How much super do you need for an SMSF?

How much super is needed to start a self-managed super fund? Unfortunately, this simple question does not have a simple answer!

Does the ATO require a minimum amount?

The ATO is responsible for registering new SMSFs. Still, the ATO does not specify the minimum amount of super needed to start an SMSF.

As part of the registration process, the ATO will review several items, including your current super account balances and income; however, they don’t look at these items in isolation. 

Combining super balances

One advantage of an SMSF is more than one person (typically a couple) can combine their super balances into the one SMSF.

Combining balances means you share the costs of running an SMSF across multiple people. This means the amount of super each needs to make an SMSF viable is less than if they set up an SMSF by themselves.

Fees only part of the equation

SMSF fees and how they compare to other super funds are only one item to look at when deciding to set up an SMSF.

The fees paid for an SMSF should not eat into the returns generated from the investments and make the SMSF members significantly worse off than if they stayed in their existing super fund. 

In addition, the total return after fees is more important than the fees themselves. For example, suppose you can get higher returns by using the investment choice, control and flexibility of an SMSF. In that case, an SMSF may be more suitable.

Of course, the difficulty is ensuring the returns generated are sufficient each year to cover the fees relating to the SMSF.

The hidden cost of member-directed solutions

Due to the success of SMSFs, some industry super funds have created investment choices that attempt to mimic the investment choice and control that SMSFs provide. 

The solutions have names like ‘Member Direct’ and ‘Choiceplus’. Member-directed solutions target people who perceive SMSFs as complex and expensive (which they don’t have to be!). 

You can’t transfer shares or ETFs held in a member-directed industry super fund to an SMSF. In addition, when moving to an SMSF unavoidable Capital Gains Tax (CGT) becomes payable on investments that have increased in value. 

The additional CGT can outweigh the fees you would have paid to run an SMSF in many cases. There are also brokerage costs and other transaction fees to consider when exiting a member-directed solution.

Research on when SMSFs become viable

Rice Warner1 compared SMSF to industry and retail super funds to help determine the balance needed to start an SMSF.

On a comparison based only on fees, Rice Warner found that an SMSF with a balance of $100,000 is within range of an APRA regulated super fund. This comparison applies where trustees use a cheaper SMSF service provider.  Also, remember the $100,000 is the combined amount of all members within the SMSF. 

A cheaper service provider in their report has total annual fees of $875. If the costs were lower than that amount, then the amount at which an SMSF becomes viable also reduces.

Rice Warner also tracked SMSFs with balances of between $50,000 and $100,000 over three years from 2017 to 2019. They found, excluding SMSFs that closed down, two-thirds grew to be above $100,000 within two years. 

This means that it is not simply the starting balance that’s important, but the SMSFs ability to grow based on investment returns and future contributions. 

Other factors to consider

Most people who set up an SMSF are not primarily concerned with fees – it just makes it into the top-5 reasons.

All of the following all reasons rate more highly than fees: 

  1. Having more control over investments; 
  2. Desire to achieve better returns; 
  3. Tax effectiveness of an SMSF;
  4. The belief that I can make better investments than my existing fund;
  5. To save on fees.


The decision to set up an SMSF is a very personal one.  There is no magical number when an SMSF becomes viable as each individual has different needs and motivations.

An SMSF is not about where you are now. It’s about where you’re going and how you get there.


1. Rice Warner – Costs of Operating SMSFs 2020 – 23/11/2020

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