Your Expert SMSF Accountant

A Self Managed Super fund (or SMSF) is a superannuation fund where you (along with a small number of others) are also the trustees of the fund. Trustees are the one’s that have control over a super fund, and everything that goes on within it.

Yes. Every SMSF must have an annual SMSF audit to check the validity and accuracy of its financial statements and its compliance with superannuation legislation (SIS Act) and regulations (SISR).

Self-managed super funds can carry on business, but the business activity must be:

1. 1. allowed under the trust deed
   2. operated for the sole purpose of providing retirement benefits for fund members.

The rules governing SMSFs prohibit or limit some activities available to other businesses, such as entering into credit arrangements or having overdrafts. You should get professional advice before carrying on a business through your SMSF.

Yes. Generally speaking, the income of your SMSF is taxed at a concessional rate of 15%. To be entitled to this rate, your fund has to be a ‘complying fund’ that follows the laws and rules for SMSFs. For a non-complying fund the rate is the highest marginal tax rate.

There are a number of ongoing running costs to consider for an SMSF – accounting, audit, planning, broking, etc. The running costs for a SMSF will generally be between $1,500 and $10,000 depending on the assets held by the fund and any advice received by the trustees.

It is possible for an SMSF to lend money to a third party but (as with almost everything to do with SMSFs) there are strict restrictions for doing so. Lending money must be part of the SMSF’s investment strategy and the trust deed must allow for lending. It’s incredibly important to seek professional advice on this matter.

SMSF stands for Self Managed Super Fund.

SMSFs often top out at 70 to 80 per cent loan to value on commercial property, which means a 20 to 30 per cent deposit from the fund, plus costs. Budget for stamp duty, conveyancing, lender fees, bare trust setup, company registrations, valuations, building reports, and a contingency for repairs. Many lenders also expect a liquidity buffer to remain in the fund after settlement so you can meet expenses, insurance and any pension obligations. The deposit and costs must be paid by the SMSF, not by members personally. If you need extra cash, you can add money through contributions or rollovers, subject to contribution caps and your total super balance. Pre-approval helps you set a realistic price range and confirm whether the lender requires a corporate trustee, a minimum fund size, or specific rent coverage. Remember the contract and title need a correct limited recourse structure from day one. Avoid signing in the wrong name or paying holding deposits personally, as that can be messy to unwind and may trigger extra duty. A simple rule of thumb is property price plus 7 to 8 per cent for on-costs, held within the fund, with a cash buffer on top.

The in-house asset rule limits loans to, investments in, or assets leased to related parties to 5 per cent of total fund assets at year end. If you exceed 5 per cent, you must prepare and implement a written plan to fix it within the following year, often by selling or redeeming the offending asset. There are important exceptions. Business real property that is owned by the fund and leased to a related party on market terms is generally not treated as an in-house asset. Certain ungeared unit trusts that comply with strict conditions can also be excluded. Auditors will check your year-end percentages, related party definitions, lease documents and market evidence. Keep an eye on this ratio during the year if asset values move or if members make large contributions, as percentage shifts can push you over the threshold unexpectedly. The safest approach is to avoid casual loans to related entities and to document arms-length terms for any related party dealings. If you discover a breach, act early, minute your plan, and keep your auditor and adviser in the loop.

Yes. A complying SMSF pays tax on net capital gains, generally at 15 per cent. If the fund holds an asset for more than 12 months, a one-third discount applies, which reduces the effective rate on that gain to 10 per cent. The result can be better or worse depending on carried-forward losses, transaction costs, and whether part of the fund is in retirement phase. Where an asset is supporting a retirement phase income stream, some or all of the investment income and gains can be exempt under the exempt current pension income rules, subject to proportioning calculations. Good records matter. Keep purchase contracts, settlement statements, improvement costs, and depreciation reports so you can correctly work out cost base adjustments. If you renovate, distinguish repairs from capital improvements, as they are treated differently for cost base purposes. Timing can be powerful. If you are close to a 12-month holding period or a planned shift into retirement phase, understand how the tax outcome changes. Always model the after-tax proceeds in the fund rather than relying on headline rates.

Yes, using a Limited Recourse Borrowing Arrangement. This requires a specific structure where a holding trustee owns the property on trust for the SMSF until the loan is repaid. The lender’s recourse is limited to the property and related rights. In practice, lenders often want personal guarantees and conservative rent coverage, so read the fine print. The asset must be a single acquirable asset. You can use borrowed funds for the purchase and certain costs such as stamp duty and settlement adjustments. Repairs and maintenance can be paid from fund cash, but you cannot use the loan to finance improvements that change the character of the asset while the LRBA is in place. Most lenders prefer a corporate trustee for the SMSF and the holding trustee, minimum fund balances, and evidence of market rent if your business will be the tenant. Get the structure right before you sign a contract. Names on the contract and loan documents must match the LRBA requirements or you risk double duty and delays.

Absolutely, provided your trust deed allows property and borrowing, and the investment meets the sole purpose test. If the property qualifies as business real property, your related business can lease it from the fund at a genuine market rent on fully documented arms-length terms. That means a commercial lease, regular rent reviews, evidence of market rates, and on-time payments. Keep clear boundaries around fit-out, incentives, outgoings and make good obligations, and record who owns what. Consider GST registration if the property has taxable supplies. Many SMSFs use an LRBA to acquire the property. Lenders will test rent coverage and may prefer longer lease terms with options. Order an independent valuation at purchase and keep valuation evidence up to date for year-end reporting. Ensure your insurance, land tax, and maintenance plans are in place before settlement. A clean file and a disciplined lease process make audits straightforward and help you avoid compliance risk.

No. Members, relatives and related parties cannot live in, holiday in, or otherwise use residential property owned by the fund. Even short stays at market rent by a related person are prohibited. For commercial premises, usage by a related business can be allowed if the property is business real property and the lease is on market terms. Mixed-use properties are tricky. Any private use by a related person can taint the asset and create compliance risk. If you buy a residential property with an LRBA, do not plan to convert it to a member’s home later. The rules are designed to keep fund assets separate from members’ personal use. Breaches can attract administrative penalties, potential non-compliance, and forced unwinds that are costly. When in doubt, assume no private use and document all tenancies, access rights, and storage arrangements to avoid grey areas.

Act early. Under an LRBA, the lender’s security is generally limited to the property, but guarantees can widen the practical consequences. Missed repayments risk default interest, enforcement action, and audit flags. Options include increasing fund liquidity through contributions or rollovers within caps, renegotiating lease terms to market where appropriate, adjusting investment allocations, or agreeing a payment plan with the lender. Do not pay fund expenses personally to plug gaps without advice, as these are usually treated as contributions. If your business is the tenant, late or discounted rent must be supported by current market evidence and proper variations to the lease. Minute discussions and decisions, keep correspondence, and update your cash flow forecast. If stress looks structural, consider selling the asset in an orderly manner rather than drifting into default. Your adviser and auditor should be informed early so the file shows a reasonable, documented response.

Yes. While an LRBA is in place, you can repair and maintain the property using fund cash, but you cannot use borrowings to improve the asset in a way that changes its character or creates a replacement asset. Examples of repairs include fixing a roof leak, repainting, replacing like for like, and safety upgrades. Improvements that substantially change the asset, such as adding a new storey or converting a warehouse into multiple strata lots, are not permitted under the borrowing. After the LRBA is repaid and the property is unencumbered, the fund has far more flexibility to renovate or redevelop in line with its investment strategy and risk profile. Use arms-length contractors, keep invoices, and retain council approvals. Significant works often warrant an updated valuation for audit and year-end reporting. If your business is the tenant, ensure any works and incentives are captured in the lease and that ownership of fit-out is clear.

Expect one-off setup costs for the LRBA structure, including bare trust deed, company registrations for trustees, legal review and lender establishment fees. Recurring costs include loan interest and fees, audit and accounting, ATO supervisory levy, ASIC annual fees for corporate trustees, property management, council rates, water, land tax where applicable, insurance, and maintenance. Many funds also budget for periodic valuations and a quantity surveyor’s depreciation schedule. If the property is leased to your business, build in a schedule for rent reviews, market evidence and lease renewal costs. Keep a cash buffer for unexpected repairs and vacancy. Transparent records and timely payments reduce audit time and risk. Ask your adviser to map a 12-month calendar of due dates so the finance rhythm becomes routine. A well-run property SMSF feels like a steady utility rather than a drain on headspace.

Plan on 8 to 12 weeks from intent to settlement, assuming a standard purchase with finance. Typical milestones are SMSF and LRBA structure review, bare trustee company setup, pre-approval, due diligence, contract negotiations with correct names, valuation, lender credit approval, loan documents, trust deed checks, insurance, and settlement. Timeframes vary with state revenue office processing, bank turnaround and the complexity of the deal. If you need a lease to your business at settlement, allow extra time for drafting and market rent evidence. Off-the-plan or construction scenarios add months and have extra LRBA constraints, so seek advice early. The golden rule is do not sign or pay deposits personally and do not exchange with the wrong entity. Get the structure right up front, keep everyone aligned with a shared checklist, and your timeline will hold.

Each financial year your SMSF must prepare audited financial statements and lodge the SMSF annual return with the ATO by the due date. The annual return combines tax return, regulatory reporting and member information. If you have property, keep valuation evidence that supports your year-end carrying value. For funds paying retirement phase pensions, ensure exempt current pension income calculations and any transfer balance reporting are accurate and lodged on time. If the fund is registered for GST on commercial leases, lodge activity statements as required. Auditors will want bank statements, lease documents, rent receipts, invoices, insurance, loan statements, minutes, and valuation support. Missing deadlines can trigger ATO penalties and a loss of lodgement concessions. A simple annual calendar with responsibilities and cut-off dates keeps the process predictable. Aim to have bookkeeping closed and documents uploaded early so the audit runs smoothly.

Quantity surveyor fees depend on property size, age and complexity. As a guide, many commercial properties fall in the AUD 500 to AUD 1,200 range for a comprehensive report, with larger or more complex sites costing more. The schedule identifies capital works deductions and eligible plant and equipment for tax purposes. For commercial assets, plant claims can be significant. For residential property, the rules are tighter for second-hand plant, so most value sits in capital works. Order the schedule soon after settlement so you capture any eligible items and can amend prior returns where appropriate. Provide plans, contracts, invoices and photos to improve accuracy. A good report pays for itself through higher deductions and cleaner records. Keep the PDF with your permanent file and upload it to your year-end folder so your accountant can reconcile claims each year.