The three main asset classes that SMSF’s can invest in are:

  1. Managed shares and share related investments;
  2. Bank and fixed term deposits; and
  3. Property

Permissible SMSF investments are relatively straightforward. As long their aim is genuinely to provide retirement benefits for Fund Members, SMSF Trustees are generally heading in the right direction.

Many people dream of setting up an SMSF and filling it with exotic investments like artwork, classic cars and yachts. There are, however, certain rules as to the types of investments an SMSF can acquire. So, let’s take a look at what are deemed to be allowable SMSF investments.

The Sole Purpose Test

The rule of thumb when it comes to selecting investments for an SMSF is that the sole purpose of any investment must be to provide income on retirement for the Members of the SMSF. This means all the assets in the SMSF must have the potential to generate income by the time you retire. You can’t use your SMSF’s funds for your own purposes. In other words, you can’t lend money to friends or family or run a business with your Fund.

Running a Business in an SMSF

An SMSF is not permitted to run a business. Doing so is usually considered a strong indication that the Fund is in breach of the sole purpose test. An SMSF must be administered for the sole purpose of providing retirement benefits for Fund members. Investment decisions must be made for a future retirement benefit, not a current benefit.

Your SMSF must formulate an SMSF investment strategy rather than a business (trading) strategy, and any investment decisions must be in accordance with that investment strategy. Section 52 of the Superannuation Industry (Supervision) Act 1993 states that when formulating your strategy, the following must be taken into account:

  • Risk and return: the risk involved in making an investment, and the likely return on that investment, taking into account your SMSF’s investment objectives and expected cash flow requirements.
  • Diversification: the composition of your SMSF’s investments as a whole and whether the Trustees have considered the appropriate spread of risk across industry sectors, asset classes and countries.
  • Liquidity and ability to discharge your SMSF’s liabilities: the ability of your SMSF to pay taxes, expenses and benefits as they become due.

When setting up an SMSF with Superannuation Warehouse, we provide you with assistance in the form of our investment strategy template.

I. Shares and Share Related Investments

Once your SMSF is established, you can open up a share trading account. This can be with a traditional full service broker or an online broker.

Another good option is to use Separately Managed Accounts – the transaction costs are low and it will assist you, as a Trustee, in acquiring a diversified share portfolio.

“Don’t put all your eggs in one basket” is all wrong. Put all your eggs in one basket and then watch that basket. It is easy to watch and carry one basket. It is trying to carry too many baskets that break most eggs.

— Andrew Carnegie, Carnegie Steel Company, 1835 - 1919

When SMSFs invest in shares, factors to consider are Dividend Payout, Franking Credits, Portfolio Construction and Diversification.

II. Bank and Fixed Term Deposits

First of all, your SMSF should have a bank operating account. This is the main bank account for the SMSF. Superannuation Warehouse is not prescriptive on where to open up your bank account.

Part of your investment strategy can be to put some or all of your Fund’s investments into a fixed term deposit. The great advantage of this is that capital is guaranteed (government guarantee) and a consistent interest income can be earned.

III. Property

You can invest in residential or commercial property. If the SMSF buys a property outright, it’s similar to buying any other type of investment and will be done within the SMSF.

An SMSF can also borrow to purchase an investment property. To facilitate this borrowing, a Bare Trust is set up with a Corporate Trustee (click here for further details).

IV. Gold and Silver Bullion

SMSF also can invest in bullions such as gold and silver. However, Trustees need to be mindful of the Sole Purpose test, and the storage for these assets – commercial premises. For more info on the provider for this kind of investment, please see more at Ainslie Bullion.

Bullion providers such as Bullion Capital offer bullion products to SMSFs. For more details on Bullion Investments in an SMSF, please see our Gold Investment page here.

FAQs about SMSF investments (click on the question to reveal the answer):

Q: Can I invest in racehorses with my SMSF?

A: In theory, yes; but in practice, no. You could buy into a syndicate – but you’d have to be able to prove the syndicate wasn’t a business (because SMSFs can’t invest directly in a business). You’d also have to prove to the ATO that the investment was going to generate income for your retirement. If you’re a keen punter and you’re known within racing circles for your interest in horses, it’s unlikely the ATO would view your interest in a racehorse syndicate purely as an income-generating venture.

Q: Can I invest in property with my SMSF?

A: SMSFs are expressly prohibited from investing in the family home. They can, however, invest in investment properties – as long as the property is only used for investment purposes. This means Fund members can’t use the property for holiday purposes or rent it out to family members. The property generally needs to be managed by a real estate agent to satisfy the sole purpose test regulations.

Q: How about jewelry, wine and art?

A: You can invest in jewelry. However, if you want to satisfy the sole purpose test, you can’t wear it. Similarly, you can invest in wine through an SMSF – but you can’t drink it. SMSF investments in art operate in a similar way. You can’t display an artwork in your hall at home, but you can rent it to a corporation or an art bank whose business it is to rent out works of art.

Although you may be tempted to use your superannuation to invest in objects d’art and related items, the value of this type of investment is notoriously volatile and the market for these asset classes is generally pretty illiquid. Sure, have a little flutter with a small portion of your fund (within the law) but remember your SMSF is designed to support you in retirement. Investments for the SMSF should be in alignment with your investment strategy.

Q: Can an SMSF invest overseas?

A: Yes, an SMSF can invest internationally. The first step you need to do is to ensure your Trust Deed allows these types of investments. Once the Trust Deed does not exclude the investments, the types of investments the SMSF actually holds are determined by the Investment Strategy, which is formulated in the Trustees’ capacities.

The Investment Strategy should reflect your objectives, risk tolerance, liquidity needs and the investments the Trustees intend to utilise. It can be changed as often as you wish, to suit your changing circumstances and to take advantage of new investment opportunities.


  • Stephen Manallack

    Can an SMSF invest in a Singapore or India based fund manager?

    • superannuationwarehouse

      On the basis the Trust Deed and Investment Strategy allows for it, an SMSF can invest overseas.
      We give the 2 documents noted above as free downloads, so please amend you investment strategy if needed before entering into these investments.
      Lastly, remember to have a balanced investment portfolio and keep in mind the onus to protect capital of your SMSF if your responsibility as Trustee of the Fund.

  • Farhan

    Can I please confirm if the following scenario is possible in SMSF –

    a. Have a spare 10,000 AUD in my personal account. Can I borrow that amount into SMSF to buy shares and over the next 6 months pay off?
    b. The 10,000 AUD is offsetting an interest against my PPOR however, I will be paying interest once I borrow ~5%. Is this interest deductible as expense in SMSF and creditable back to personal as income?

    Also, please confirm if the reverse is possible i.e., can i borrow into personal account and pay income interest on it back to SMSF through earnings. Main reason being that I can invest in offshore mutual funds without creating an offshore SMSF structure as Australian SMSF will not be acceptable there and would need a company to be formed?



    • superannuationwarehouse


      With the scenario’s as you described, its important to remember you can not receive a benefit from the SMSF or be perceived to get a benefit before a condition of release is met.

      The SMSF can not make a loan to you or a related party. This is seen as giving a financial benefit, even if interest is charged. All investments must be for the sole purpose of your retirement benefit.

      In addition to this, an SMSF can’t incure any loans or borrowings except in very specific circumstances where we set up a Bare Trust, usually to purchase property.

      The rules over SMSF’s are strict and this would generally prohibit the transactions as noted in your scenarios.

      Keep well,

  • Farhan

    Under an SMSF, if we are NOT a Company and have an ABN, can we claim back GST for,
    1 – Shares
    2 – Property

  • Farhan

    Under an SMSF, if we are NOT a Company and have an ABN, can we claim back GST for,
    1 – Shares
    2 – Property

    • superannuationwarehouse


      The type of Trustee for your SMSF has no bearing on the GST registration, these 2 concepts are separate from each other.

      We usually do not register Funds for GST as the administration effort involved is not worth the amounts that can be claimed back. However, if the SMSF owns property, it might be worth it, especially if its commercial property. Please advise us if you want to register your Fund for GST and we do it online with the ATO.

      On a quarterly basis the ATO will then send you a BAS form. You as Trustee need to complete this to claim or pay your GST.

      Trust this answers your question.

  • Victoria Kong


    When can a SMSF invest in an Unlisted Unit Trust?

    Can SMSF buys units in Unlisted Unit Trust from a member?



    • superannuationwarehouse


      An SMSF can invest in a Unit Trust if the Investment Strategy allows for this and if the underlying investment is an authorised investment for the Fund.

      Unit Trusts are popular to purchase property with related parties. It does allow the Fund to buy more units but there are specific rules governing this type of investment:

      An SMSF can buy Unit Trusts from a member on an arms-length basis and on commercial terms.

      Trust this answers your question.

  • Victoria Kong

    Pre Aug 1999 Unit Trust

    SMSF owns 99% of the units in this unit trust that was set up pre Aug 1999. Is this unit trust totally excluded from the in house assets rule regardless of whether there was a loan initially etc? The SMSF is not looking into acquiring more units in the trust but is thinking of buying a residential property through this units trust using borrowings and leasing it to a related party of the SMSF.

    Will this contravene any of the regulations or the unit trust can do whatever it wants?


  • Scott

    I have purchased one piece of artwork already with my SMSF and was wondering if Vintage Movie Posters are classed as Art?
    Movie Posters are specifically stated on any allowed SMSF list.

    • Hein Preller

      Scott, its important to be mindful of the ATO rules around art. You are correct in noting this will be classified as art. More info and guidance here:

      • Rajeshwar

        Dear Hein ! What are RULES by A TO on investing in overseas BANK in India in Fixed deposit at 7 % and investing interest proceeds in shares and gold. How the asserts like MUTUAL Funds gold can be registered over SUPERFUND in case Asserts are held in names of trustees for the benefits of members. I read in ONE of your discussion also that A TO looks at your intention also. What does that mean

        • superannuationwarehouse

          The SMSF must have a legal enforceable right to all assets it owns. This means all bank accounts and other assets must be in the name of the SMSF.
          If there are practical considerations why an asset owned by the SMSF is not in the name of the SMSF, there must be a Declaration of Custody Trust, noting the SMSF is the legal owner. See here for guidance:

  • Tanju Ibrahim

    Hi, can I invest in Industry super funds via a SMSF?

    • superannuationwarehouse


      You can have more than one super account. Part of your super can be in an industry Fund.

      A potential strategy may be to use the SMSF for a specific asset, say purchasing a property. Leave part of your super in an industry Fund and let them manage the portion invested in shares. You can move funds from a retail fund to the SMSF and also visa versa.

      Trust this gives you some guidance.

  • Andrew

    Hi, could a SMSF invest in a consultancy business, acquiring 20%, of which I am one of 4 partners, where each partner owns 20% of the business and each other partner is unrelated to me?

    • superannuationwarehouse

      Yes, on the basis this is catered for in the SMSF Investment strategy.

  • Jong

    Hi, If I becomes your client for SMSF packages Advanced $79/month

    1. Is the fee include all the administration, yearly financial statement & audit & all other compliance
    2. Can I set up bank account with NAB.
    3. What is mean by administration in term of your smsf packages
    4. For you to prepare financial statement, at end of the year what document you need from me. (bank statement, investment tax statement)
    5. Do I need to send you any document every month, if yes what kind of document ?
    6. Can I invest in Unlisted managed funds, bonds, options, international shares.
    7. What investment restriction for your SMSF packages.
    8. Any restriction for the broker ?
    9. Do you have prefer supplier for life insurance or can you recommend ?

    • superannuationwarehouse

      Jong, thanks for posting and I can answer as follows:

      1. Is the fee include all the administration, yearly financial statement & audit & all other compliance – the fee is for accounting, tax and audit. If there’s other fees like bank fees, insurances or brokerage, the SMSF pays for this. Also remember to pay for the super levy and an actuarial certificate if applicable, more guidance here:

      2. Can I set up bank account with NAB.- yes, see also here:

      3. What is mean by administration in term of your smsf packages –
      It means we are the accountant and tax agent for your SMSF, so we ensure the tax return is lodged on time with the ATO, see here as well:

      For you to prepare financial statement, at end of the year what
      document you need from me. (bank statement, investment tax statement) – it depends what you have in your SMSF, you have to tell us what you have for us to do the accounting, see a chechlist here:

      5. Do I need to send you any document every month, if yes what kind of document ? – only at the end of the year, i.e. after 30 June each year.

      6. Can I invest in Unlisted managed funds, bonds, options, international shares. – Yes
      7. What investment restriction for your SMSF packages. – if the ATO allows for it, good by us.
      8. Any restriction for the broker ? – No
      9. Do you have prefer supplier for life insurance or can you recommend ? – yes, see here and remember its your choice ultimately, the SMSF can pay for the insurance but make sure the policy is in the name of the SMSF:

      Trust this answers your questions

  • Rowdy Bravo

    Hi Team,

    Am I allowed to withdraw some money from my Macquarie trading account? Are the fees for the SMSF allowed to be paid by the super? I tested a withdrawal from the CMA and it let me withdraw money into my bank account. I cancelled the withdrawal just in case this was not allowed. Can you please let me know. Cheers.

    • Hein Preller

      Rowdy Bravo,

      Even if you can withdraw funds from the SMSF, is may be illegal. To be entitle to a withdrawal, you need to meet a condition of release, usually over 60 years of age and retired or over 65 irrespective of your working conditions.

      See here for the other conditions of release, for example a terminal medical condition that also allows for a valid withdrawal:

      As far as fees for the SMSF goes, if the fee if for the SMSF, yes, the SMSF can pay the fee.

      Keep well,

      • Rowdy Bravo

        I don’t understand the response. Can the withdrawal be used to reimburse the SMSF fees that I have already incurred and paid for?

        • Hein Preller

          Yes you can.

  • Ben Van Baak

    I am currently considering to transfer to a SMSF in the future. Am I able to have a term deposit account in another country as my SMSF.
    The term deposit would be held in my partners name as it is her place of birth and provides better interest rates to nationals. Would this mean she would be required to be a trustee?
    Additionally can the funds from the SMSF once setup be
    withdrawn pysically and transferred as cash to the overseas account to avoid bank fees etc.

  • Jenny

    I would like to set up SMSF with you. one of investments I would like to do within SMSF is run a business of lease and sublease. my SMSF will lease a property from other owner, and furnish this property then sublease it for a profit. Does SMSF warehouse allow this type of investments?

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We are Melbourne based with clients throughout Australia. Our SMSF administration service is mostly paperless. This enable us to charge a fair fee, resulting in a good value-proposition for you.

No Advice

Superannuation Warehouse is an accounting firm and do not provide financial advice. All information provided has been prepared without taking into account any of the Trustees’ objectives, financial situation or needs. Because of that, Trustees are advised to consider their own circumstances before engaging our services.