Hello, I’m Zoe Hadley. I’ve worked as an accountant here in Australia for over 35 years, and in that time I’ve seen superannuation become one of the biggest talking points in people’s financial lives. I’ve helped families, small business owners, tradies, and retirees with payroll, tax, and super. And one question that seems to pop up more often than any other is this:
“Zoe, how much super do I need before I can set up my own SMSF?”
It’s a good question. Super is your safety net for retirement, so you don’t want to muck around with it. You want to know if it’s worth it, if it will cost too much, and if you’re ready for the responsibility that comes with running your own Self-Managed Super Fund (SMSF).
Let me walk you through it the same way I’d explain it to someone sitting across the desk in my office.
First Things First: What Is an SMSF?
An SMSF is a type of superannuation fund that you manage yourself, either alone or with up to five other members (often family members or business partners). Unlike retail or industry funds, where someone else makes the decisions and takes care of compliance, an SMSF puts you in the driver’s seat.
That means you choose where the money is invested shares, property, term deposits, or other allowable investments. It also means you carry the responsibility of making sure the fund is run properly under Australian Taxation Office (ATO) rules.
I often describe it as running a small business. Except this time, the “business” is your retirement savings. There are tax returns, audits, and strict compliance requirements. It’s not just about investing it’s about managing paperwork, deadlines, and regulations.
The Big Question: How Much Super Do You Need?
The short answer is this: most experts and my experience backs this up agree that you need at least $200,000 combined in super before an SMSF becomes worthwhile.
Here’s why.
The Costs of an SMSF
Running an SMSF is not free. Typical costs include:
- Setup fees: usually between $1,000 and $3,000.
- Ongoing annual fees: around $2,000 to $5,000. These cover compliance, accounting, tax returns, audits, and admin.
If you’ve only got $80,000 in super, paying $3,000 in annual fees is a big hit almost 4% of your balance gone before you even start investing. But if you’ve got $400,000, those same fees are less than 1%, which makes them much easier to justify.
This is why $200,000 has become the “rule of thumb.” It’s not a law, but it’s a practical balance where the costs start to make sense.
What the ATO Says
Interestingly, the ATO doesn’t set a minimum balance requirement for SMSFs. Technically, you could start one with $50,000 if you wanted to. But would it be smart? Probably not.
In fact, the ATO has published data showing that funds with balances below $200,000 often perform worse than industry or retail funds simply because the costs eat into returns. Once balances climb over $200,000, performance starts to improve.
So while you can start an SMSF with less, the real question is whether you should.
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Stories From Real People
Over the years, I’ve seen both sides of this.
Case 1: The Eager Young Tradie
A young tradie came to me once, super excited about setting up an SMSF. He had about $90,000 in his super and wanted to buy a property with it. On paper, it sounded like a great idea to him. But after I showed him the fees and explained how much of his balance would be eaten up, he realised it wasn’t the right time. He stayed with his industry fund and focused on growing his balance. That decision alone saved him from unnecessary stress and losses.
Case 2: The Family Business Owners
On the other hand, I had a husband-and-wife team running a family business. Between them, they had $400,000 in super. They wanted to set up an SMSF to buy a commercial property for their business to operate from. It was a perfect fit the balance was high enough, the costs were reasonable, and the investment aligned with their goals. Ten years on, they’ve got control and security, and it’s worked beautifully for them.
The difference between these two cases wasn’t just about desire. It was about whether the numbers stacked up.
Where Payroll Fits Into the Picture
Now, here’s where my payroll background comes in. You might be wondering: what does payroll have to do with SMSFs? The answer is a lot.
Superannuation contributions come through payroll systems. Over the years, I’ve seen plenty of small businesses struggle with this side of things. Missing deadlines, underpaying contributions, or simply not understanding the rules.
One café owner I worked with was diligent about paying her staff wages but didn’t realise that super contributions had to be paid quarterly and on time. Once we put the right system in place, she not only stayed compliant but her staff felt more secure.
If you’re running an SMSF and you’re also a business owner, payroll accuracy becomes even more critical. Every contribution has to be made on time and reported correctly under Single Touch Payroll (STP). You’re not just the employer anymore you’re also a trustee of your fund. That responsibility doubles.
Questions to Ask Before You Set Up an SMSF
Before you dive in, I always encourage people to ask themselves:
- Do I have enough super? If you’re under $200,000, the fees may outweigh the benefits.
- What are my goals? Are you looking to invest in property, or do you just want more control?
- Am I ready for the responsibility? The ATO is strict, and you are personally responsible for compliance.
- Do I have the time? SMSFs are not “set and forget.” They take ongoing attention.
- Do I have support? An accountant or financial adviser is essential. Don’t try to do everything on your own.
Why $200,000 Is the Benchmark
Let me explain why $200,000 is such a common figure in a bit more detail.
Imagine two people:
- Person A has $80,000 in super. Their SMSF costs $3,000 a year. That’s nearly 4% of their balance, gone annually.
- Person B has $400,000 in super. Their SMSF also costs $3,000 a year. But for them, that’s less than 1%.
Which person gets better value from their SMSF? Obviously, Person B.
This is why I advise most people to wait until their balance is closer to $200,000 or more. It’s not about denying you the control you want. It’s about making sure the numbers work in your favour.
My Honest Take After 35 Years
After decades of working with people across payroll, super, and accounting, I’ve learned this:
- SMSFs can be incredibly powerful tools for building wealth and controlling your retirement.
- They can also become stressful and costly if started too early or managed poorly.
- The decision should never be rushed or made on a whim.
I’ve seen SMSFs transform people’s retirement plans, giving them control and flexibility they couldn’t get anywhere else. But I’ve also seen people regret setting one up because they weren’t prepared or didn’t have enough in their balance.
m Final Thoughts
So, what’s the minimum balance requirement for an SMSF in Australia? Legally, there isn’t one. But practically, the sweet spot starts at around $200,000.
Below that, the costs usually outweigh the benefits. Above that, it may be worth considering if you’re ready to take on the responsibility.
Your super is your future. It’s your retirement, your comfort, and your security after years of work. Treat it with care, weigh up the costs, and don’t make the decision lightly.
At the end of the day, an SMSF is just one path. Whether it’s the right one for you depends not only on your super balance but also on your willingness to manage it properly.
— Zoe Hadley
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