There is no legal minimum balance required to establish an SMSF, but most financial guidance and the ATO itself suggests that a combined member balance of at least $200,000 is generally needed for the costs of running an SMSF to be worthwhile compared to a retail or industry fund. For smaller balances, the administration and audit costs typically represent too high a proportion of the fund’s assets.

 The annual costs of running an SMSF include accounting and tax return preparation, an independent audit, any investment fees, and ASIC fees if you have a corporate trustee. For a straightforward fund, total annual costs typically range from $2,000 to $4,000 or more depending on the complexity of the fund’s investments and activities. Setup costs for a new fund, including the trust deed and corporate trustee, are generally in the range of $1,500 to $3,000.

 Yes. SMSFs can purchase residential investment property and commercial property, subject to rules about who the property can be leased to. An SMSF cannot purchase residential property from a related party, and fund members generally cannot live in a property owned by their SMSF. However, business real property can be purchased from a related party and leased back to a related business at market rates, which is one of the most popular SMSF strategies for business owners.

 SMSFs can hold a wide range of assets including Australian and international shares, residential and commercial property, managed funds, exchange-traded funds, cash and fixed interest, gold and other precious metals, and collectibles such as artwork and coins. However, collectibles must be stored and insured correctly, and there are strict rules about using assets for personal enjoyment. Assets must also comply with the fund’s investment strategy and the sole purpose test.

 Yes, through a Limited Recourse Borrowing Arrangement (LRBA). This is a specific legal structure that allows an SMSF to borrow funds to purchase a single asset, with the lender’s recourse limited to that asset in the event of a default. LRBAs are subject to strict rules and must be structured correctly to be compliant. They are a popular strategy for purchasing property within an SMSF but require specialist advice to implement properly.

 As an SMSF trustee you are legally responsible for acting in the best interests of all fund members, maintaining and regularly reviewing a written investment strategy, keeping fund assets separate from personal assets, ensuring contributions stay within the relevant caps, paying benefits only in accordance with the conditions of release, arranging an annual independent audit, lodging the annual return with the ATO, and maintaining records for at least ten years. Breaches of trustee obligations can result in significant penalties.v

 Yes. Every SMSF must be independently audited each year by an ASIC-registered SMSF auditor. The audit covers both the financial statements of the fund and its compliance with superannuation legislation. The audit must be completed before the annual return can be lodged with the ATO. TSP Accountants provides independent SMSF audit services to funds and to accounting firms throughout NSW.

 The SMSF annual return is the tax return lodged with the ATO each year for the fund. It reports the fund’s income, deductions, contributions, and member balances, and is used by the ATO to assess the fund’s tax liability and compliance status. The due date for SMSF annual returns is generally 31 October for self-preparers, or later for funds lodging through a registered tax agent. TSP manages this lodgement as part of our annual compliance service.

 The consequences of SMSF non-compliance range in severity. Minor breaches may result in administrative penalties. More serious breaches can result in the fund being made non-complying by the ATO, which means the fund’s assets are taxed at the top marginal rate rather than the concessional superannuation rate of 15%. This is an extremely serious outcome that can effectively destroy the retirement savings held in the fund. Early detection and correction of compliance issues is critical, which is one of the primary reasons annual auditing and professional administration are so important.

 Yes. An SMSF can be wound up and the assets rolled over to a retail or industry fund, or paid out as a benefit if the member has met a condition of release. The wind-up process involves lodging a final return, paying any outstanding tax, and distributing or rolling over the fund’s assets. The process has specific ATO requirements that must be followed. Our team can assist with the wind-up process if your circumstances change and an SMSF is no longer appropriate.

 Yes. TSP provides independent SMSF audit services to accounting firms and financial advisers throughout metropolitan Sydney and regional NSW. Both of our directors are ASIC Registered SMSF Auditors with extensive experience auditing funds of varying complexity. We offer efficient turnaround times and direct access to our audit team for any queries. To discuss your practice’s audit requirements, call us on 4926 4155 or email ad***@****************om.au.