There is no statutory minimum balance to start an SMSF.
The government and most companies focus on the minimum dollar amount that is suitable for setting up an SMSF. However, we think a better criterion is the cost of running an SMSF compared to your Superannuation balance. If you’re going to pay someone thousands of dollars to set up and maintain your SMSF, you’ll need a high balance to justify the cost of administration. Superannuation Warehouse makes SMSFs available to many more individuals by keeping the set-up and monthly fees as low as possible.
The costs you’ll incur are as follows:
- Audit costs – $450 or even less, if you have a well-prepared audit file. See guidance notes on our sister website.
- Supervisory levy – $259 payable by your SMSF annually with your tax liability
- Administration costs for accounting, tax and audit – $49 for a complete monthly administration service with Superannuation Warehouse or $79 depending on your investment choices. Alternatively you can do this yourself for $ NIL.
As a general rule of thumb, you’ll be doing well if your administration costs are around 1% of your SMSF. Most retail funds have an administration fee that works out at around 2.5%.
Based on the above, most people can run an SMSF cost-effectively with an SMSF Superannuation balance starting from between $50,000 and $100,000. Remember, if there’s more than one member in the SMSF you will quickly be in excess of these amounts.
If you’re considering share-related investments, in our view the most efficient types are Separate Managed Accounts. These are an excellent investment option if you want equities in your SMSF.
In summary, if you have $50,000-$100,000 in your combined Superannuation accounts, and you’re interested in managing your own money (as everyone should be), then an SMSF is well worth considering.
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