Frequently asked questions about self managed super funds.

The Newcastle real estate market seems to be a hot topic at the moment, the CBD skyline is constantly dotted with cranes with up to several developments occurring at the same time, and this is only the beginning of the revitalisation of the Newcastle CBD. There are several projects planned for the next few years like the Wickham Master Plan which will become an extension of the West end, and GPT and Urban growth plans to invest up to $400 million into the redevelopment of the Hunter street mall.  Despite the increase in supply of new apartment buildings each development appears to be selling off the plan quite quickly.

After a recent catch up with Brad Frankham from Think financial solutions the topic came up about purchasing a property through a self managed super fund and other frequently asked questions about setting up a fund. I personally get asked from time to time questions relating to setting up a fund and I myself had several questions and queries which I wanted more clarification on. One of the main reasons why people choose to set up a SMSF is for the flexibility and control over where to invest your super. This article will cover 10 of the most common questions asked relating to self managed super funds.

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Frequently asked questions about setting up a Self-Managed Super Fund.


What is a Self-Managed Super Fund (SMSF)?

  • Like other super funds such as retail and industry funds, SMSFs are a way of saving for your retirement.
  • SMSFs are different to retail and industry super funds because they’re run by you – so you can invest, manage and build your retirement savings as you choose.
  • Self-Managed Superannuation is about you taking control of your own retirement savings.

Who can set-up a SMSF and how many members can there be?

  • Anyone can set up a SMSF providing you are over the age of 18.
  • There can be no more than 4 members of a SMSF.
  • You can set-up a fund with your spouse, partner, adult children, other relatives and family members, friends, colleagues or a combination of all of the above.

 What are some of the advantages of having a SMSF?

  • More control over your super—You make the key decisions and decide where to invest your money.
  • Flexibility and choice—You construct your fund’s investment strategy and enjoy more investment options.
  • Potential tax advantages—Tax savings depend on your personal circumstances and investment strategy.
  • Cost efficiencies—You can pool your super with family or other fund members to create cost savings.

 What assets can SMSF’s invest in?

  • SMSF investment portfolios can include many of the following investments:
  • Cash management accounts.
  • Term deposits.
  • Residential property.
  • Commercial property.
  • Industrial property.
  • Property purchased with borrowed funds (limited recourse borrowing).
  • Property partnerships with non-related parties.
  • Managed funds (Australian and international).
  • Listed Australian shares.
  • Listed unit trusts (property, investment).
  • Listed investment companies.
  • Overseas listed shares.
  • Shares in private companies with non-related parties.
  • Options, warrants, CFDs and other “exotic” investments – these assets are permissible with the proper investment strategy.

What are some of the benefits associated with using your SMSF to purchase property?

  • Most people we speak to prefer to invest in property as opposed to the share market given the perception that the property market is less volatile – ultimately if the clients want to invest in property using their superannuation savings, they must set up an SMSF. What are the benefits:
  • Asset protection
  • Significant tax efficiencies
    • Potential to benefit from negative gearing inside the SMSF environment.
    • No Capital Gains Tax (CGT) paid when disposing of the property once the member(s) retire (when the asset is sold in the pension phase).

What is a reasonable balance to have in superannuation in order to consider setting up a SMSF?

  • Australian Securities & Investment Commission (ASIC) guidance suggests an existing superannuation savings balance of $200,000 to start an SMSF.
  • This includes the superannuation assets of all members, for example the combined existing superannuation balances of a husband and wife needs to be at least $200,000.

Can super contributions from my employer be paid in to my SMSF?

  • Yes, most people can now instruct their employer to pay their super contributions in to a SMSF.
  • If you change employers, you can instruct your new employer to pay in to your SMSF.

What other types of superannuation contributions can a SMSF accept?

  • The exact same types of super contributions as a retail or industry super fund:
  • Voluntary contributions eg salary sacrifice and non-concessional contributions.
  • Rollovers or transfers from your existing superannuation funds.
  • Spouse contributions.
  • Co-contributions.

Article written by Brad Frankham

Brad Frankham


Think financial solutions logo





Financial planner at Think financial solutions


Think Financial Solutions provide comprehensive support services for SMSF clients. From establishing the SMSF and providing strategic investment advice to retirement planning, estate planning, insurance, accounting, mortgage and property services. If you are considering investing in property using your superannuation, find out how we can help you.

* Brad Frankham is an authorised representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706.

Any advice given is general only and has not taken into account your objectives, financial situation or needs.  Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.

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