Can I claim back the costs of setting up my SMSF?

No – registration costs, bank establishment fees and other costs which may be incurred when setting up a SMSF are regarded as a capital cost and therefore can’t be claimed as a tax deduction.

Is it best to get professional advice to help me set up my SMSF?

Yes – since the legislation surrounding SMSFs is lengthy and complex, it’s worth getting professional advice before setting up your fund. Some companies specialise in setting up SMSFs and producing all the necessary documents and annual reports to ensure the fund is legally compliant. Expect to pay from $800 up to over $2,000 per year for such a SMSF service, depending on the state you live in and how involved your SMSF trust structure is.

How many different types of SMSFs are there?

There are two basic types of SMSF, which depend on how many members of the fund there are. The first is known as a ‘multiple members fund,’ which permits up to four people (or six people after regulation changes on 1 July 2021) to be members of the fund. They tend to have a corporate trustee structure. The second type is a ‘single member fund,’ which again can either have a corporate or non-corporate structure, but must have two trustees (the founding member, who must be a trustee, plus another individual or legal entity, who is not a member of the fund).

Are the fees I pay my financial advisor to manage my SMSF tax deductible?

Yes – ongoing fees for financial advice or management (including monthly or ongoing bank account fees) are tax-deductible and can be offset against any income your SMSF makes. You can also claim the costs of auditing and preparing your fund’s tax return as a tax deduction.

What is the ATO's supervisory levy?

Your SMSF will have to pay the supervisory levy of $259 per year (as of April 2022). The levy has to be paid to the ATO and it finances the employment of auditors and supervisors who ensure that all of Australia’s SMSFs are compliant with regulations. It’s a requirement that this levy is paid in advance, so when you first set up your SMSF you’ll be required to pay 2 x $259 ($518) to ensure you’re paid up one year in advance.

What is the ‘sole purpose test’ as applied to a SMSF?

This phrase refers to an ATO requirement that the sole purpose of a SMSF is either to provide retirement benefits, death benefits or other ‘core purpose’ benefits (such as resignation or disability benefits) to the SMSF’s members. If the super fund breaches this sole purpose test, it can be classified as a non-complying super fund and heavy penalties can apply.