Q: I came across your website which looks excellent (courtesy of your feature on Sky Business). I am about to set-up my SMSF but I am not sure who to handle this for me. Some online providers are reasonably priced but I am concerned about access and professionalism as they are online only. I have checked out various other providers (but unsure who to go with). Have you done any articles that would be helpful for me in regard to what I should be concerned about with setting up a SMSF, for example, do you recommend any particular companies I can check out?
Trish’s response: Many thanks for your kind words on our site.
I don’t recommend service providers (to ensure I maintain my independence), but online service providers are as popular as the more traditional face-to-face SMSF providers.
Steering your super C-A-R-T
Before I discuss SMSF providers, I briefly want to take you through what’s involved in running a SMSF. I have coined a term C-A-R-T to describe the Compliance, Administration, Reporting and Tax management obligations of a SMSF trustee.
One of the biggest decisions that you need to make when running a SMSF is whether you steer the entire CART yourself, or you delegate all, or part of, your responsibilities to a professional administrator, or to an accountant, or to another service provider.
Your fund’s administration tasks support many of your fund’s compliance, reporting and tax management obligations. Quoting directly from my book, DIY Super For Dummies (Wiley), after setting up a SMSF, your main CART obligations are
- Acting in accordance with super and tax laws.
- Acting in line with your fund’s trust deed.
- Complying with the sole purpose test.
- Accepting super contributions.
- Investing in accordance with your fund’s investment strategy, and super’s special investment rules.
- Preparing minutes of trustee meetings and decisions.
- Keeping accurate accounting records, including recording all contributions, expenses, tax paid, investment transactions, and other transactions throughout the year.
- Paying income streams and fulfilling the legal requirements, including tax obligations, associated with an income stream (if your fund is paying a pension).
- Preparing annual financial reports — operating statement and statement of the fund’s financial position.
- Arranging for the audit of your fund’s financial accounts and statements.
- Preparing and lodging, by due date, the fund’s annual return, which contains the annual tax return, regulatory return (SIS compliance information) and member contributions statement.
- Paying the supervisory levy of $150, and tax liability when due.
Finding a suitable SMSF service provider
You can find a lot of DIY super-related sites by typing in DIY super administrator or SMSF administrator into internet search engines such as Yahoo or Google and checking out the content links on the main page, and the advertised links at the top or right-hand side of the web page.
A useful test when assessing the suitability of any SMSF adviser or service provider is to find out how long they have been in the marketplace. If they have only set up shop in the past two years or so then be very careful, unless the individuals who run the business have been in the super industry for a long time. If you are concerned, find out who owns the business and where they were before they started the online service.
There are several online service providers that provide fund establishment services, ongoing administration and compliance services and one-off transactions. Many of the providers have relationships with adviser groups and some are even owned by financial organisations. You can even get financial products with some administrators.
Some providers will offer you a complete service with a wrap account for your investments, an administration service for your compliance requirements, an auditor, a tax agent, a financial adviser, and a relationship manager. Think carefully before you sign on for one of these complete package arrangements because they can be very expensive. In many other cases, an administration service charges you a percentage of your account balance, a flat fee or an hourly fee. Your investment adviser may charge an hourly fee or charge a percentage of assets as well.
The establishment costs for a DIY super fund when using an online service provider are often fairly cheap. These honeymoon rates mean they can then offer you the higher-end services later that make them the money.
Now, whether to use an online provider or face-to-face provider depends on your needs, and probably the complexity of your fund. In most cases, the online providers offer face-to-face consulting for additional fees. You can also choose an accountant or a financial adviser, but be sure they have SMSF expertise.
In my book, DIY Super For Dummies, I have included a comprehensive compliance and administration checklist which illustrates what is involved in running your SMSF on your own, or what you can expect from your fund’s administrator if you choose to delegate your CART obligations. I also provide a comparison of costs for different services and various providers.
Note: You can’t delegate your responsibility as SMSF trustee. You can appoint a fund administrator to look after all, or part, of your CART obligations, but you remain responsible for what happens in your SMSF if something goes wrong.
Check the scope of the service
Again quoting directly from my book, DIY Super For Dummies, if you’re opting for a package deal, then the better administration option depends on what the administrator gives you for your money. You can compare which service provider delivers the better value, by asking each administrator/adviser to itemise the following:
- Advice component (if any)
- Establishment costs (including trust deed)
- Running costs such as administration, annual audit and reporting
- Any other costs included in the fee
- Any other costs that may arise that are not included in the fee.
I suggest you also ask the administrator/adviser to separate the costs relating to running your SMSF and other advice (if any) relating to non-super assets.
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Hi - I'm Trish Power and I am the author of 
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