How much do I need to start a SMSF?

09 Oct 2012

By Belinda Von Knoll

It depends.

The first question you need to ask yourself is why do I want to start a SMSF?

There are many good reasons for starting your own SMSF such as the ability to take control of your super, being able to own assets such as your business property within your super or having better control over the tax payable. But the important thing is to have a reason, if you are not yet at the stage where you wish to take control of your super and assume the responsibilities associated with being a Trustee then it may not be for you.

Assuming you are ready then it becomes a case of looking at what you currently have in super and the fees you pay versus the costs of running a SMSF. SMSF's have some set fees such as accounting and audit and the SMSF Supervisory Levy which are payable each year. On average you need to allow between $2,000 to $3,000 pa for these fees.

What other fees are payable depend on how much you wish to be involved in the running of your fund and how much external advice is required. Areas where you may seek the services of an expert are in investments and compliance, to ensure you meet the SIS Legislation requirements. It is important to ensure you do not just try to save the cents and in the long run lose the dollars due to the lack of appropriate advice.

Once you have determined what services you wish to access and their cost, it is then simply a matter of comparing this to your current arrangement to see where you sit. Obviously if the cost is less than what you currently pay, you already have enough to start a SMSF.

If the cost is more, you need to determine if the increase in cost is offset by the reason you have decided to start a SMSF. For example if the reason is to provide you with the ability to purchase your business property and free up cash to put back into the business, the extra cost may be more than offset by the benefit of accessing this cash in the business.

An additional factor to take into account is what you are contributing into superannuation, if the amounts are significant each year then you are more likely to be able to start with a lower balance in a SMSF, as you will grow the balance quickly.

So in answer to the question on, how much you need to start a SMSF, it really does depend on a whole lot of factors. As a starting point, once your balance in super reaches $200,000, you should at least be asking the question of whether a SMSF is right for you.

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