Self-Managed Super Funds (SMSFs) give Australians greater control over their retirement savings. However, with this control comes the responsibility of managing the fund in compliance with the law. One of the significant considerations when setting up an SMSF is the fees involved. In this article, we’ll discuss the fees related to setting up, renewing, and running an SMSF, including ATO requirements and obligations.
Set up fees: SMSF trustees must pay a set-up fee to establish their fund. The cost can vary depending on the provider and the services offered, but it typically ranges from $500 to $2,000. The set-up fee includes the cost of creating the trust deed, registering the fund with the ATO, and setting up a bank account for the fund.
Annual compliance fees: SMSFs are subject to annual compliance fees, which cover the cost of administering and overseeing the fund. The fees can vary depending on the fund’s size and complexity, but typically range from $2,000 to $5,000. The compliance fees cover services such as preparing financial statements, completing the annual tax return, and auditing the fund.
Investment fees: SMSFs are free to invest in a wide range of assets, including shares, property, and collectibles. However, each investment may incur additional fees, such as brokerage fees for buying and selling shares, property management fees, or storage fees for collectibles.
Insurance premiums: SMSF trustees may choose to purchase insurance to protect their fund and members. The insurance premiums can vary depending on the type of coverage, the fund’s size, and the members’ ages and health. Insurance options include life insurance, total and permanent disability (TPD) insurance, and income protection insurance.
SMSF supervisory levy: The ATO charges an annual SMSF supervisory levy to cover the cost of regulating and overseeing the SMSF sector. The levy is based on the fund’s assets and ranges from $259 to $1,221 per year.
According to the ATO, “Understanding the fees and costs associated with setting up and running an SMSF is an important part of managing your fund. Trustees should ensure that they have a clear understanding of all fees and costs involved before setting up an SMSF.”
It’s also worth noting that SMSF trustees have additional reporting obligations, including lodging an annual return for the SMSF’s regulatory status and reporting member contributions. Trustees should ensure they meet all their reporting obligations before the deadline to avoid penalties.
Setting up, renewing, and running an SMSF incurs several fees, including set-up fees, annual compliance fees, investment fees, insurance premiums, and the SMSF supervisory levy. SMSF trustees should ensure they have a clear understanding of all fees and costs involved before establishing a fund. Trustees should also ensure they meet all their reporting obligations to avoid penalties.
References:
Australian Taxation Office. (2021). Self-managed superannuation funds. Retrieved from https://www.ato.gov.au/Super/Self-managed-super-funds/
Australian Taxation Office. (2021). SMSF supervisory levy. Retrieved from https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/SMSF-resources/SMSF-supervisory-levy/
Australian Taxation Office. (2021). SMSF trustee obligations. Retrieved from https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/SMSF-trustee-obligations/
