid?
Overtime hours – award stipulates ordinary hours to be worked and employee works additional hours for which they are paid overtime rates No
Overtime hours – agreement prevails over award No
Agreement supplanting award removes distinction between ordinary hours and other hours Yes – all hours worked
No ordinary hours of work stipulated Yes – all hours worked
Casual employee: shift loadings Yes
Casual employee: overtime payments No
Casual employee whose hours are paid at overtime rates due to a ‘bandwidth’ clause No
Piece-rates – no ordinary hours of work stipulated Yes
Overtime component of earnings based on hourly-driving-rate method stipulated in award No

Can my employer use money from my superannuation account?

No, your employer can’t touch the money that is paid into your superannuation account.

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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