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cost of set up SMSF

Discussion in 'Superannuation, SMSF & Personal Insurance' started by johnluo721, 26th Apr, 2010.

  1. johnluo721

    johnluo721 Active Member

    Joined:
    9th Feb, 2009
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    Location:
    sydney
    I am currently considering to set up SMSF with my friends. however, since we do not have much in our super. We have total around $20,000 balance. I understand with it highly unlikely I can get fund running efficiently with such low balance. Since my wife is working in a accounting firm, she can get aounnting and auditing done without cost. Just want to know what other unaviodable annual fixed cost involve.
    Is there any minimum balance requirement from ATO to setup a SMSF?
     
  2. Superman

    Superman Well-Known Member

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    Location:
    Gold Coast, QLD
    Ummm....shouldn't you ask your wife to find out?

    Anyway, you will have the $150 ATO levy which is added to the annual tax payable.

    If you have a corporate trustee (which you should especially as you have friends in the SMSF) then the ASIC annual fee of $40 is also unavoidable.

    Why do you want to set up an SMSF for? Any specific plans?

    I reckon having virtually $0 admin costs is the only reason you should set up a SMSF with less than $100k

    Thanks
    SM
     
  3. johnluo721

    johnluo721 Active Member

    Joined:
    9th Feb, 2009
    Posts:
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    Location:
    sydney
    Thanks superman

    She do not know much about super. In case there are so many professionals in here, I may get a answer quicker from here.

    Purpose of set up SMSF is not saving the cost. I believe cost of runnnign SMSF will be higher than industry one. I just want to have more control of my super.

    One more question, what the main reason a SMSF become uncompliance. If I just invest my super in share market, is there any chance I will breach the rules?
     
  4. SuperWarehouse

    SuperWarehouse New Member

    Joined:
    29th Aug, 2010
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    Location:
    Melbourne, VIC
    johnluo721, you can easily run a SMSF with $20k more efficiently than a retail super fund. To minimise the fixed costs further, there can be up to 4 beneficiaries in your fund. The fixed costs for running the SMSF, like the $150 ATO levy, can therefore divided into 4.

    The biggest drain on a SMSF can be the brokerage if you want to diversify into a few shares. For this reason, consider going for a Separately Managed Account (SMA) set-up. The trading costs are only 5 bps or less in a SMA.

    There is no ATO minimum balance requirement for a SMSF, but you have to make sure it is what you want, and transparency of fees is an important reason to set up your own fund. I believe as the compulsory super contribution increase from 9% to 12% people will become more fee sensitive and take ownership of their own savings and super.

    In your case, don’t go for a corporate trustee as it will add too much to your cost structure.

    Lastly, I know it’s bad to plug your own product, but please have a look at my website called Superannuationwarehouse.com.au as I believe it ticks all the boxes you are after. And do a Google search to make sure you get the best deal.

    Cheers
     
  5. Billv

    Billv Getting there

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    15th Jul, 2007
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    Location:
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    johnluo721
    Buying shares is 1 of the ways you can invest SMSF funds so the ATO has not problem with it.

    However, with only $20K to invest I feel that you'll be wasting your time. If I was in your position I'd leave the money where it is and if you wanted to have better control you could take the DIY option through your existing super fund.

    Through your current super fund you also get cheap life insurance. Your SMSF will pay much more to give you the same level of cover.

    Also, some SMSF setup costs are unavoidable because the deed docs will have to be purchased, and don't count on avoiding all of the yearly accounting fees because the auditor must be a different accountant and suitably qualified to perform the audit.
    The minimum auditing fee I've heard of is $400

    I hope this helps