top of page

The Ten BIG Benefits of a SMSF

Updated: Dec 15, 2023

We are going to look at the ten benefits of a SMSF, remember our goal is to make things simple - but with thousands of pages of laws it is my recommendation that you find a great SMSF adviser to help you put your ideas and strategies, along with their input, into practice.

Benefit One: A SMSF lets you look after your Family

For the majority of people, their family is the most important aspect in their lives. I don't know about you but I love my kids and it is great to see them grow and blossom in this marvelous

world we live in. Stressful yes but filled with opportunity. And as their Dad I take my responsibilities, particularly financial very seriously. I have made sure that if something happens to me they are well looked after, but more importantly, protected from financial predators - parents if you get my drift. Bloodline protection the whole way down the line. Now that is a real Family SMSF Estate Plan and erupts from my Family SMSF if I die.

In this way, a SMSF provides members with an opportunity to lay down the foundations to provide a comfortable retirement income stream for their immediate family and possibly generations to come. This opportunity has been increased with the Super Reform proposals where a member of a SMSF can leave their superannuation benefits in the Fund until their death.

Benefit Two: Providing a Secure Income in Retirement

The major reason for establishing a SMSF is to ensure that, when an individual ceases work or business they will have a stable, secure alternative to keep the lifestyle that they are accustomed to. That income stream, if it comes from super is called a pension and is a very popular strategy for SMSF members once they retire. The big benefit is, if the member is over age 60 when receiving the pension then the pension income is tax free in the hands of the member. Moreover, if this is a member's only source of income, being tax free they will not have to lodge a personal tax return. Can you imagine that? Being out of the Commissioner of Taxation's clutches for the first time in your life. Plus, the Trustee of the SMSF paying the pension will not pay tax on income or capital gains earned on pension assets in the Fund.

Benefit Three: Offering a financial helping hand if your Health Deteriorates

Health is one of those things that can never be taken for granted. I know as 2016 was a bad year for my parents and also myself. Old age and dementia hit my Dad, stress my mum and myself, and well it was good to put it behind us. But knowing that when the chips are down we can use the SMSF along with health insurance is a blessing.

So if an individual's health declines, he or she needs to have access to a safe, secure income that takes the financial worry out of becoming seriously ill or even incapacitated. A SMSF allows members access to a range of benefit options in times of sickness and ill-health. This is the case even where the sickness is of a temporary nature. Temporary and Permanent Disabilities inflict great change and superannuation benefits are able to be accessed during these times of trouble.

Benefit Four: Investment Choice

The large majority of people or families who find their way into SMSFs want to have some say as to how they invest overall wealth including their superannuation. As Trustee of a SMSF, the power of choosing investments for the Fund resides with the Trustee; however, great care needs to be taken to ensure that the Trustee meets the relevant superannuation laws in terms of investment choice. These laws include the need to draft and successfully implement an investment strategy as well as ensure that, within confined limits, no asset of the Fund is used by a member of the Fund, their relatives or any entity related or closely associated with them or their family. But the choice of investments is broad - residential investment property, commercial property, shares, government bonds, gold, overseas investments, start-ups, Early Stage Investment companies, syndicates and the list goes on.

Benefit Five: Low Taxation fully sanctioned by the Government

Taxation in Australia is substantial, but the Government has implemented measures to encourage citizens to become self-funded retirees, thereby reducing future welfare expenditures. A key aspect of this initiative is the mandatory superannuation contribution by employees, which, as of 1 July 2023, has increased to 11% of their salary. This gradual increase in contribution rates, set to reach 12% by July 2025, underscores the government's commitment to bolstering self-funded retirement. Members of SMSFs have the best opportunity to simply reduce the taxation burden in their retirement lives. For example, the tax-free nature of a private pension and lump sum arrangements for a member of a SMSF post age 60 is one of the key benefits to a secure lifestyle retirement income.

Benefit Six: Looking after your Family when you Die

The SMSF is by far the most flexible, most targeted and most tax-effective vehicle to provide lump sums or income streams to a member's spouse, children or grandchildren when the member dies - and it lets the member control the process without fear of legal challenge. Importantly where a member puts in place a strategic SMSF estate planning strategy, it resides outside the member's will. This is not known to many SMSF members, and Trustees who forget to put in place an SMSF estate plan are missing out on highly valued taxation concessions, and also opening the deceased member's benefits to the lawyers and in some cases the Public Trustee.

Benefit Seven: Access to the Age Pension

The Age Pension is available for persons over age pension age - currently age 67. However, it is subject to an Income and Assets test. A member's benefits in a SMSF once a member reaches age pension age are generally included for Assets Test purposes, as is income withdrawn from the Fund.

The latest Assets Test limits for full Age Pension eligibility are $301,750 for a single homeowner, $543,750 for a single non-homeowner, $451,500 for a couple (combined) homeowner, and $693,500 for a couple (combined) non-homeowner. For part Age Pension, the limits are $667,500 for a single homeowner, $909,500 for a single non-homeowner, $1,003,000 for a couple (combined) homeowner, and $1,245,000 for a couple (combined) non-homeowner. Your residential home remains exempt from the Assets Test. In addition, they may be entitled to other important benefits including the Health Care Card but as this is a complex area, specialist financial planning advice should be sought.

Benefit Eight: Protection from Creditors

This is a sleeper and, for most people, is not used at all. However, where a person gets into serious financial difficulty, the Government has provided rules in the bankruptcy laws that broadly protect a member's benefits in the Fund from creditors with the exception of any retirement income. This can be a relief when unfortunate financial events occur.

Benefit Nine: Transition to Retirement Income Stream ("TRIS")

The biggest bug bear for most people when it comes to compulsory superannuation is not having access to their super until they retire. There are a number of exceptions such as temporary and permanent incapacity, certain compassionate grounds and financial hardship.

One important exception introduced in 2005 was the Transition to Retirement Income Stream. The TRIS enables a working member of a super fund, who has reached their preservation age to access their superannuation as an income stream. The TRIS requires the member to withdraw at least 4% of their TRIS account balance each year and no more than 10%.

From a tax perspective, if the TRIS is received when a member is under age 60, the TRIS income will form part of the member's assessable income - however it will attract a 15% tax offset. From age 60, any 60 any TRIS income from a member of a SMSF will be tax free.

Benefit Ten: Superannuation Contributions Splitting

Under the laws, it is possible for a member of a superannuation fund to split their benefits with their spouse. Spouse includes a de facto spouse under the superannuation laws. The advantages of this is where both spouse members of the Fund are between the ages of 55-60 and using the transition to retirement strategy, then the benefits of the 15% tax rebate is maximised. Further where one member is older than the other and will thus reach the tax-free pension and/or lump sum status before the other, then it makes strategic sense to split any contributions for the younger spouse to the older spouse. However, it is only the employer or deductible superannuation contributions that can be split and then to a maximum of 85%.


A SMSF offers numerous benefits, including family financial security, tax advantages, investment flexibility, health protection, estate planning control, access to government benefits, creditor protection, and strategic contribution splitting. Consulting an SMSF adviser is recommended to make the most of these advantages and secure your financial future.

277 views0 comments


bottom of page