Thinking about taking greater control over your retirement savings? A self-managed super fund (SMSF) might be right for you.
But what is an SMSF, and how does it work? In short, an SMSF puts you in the driver’s seat. Unlike industry or retail funds, you choose how your super is invested, managed, and distributed, giving you the freedom to tailor it to your retirement goals. Plus, with expert guidance and the right structure, an SMSF offers more flexibility and transparency, leading to smarter and more valuable outcomes.
Let’s explore how an SMSF works and the key benefits that make it an attractive option for many Australians.
Understanding the Basics of an SMSF
First, let’s answer the question: What is an SMSF?
An SMSF is a private superannuation fund that you run yourself. It can have up to six members, all of whom must also be trustees (or directors of a corporate trustee). That means you’re responsible for making investment decisions and ensuring the fund stays compliant with super and tax laws.
So, how does an SMSF work in practice? You decide where to invest, how to manage contributions and pensions, how to structure the fund with the assets it holds, and how benefits are paid out. It’s not for everyone, but for those who want hands-on control, the results might be worth the effort.
Weighing your options? Learn how to change super funds and explore if it’s the right move for you. Next, let’s break down what the benefits of an SMSF are.
What Are the Benefits of an SMSF?
Control & Flexibility
The most talked-about qualities of an SMSF? Control. You decide where your money goes and when. You have a say in shaping your investment strategy, whether it’s property, shares, term deposits or even collectibles.
This control also extends to how and when you start a pension, handle contributions, and manage your estate. For business owners, an SMSF can even hold commercial property and lease it back to a fund member.
Wider Investment Choices
With an SMSF, you’re not limited to a preset menu of options. You can invest in:
- Direct residential or commercial property.
- Australian and global shares.
- Managed funds and ETFs.
- Term deposits and fixed interest products.
- Collectibles, such as art, under conditions.
- Physical gold and other alternative assets.
These investment choices allow you to build a portfolio aligned with your risk appetite and financial goals while taking advantage of market movements or new strategies quickly.
Build Wealth Together
SMSFs let you pool funds with up to five other members (often family members or partners). That combined capital gives your fund greater scale, allowing you to access assets or investment opportunities that might not be available alone—while reducing individual costs.
Managing wealth together also means one set of investments, one bank account, and shared fund administration, simplifying decision-making, reporting, and performance tracking. This is particularly helpful for couples managing retirement together or adult children and parents planning as a family unit.
Cost Efficiency Over Time
In contrast to most public super funds fees based on your account balance, many SMSF administration costs are fixed. Meaning, as your super balance grows, your percentage-based costs shrink. Plus, with multiple members, you’re spreading those fixed costs across the fund, leading to savings in the long run.
A trusted SMSF accountant can help you understand the breakeven point based on your situation. Learn more about the benefits of hiring SMSF accountants; they can save you the admin headache while ensuring your fund stays on track.
Smarter Tax Strategies
A common answer to the question, ‘What are the benefits of an SMSF?’ is making tax work in your favour. While all funds come with tax concessions, an SMSF lets you be strategic about them, reducing your fund’s tax burden and boosting savings. You can:
- Time asset sales strategically, sell at the right time to reduce capital gains tax and take advantage of lower tax phases.
- Plan contributions and pension commencements to optimise tax treatment and preserve benefits.
- Use franking credits from shares to offset tax payable and boost after-tax returns.
- Split income between members to stay under individual tax thresholds and pay less overall.
- Allocate income smartly between accumulation and pension accounts to reduce taxable earnings.
- Claim deductions with precision and get the timing and paperwork right for claiming eligible expenses for maximum benefit.
Borrowing Capacity
With the right setup, SMSFs can use a Limited Recourse Borrowing Arrangement (LRBA) to purchase investment property. That opens up an avenue to larger, income-generating assets, which is particularly attractive for business owners wanting to lease property back to themselves.
It’s not without risks, but for many experienced investors, it offers an avenue for leveraged growth within a compliant structure.
Portability & Lifetime Ownership
Retail and industry super funds tie your investments to their platform. Switching means selling assets, triggering capital gains tax, and resetting your investment strategy.
With an SMSF, your fund and assets stay the same, with only the accountants, financial advisers, or administrators changing. That means fewer disruptions, better continuity, and no forced sell-offs.
Easier Estate Planning
SMSFs offer more control over how and when your wealth is distributed. With the right deed and strategy, you can:
- Nominate beneficiaries with binding certainty.
- Minimise tax through strategic distribution.
- Manage multi-generational wealth transfers with confidence.
An SMSF also allows for advanced strategies like cascading nominations or blended family protection—a powerful perk.
Is an SMSF Right for You?
While SMSFs offer substantial value, they also come with heavy responsibilities.
As a trustee, you must understand the rules, manage risks, and stay compliant. It takes time, effort, and, for many, expert support. But if you value control, flexibility, and the ability to tailor your retirement strategy, an SMSF is a powerful structure to further your retirement savings.
Before deciding, consider your financial goals, how hands-on you want to be, and whether you’re ready to manage (or outsource) your SMSF obligations.
If you’re ready to have more say in your financial future, book a free discovery call with Spark Accountants. We’re here to help you make informed, confident decisions about your super.
