Is an SMSF Right for You? The 5-Question Checklist
Is an SMSF right for you?
That's the first question to answer, before the trustee structure, before the deed, before anyone starts talking about what you could invest in.
It's also the one most often skipped, because almost every article about setting up an SMSF is written by someone who gets paid when the answer is yes.
So this is the other kind of article.
The short version: an SMSF tends to make sense when the balance is big enough that fixed costs stay under about 1% a year, there's a specific reason the structure does something a retail or industry fund can't, and you're willing to carry the responsibility not just enjoy the control.
It tends not to when the appeal is "flexibility," when the plan is for the accountant to handle it, when the reason was borrowing to buy a residential rental (no longer available for new loans from 10 August 2026), or when the person recommending it gets paid if you say yes.
Five questions below. Each ends with a single test. Fail two and stop.
First: what an SMSF actually is
An SMSF isn't a product and it isn't an investment. It's a legal structure that makes you personally responsible for retirement money — yours and every other member's.
Most of what you'll read about SMSFs describes what the structure lets you do: pick your own investments, hold property, own your business premises, control the strategy. All true. None of it answers whether you should be the one holding the responsibility. That's what this checklist is for.
One more thing worth knowing before you start. Following the collapse of two investment schemes where more than $100 million had come through SMSFs, the Government announced reforms on 19 August 2026 that include a mandatory trustee knowledge test before a new fund can be registered.
The reforms are announced, not yet law — but the direction is clear. The question "do you understand what you're taking on?" is about to become formal. Ask it of yourself first.
1. Is there enough in the fund for the structure to make sense?
There's no legal minimum balance. There is a practical one.
An SMSF carries fixed annual costs whether it holds $150,000 or $1.5 million:
Annual accounts and tax return
Independent audit (required every year)
ATO supervisory levy — rising from $259 to $295 under the August 2026 reforms, and to be paid at establishment rather than with the first return
Contributions to the Compensation Scheme of Last Resort in special-levy years (expected to be $20 or less per SMSF, starting 2026/27)
Corporate trustee ASIC fee, if you use a company as trustee (you should)
Individually these aren't large. But they're the same dollar amount at every balance, so the percentage they eat varies enormously. And the direction of travel is up, not down.
Run the numbers on your balance, not the industry average. If you're combining balances with a partner to reach scale, that's legitimate — but count the combined figure, not the one you hope to reach in five years.
The test: if your total fixed costs exceed roughly 1% of the fund balance, the structure is working against you before you make a single investment decision.
2. Do you want to run a fund or do you just want control?
This is the question that catches most people.
Wanting control over how your super is invested and wanting to administer a superannuation fund are two different desires. The second is what you're signing up for:
A written investment strategy, reviewed regularly — and under the proposed reforms, required before the fund holds anything
Annual financial statements and a tax return
An independent audit every year
Records that satisfy both the auditor and the ATO
Minutes for trustee decisions
Ongoing compliance with contribution caps, pension rules, related-party and in-house asset rules, and the sole purpose test
You can outsource almost all of the doing. You cannot outsource the responsibility. The trustee is legally accountable regardless of who prepared the paperwork, and the ATO treats it that way.
If the idea of writing an investment strategy before you've bought anything makes you want to close this tab, that's useful information.
The test: if your honest answer to "who keeps on top of this?" is "I assume the accountant does," you want an investment platform or a wrap account, not an SMSF.
3. What's your actual reason and does it still exist?
Write down the specific thing you want an SMSF to do. One sentence. Then check it's still available.
For years the most common answer was borrow to buy a residential investment property. That reason is gone. From 10 August 2026, SMSFs can no longer enter new borrowing arrangements for residential property. Existing loans are grandfathered and commercial property borrowing still works — the detail is in our guide to the LRBA ban.
If that was your reason, you don't need a revised plan. You need a new reason or a different decision.
Reasons that hold up:
Holding your business premises inside super (the fund owns it, your business pays rent to your own retirement)
Genuine investment control you'll actually exercise — direct shares, specific asset classes, a strategy a retail fund won't run
Direct property you can buy outright, without borrowing
Estate planning outcomes that need the structure — control over death benefit nominations, reversionary pensions, keeping assets in the family
Combining balances with a partner or adult children to reach a scale that makes the structure efficient
Reasons that don't:
Someone told you it was a good idea
You want an investment a retail fund won't offer — and haven't asked why they won't
You saw an ad, a seminar, or a property spruiker
"Flexibility"
If the reason is an investment someone showed you
There's a specific version of this worth separating out, because it's the pattern the reforms were written in response to.
If you're considering an SMSF because someone has recommended a particular investment that requires one, you're being asked to make two decisions at once. Pull them apart and answer them in order:
Is establishing an SMSF appropriate for me — the structure, the cost, the responsibility — independently of any investment?
Separately, is this particular investment appropriate for my SMSF and its investment strategy?
The investment must not become the reason the SMSF is appropriate. When the sequence runs the other way, the structure gets built to justify a decision that's already been made — and the strategy document ends up explaining the investment rather than informing it.
If you can't get to yes on question 1 on its own, the answer is no, regardless of how good question 2 looks.
The test: if you can't state your reason in one sentence without the word "flexibility," you don't have one yet.
4. Who suggested it, and what do they get?
This is the question the August 2026 reforms are built around, and it's the one most people skip.
New SMSFs will be required to disclose to the ATO any financial adviser involved in setting them up, and annual financial statements will carry a dedicated line showing advice fees deducted during the year. That transparency exists because of what happened when it didn't — people were steered into SMSFs by parties who profited from the steering, and the money went into products that collapsed.
It's not a hypothetical risk. ASIC reviewed 100 financial advice files involving a recommendation to establish an SMSF or make an initial rollover into one. Only 38 demonstrated compliance with the adviser's best interests obligations. In 27, ASIC identified significant concerns about potential client detriment from the recommendation itself.
That's a coin flip on whether the advice that led someone to an SMSF was actually in their interest.
You don't need to be cynical. You do need to ask directly: what are you paid if I set this up, and what are you paid if I don't? Anyone legitimate answers without flinching.
An accountant charging a flat setup fee is a straightforward answer. A property firm, a "wealth coach," or an adviser whose fee is tied to the product you'll buy afterwards is a different answer — and you should hear it before you sign.
The test: if the answer is vague, or the person becomes uncomfortable, you have your answer about the recommendation too.
5. Can everyone involved actually be a trustee?
Every member of an SMSF must be a trustee, or a director of the corporate trustee.
Everyone signs. Everyone is responsible. Everyone needs to be capable of the role — now and later.
Think about this before the fund exists, not after:
What happens if one member loses capacity?
What happens if the relationship ends?
What happens when one member dies?
Is there a member who has no idea what the fund holds and no interest in finding out?
A two-member fund with one engaged trustee is a fragile arrangement. It fails at exactly the moment the remaining member can least afford it — usually while dealing with illness, separation or grief. Enduring powers of attorney, a corporate trustee, and a successor director plan fix most of this. But they have to be set up deliberately.
The test: if one person in the fund couldn't explain what it holds and why, that's a risk you're carrying, not a detail you'll sort out later.
Scoring it
Question | Pass | Fail |
1. Fixed costs under ~1% of balance | ||
2. Willing to be responsible, not just in control | ||
. One-sentence reason that still exists | ||
4. Recommender's incentive is clear and clean | ||
5. Every member can genuinely act as trustee |
Five passes: an SMSF is a reasonable thing to investigate properly.
One fail: fixable, usually — but fix it before setup, not after.
Two or more fails: don't. Not yet, possibly not ever. A good retail or industry fund will serve you better and cost you less.
If you passed and still want one
Good. That's a real decision rather than a default, and plenty of people land there legitimately — business owners buying their premises, people with the balance and the genuine interest, families where the structure does something a retail fund can't.
Start here:
Key Decisions to Make Before Setting Up Your SMSF — trustee structure, naming, eligibility, and the choices that are hard to change later
Does Your SMSF Investment Strategy Meet ATO Expectations? — write it before the money moves, not afterwards to explain what you bought
SMSF Record Keeping: What to Keep and For How Long — build the habit from day one; retrofitting it is the expensive version
There's no universal answer to whether an SMSF is right for you — it depends on your balance, your reasons, and your appetite for the responsibility. What follows is a way of working through it honestly.
Frequently Asked Questions
Is there a minimum balance to set up an SMSF?
No legal minimum exists. The practical test is whether fixed costs (accounting, audit, ATO levy) stay under about 1% of the balance. Below that, the structure costs more than it delivers.
Can my accountant run my SMSF for me?
Your accountant can prepare the accounts, tax return, minutes and investment strategy documentation, and arrange the audit. They cannot take on the legal responsibility — the trustee remains accountable to the ATO for every decision and every compliance breach, regardless of who did the paperwork.
Can an SMSF still buy property?
Yes, if the fund can pay outright or the property is commercial. From 10 August 2026, SMSFs cannot take out new loans to buy residential property. Existing loans continue under their current terms.
What's changing for SMSFs under the August 2026 reforms?
Seven measures were announced: ATO power to block rollovers into new SMSFs under investigation; a mandatory trustee knowledge test before registration; uniquely identifiable SMSF bank accounts; a written investment strategy required upfront; disclosure of advisers involved in setup and a dedicated advice-fee line in annual statements; the supervisory levy rising to $295 and payable at establishment; and SMSF contributions to the Compensation Scheme of Last Resort in special-levy years. All are announced, not yet legislated. Detail is still to come.
Do I need a financial adviser to set up an SMSF?
No. You need a trustee structure, a trust deed, ATO registration, a bank account and an investment strategy. Whether you need advice depends on whether the decision is right for you — which is a different question, and one worth answering before you pay anyone for the setup.
How much does an SMSF cost to run each year?
Typically a few thousand dollars in fixed costs, plus the ATO levy. The figure matters less than what it represents as a percentage of your balance.
This article is general information only. It doesn't take into account your objectives, financial situation or needs, and isn't financial product advice. Get advice from a licensed professional who knows your circumstances before acting.
Leonie Martin is a CPA with 20 years' experience and the founder of HelloLedger, an online Australian accounting firm working with established business owners and SMSF trustees.
