A lot of media focus is on self managed superannuation funds (SMSF’s) and their benefits.  However, often the benefits and opportunities with a self managed super fund is often coloured and blurred with the investment opportunities available to a SMSF.

So what is a SMSF?

A self managed super fund is an Australian resident discretionary trust that has elected to comply with the laws of the Superannuation Industry Supervision Act (1993) (called the “SIS Act”).  That election is an irrevocable election so that, once made, the SMSF will always be obliged to comply with the SIS Act.

Once the SMSF makes that election the Tax Act gives the SMSF special concessions and benefits.  And the ATO is the body that regulates the SMSF and how it operates.

Does a SMSF have special tax concessions?

A SMSF has the same tax benefits that other superannuation funds enjoy.  So there is no direct benefit to a SMSF over and above larger superannuation funds.

The decision to open a SMSF might be an investment decision immediately

If you are going to set-up a self-managed superannuation fund there is a possible chance that you will look to roll-over your existing superannuation funds into your newly created SMSF.  So that decision will often have an investment element – you are choosing to sell an existing investment to invest in a new type of investment.

So even though a SMSF is a tax structure – it can also mean that you are making an investment decision.  So we always recommend that you talk to an investment advisor, stockbroker or personal financial advisor about other superannuation options and their forecast investment returns.

As a business we have never seen a great tax advisor give great investment advice.  And we have never seen a great investment advisor give great tax advice – the provision of tax advice cannot be done by anybody other than a lawyer or a licensed tax agent (like Westcourt).  So combining the two – tax strategy and investment strategy – is the best outcome we have seen to date.

An example of the two can be seen with the small business capital gains tax concessions together with taxation on excess non-concessional contributions tax.

Is an SMSF right for me?

Further, if you are not yet sure if a SMSF is right for you – you should engage with the type of investment professional discussed above.

Care should be taken when choosing a SMSF advisor.  Many SMSF’s will have restricted options – like you can only use a nominated bank or a nominated stockbroker.  And these advisors often are making money by kickbacks by the banks to send business their way.

Further, many investment advisors are not independent.  And their ultimate advice will either mirror your ultimate desired answer or it will align with the conflicted remuneration model – like fees as a percentage of funds invested.

At Westcourt we are independent.  We are structuring and tax advisors – not investment advisors.  And we have a deep network of truly independent investment professionals who we are happy to refer you towards.

How to set-up a SMSF

However, if you have engaged that advice, or if you are already know what you want – the process of setting up a SMSF is relatively easy.

There are a range of online legal platforms that will create the SMSF.  Sometimes these platforms will offer “free SMSF setup” hoping to entice you to use that platform later on for the ongoing work and capture the subsequent SMSF fees.

If you are going to create a SMSF you will need to know:

  • If you will operate a corporate trustee or personal trustees; and
  • Who will be the SMSF members; and
  • The personal details of the members including TFN and DIN (if using a company)

For many people using the online platforms is difficult.  So at Westcourt we can attend to the SMSF creation process and register the new SMSF with the ATO properly – including GST, TFN and other relevant taxes.

The process of creating a SMSF can take less than 2 days.  However the ATO are relatively slow in registering an SMSF – it can take over two months for the newly created SMSF to appear on the ABN register as a SMSF that is complying.

If you anticipate borrowing money within a SMSF using a custodial trustee you should ensure that the SMSF is created well before you sign a contract to purchase the property.  The banks will typically not lend money to a SMSF until they can see the complying SMSF status on the ABN register.

Decisions you should consider before creating a SMSF

If you have decided to create a SMSF you should consider:

  1. Your insurance needs and costs within the SMSF (so using an insurance broker);
  2. Whether a corporate trustee will be of assistance;
  3. How you will record the transactions within the SMSF;
  4. How you will manage the time commitments of a SMSF.
  5. Which advisors you will engage (you must have an SMSF auditor at least).

At Westcourt we can handle the tax strategy, SMSF creation, SMSF legal compliance, tax optimisation and source a local independent auditor.  We don’t ever give investment advice – so our clients either make their own investment or real estate decisions or they engage a licensed investment professional.

How does the SMSF work?

Once the SMSF is created you will have a number of legal documents (like a trust deed) together with the SMSF TFN and ABN.  And this will allow you to open a bank account.

The bank account will then allow for the SMSF to invest, pay bills and receive contributions.

The process of running a SMSF is quite similar to running a small business.  You will have decisions, transactions and filing documents to achieve an outcome.  The primary difference with running a SMSF compared to a business is that:

  • The trustee’s must only act with the sole purpose of the members retirement;
  • The trustee’s cannot engage with themselves (limited exclusions);
  • The trustee’s cannot mix the SMSF affairs with their own.

When you operate a SMSF, the way you record transactions is important.  You will want the self-managed super fund to enjoy lower operating costs so the amount available to invest is higher – so your software program that records the transactions should be able to be accessed and integrated by your SMSF auditor, SMSF tax structuring advisor and the SMSF investment advisor.

Of your advisors it is really only the SMSF auditor that is compulsory.  So if your investment advisor is running a platform that does not speak to your SMSF auditor you could be incurring higher costs.

As a practice we use BGL 360 to records transactions.  BGL 360 is the most common platform operating in Australia and allows multiple advisors, including stockbrokers and auditors, to access the data.  It also allows trustees to update and record transactions to reduce costs.

BGL 360 also allows other programs, like Netwealth, to link into the software.  So the need to re-type transactions is eliminated.

Other statutory obligations, like the trustees meeting to confirm investment decisions, or the preparation of your annual members statement, is also done by Westcourt (or the tax advisory firm you engage).

What are the benefits of a SMSF?

If you choose to open a SMSF you must have a clear reason.  And the most common one that we see is flexibility.  Many large superannuation funds have policy guidelines that will not allow a member to drill down into a single asset like unlisted shares or a single piece of real estate.

So while the ultimate investment decisions rest with the trustees, as a business, we have seen a SMSF used for the following purpose:

  1. Invest in a single piece of residential real estate that is leased to an outsider;
  2. Purchase an option to buy developed land at discounted prices;
  3. Invest in a private loan to an unrelated party;
  4. Invest almost all of the fund proceeds into a single “speccy” share;
  5. Purchase business real estate and lease it back to the trustee’s business;
  6. Deal with sophisticated investments offered by stockbrokers.

Another significant benefit of a SMSF is cost.  The SMSF fees (from somebody independent like Westcourt) are not charged as a percentage – so as the SMSF grows in size with investment returns and members contributions – the fees do not.

The larger a SMSF becomes the lower the advisors costs become.  Many larger funds charge a percentage so that as you continue to contribute to the fund you also pay the fund administrators more and more.

An SMSF can also engage tax strategies such as starting a pension without selling assets.  Some (not all) of the larger funds require that a SMSF member sells their assets, incur tax, and then invest into a separate pension fund account.

A SMSF also has some estate planning advantages over other superannuation options.  And, in limited instances, having an investment within your estate plan where the estate decisions are beyond the reach of the Superannuation Complaints Tribunal is a sound strategy.


How to plan for your retirement can be a complex decision or it can be a simple one.  For many smart families in business the SMSF is a straight forward decision on both costs and investment choice options.  For other people an investment advisor is strongly encouraged because other superannuation products can offer better options – especially for lower fund balances.

At Westcourt we are independent.  We think the one stop shop model of strategy advice with investment choice does not work with the range of conflicts.  And our deep tax and succession knowledge together with dedicated SMSF specialists mean that we are ideally placed to handle the strategy, tax and administrative obligations of your SMSF from set-up to wind-down.

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