The costs of SMSF accounting

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Self Managed Superannuation
March 1, 2020
minute read

An outline of the costs you can expect to pay for self-managed super fund accounting

Setting up your own self-managed super fund is a big decision, and one that requires careful planning.

One key element to take into account are the costs involved with self-managed super funds accounting.

So, what costs can you expect to pay for your SMSF? This really depends on your situation, and the complexity involved with your super.

Contact Liston Newton Advisory today to organise your free 90-minute financial strategy session to discuss if a SMSF is the best choice for your future.

What accounting work needs to be done for SMSFs?

Accounting services

  • Preparing your super fund’s financial statements, including an operating statement, balance sheet, member balances, and notes to these financial statements. These must be prepared by a practitioner with knowledge of the accounting standard applicable to superannuation funds
  • SMSF tax return and lodgement with the Australian Tax Office (ATO)
  • Determining the market value of the fund’s assets for all listed investments, managed funds, and residential property
  • Organising the issue of an actuarial certificate (if required)
  • Organising an independent auditor to be appointed for your SMSF, and regular liaison with them to ensure your fund remains compliant

Administration services

  • Drafting trustee minutes
  • Collating member statements
  • Calculating minimum pension entitlements
  • Preparing rollover documentation (if required)

The typical fees and costs of running a SMSF

The costs for the ongoing running of your SMSF will depend on the size and complexity of your fund.

  • For a simple and straightforward SMSF, you can typically expect to pay around $1,800 + GST.
  • A SMSF with more complexity will likely see you pay up to $4,500 + GST per year.
  • On top of this, you need to factor in the annual ATO SMSF Levy of $259.
  • Your fund also needs to be independently audited every three years. This service will cost between $300 to $440 each time.

Are the set up costs of my SMSF tax deductible?

SMSF tax

SMSF setup costs aren’t tax deductible, as they’re considered capital costs. As your SMSF isn’t a business entity, according to the ATO, your expenses aren’t able to be amortised.

Setup costs such as the cost of your trust deed or formation of a corporate trustee, must be written off in the first year of your SMSF. The average price for forming a corporate trustee and creating a SMSF trust deed is between $2,000 - $2,500 + GST. This cost can’t be capitalised or carried forward.

While the setup costs can’t be expensed, if paying the setup cost from your personal credit card or bank account, you can have your SMSF reimburse you if required. Update costs, on the other hand, can be considered as a taxable deduction.

How SMSF costs compare to public super funds

One of the main differences in costs between public super funds and your SMSF is the way fees are priced.

The majority of public super funds are priced on a percentage basis. This means that the larger your super balance, and the more it grows, the more you pay in fees.

For industry and retail super funds you can typically expect to pay between 0.6% and 1.5% in annual fees on the balance of your super.

So, for example, if you have a super balance of $250,000, you can expect to pay between $1,500 and $3,750 each year in fees.

SMSFs generally follow a flat fee structure. Due to the static nature of their fees, once your balance exceeds $500,000 they become a far cheaper option than a public fund.

One big benefit is that if you have more than one member as part of your SMSF, your fees are halved, as you only need to pay one set of fees.

The final word

As you can see, there is a lot to think about when setting up your SMSF. It takes a lot of initial work, which results in higher upfront costs, which aren’t tax deductible. You need to take into account:

  • Accounting fees
  • Administration fees
  • Annual ATO fees
  • Auditing fees

However, the flat annual fees paid on your SMSF make it a much less fee-heavy option than a public super fund. The use of a flat fee as opposed to a percentage fee will end up saving you thousands of dollars each year as your balance grows.

So while costly upfront, your SMSF will deliver reduced costs across it’s entire lifetime.

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