SMSF setup costs expenditures are not tax-deductible since they are classified as capital costs. According to the ATO, you cannot amortise your expenditures because your SMSF is not a commercial entity.
Setup expenses, such as the cost of your trust deed or establishing a corporate trustee, must be deducted in the first year of your SMSF. The typical cost of establishing a corporate trustee and drafting an SMSF trust deed is between $2,000 and $2,500, including GST. This expense cannot be capitalised or carried over.
While you cannot expense its startup charges, if you pay them with your credit card or bank account, you can have your SMSF refund you if necessary. Update expenses, on the other hand, are deductible from income.
How do SMSF fees compare to those of super public funds
The way fees are priced is one of the most significant cost disparities between super public funds and your SMSF.
The vast majority of super public funds are priced as a proportion of their assets. Implies that the greater your super balance and the faster it rises, the more fees you will have to pay.
Annual fees on your super balance will generally range between 0.6 per cent and 1.5 per cent for industrial and retail super funds.
For example, if you have a $250,000 super balance, you might anticipate paying fees ranging from $1,500 to $3,750 every year.
SMSFs often have a flat fee structure. Because of the fixed nature of their fees, if your balance surpasses $500,000, they become a considerably more cost-effective alternative than a public fund.
One significant advantage is that if you have more than one member in your SMSF, your fees are halved because you only need to pay one set of fees.
The Fees for SMSF Accounting
An overview of the expenses associated with self-managed super fund accounting.
Setting up your self-managed super fund is a vast choice that deserves careful consideration.
The expenses associated with self-managed super funds accounting are an essential consideration.
So, how much should you budget for your SMSF? It is entirely dependent on your scenario and the complexities of your super.
Contact Liston Newton Advisory now to schedule your complimentary 90-minute financial strategy consultation to determine whether an SMSF is a suitable option for your future.
What is accounting work required for SMSFs?
Services in accounting
Create your super fund’s financial statements, including an operation statement, balance sheet, member balances, and financial statement notes. These must be written by a practitioner familiar with the accounting standards that apply to superannuation funds.
SMSF tax return and submission to the Australian Taxation Office (ATO)
Calculating the market value of the fund’s assets for all stated investments, managed funds, and residential real estate.
arranging for the issuance of an actuarial certificate (if required)
appointing an independent auditor for your SMSF and maintaining frequent contact with them to guarantee your fund is compliant
Administration services
Drafting trustee minutes
Collating member statements
Calculating minimum pension entitlements
Preparing rollover documentation (if required)
The typical fees and costs of running an SMSF
The costs for the ongoing running of your SMSF will depend on the size and complexity of your fund.
For a straightforward SMSF, you can typically expect to pay around $1,800 + GST.
An SMSF with more complexity will likely see you pay up to $4,500 + GST per year.
On top of this, you need to factor in the annual ATO SMSF Levy of $259.
Your fund also needs to be independently audited every three years. This service will cost between $300 to $440 each time.
The last word
As you can see, there is a lot to consider when establishing an SMSF. It requires a significant amount of early effort, which leads to greater upfront expenditures that are not tax-deductible. It would help if you considered the following:
Accounting charges
Administrative costs
ATO annual fees
Auditing charges
The fixed yearly fees paid on your SMSF, on the other hand, make it a far less fee-heavy alternative than a super public fund. Using a flat cost rather than a percentage fee will save you hundreds of dollars each year as your amount climbs.
