Setting up a SMSF – The Suggested Way for peaceful retirement

Self Managed Superannuation fund (SMSF) is a type of retirement fund that can be set and controlled by one person and is regulated by the Australian Department of Taxation. The fund must be set up properly and audited each year. SMSF setup costs are around $550 which includes setting up a self managed super fund trust deed and other documentations like registering with the ATO (Australian Taxation Office). A smsf audit which can cost about $450 is required once a year.

The most important ATO requirement for a SMSF is the $250,000 super balance in order to make yearly audit and other fees worthwhile. SMSF is becoming more and more popular every day which is why fees are much more lower compared to other types of retirement funds. But Australians do not chose SMSF mainly because of its low fees, but also because with the money in a SMSF fund they can invest in shares and in (SMSF) property etc.

Before you decide to setup your own SMSF, ask for an advice from a professional because you will need proper skills and time to manage your fund. You also need to be aware of costs which mainly depend on you as a trustee. They are divided into 3 categories: Required, Administrative and Investment costs.

Required costs

SMSF fund must be audited once a year by a professional auditor. Fund must be separated from any personal property of its members, thus you must have separate bank account. Bank Account fees typically vary from $0 – $120 and Audit Fee ranges from $500 – $700.

Administrative costs

Services offered by licensed companies that offer administrative support for SMSF funds include: keeping records of investments, preparation of fund’s income tax returns, financial statements, follow ups on ATO rules and law changes etc. Administrators typically charge a yearly fee which ranges from $1,500 – $3,000.

Investment costs

Investment cost is the money you plan to invest in your fund plus advisory fees depending on whether you’ll use services of experienced financial planner. Other investment costs include brokerage fees which you’ll pay your broker for trading shares, goods and bonds.