Fees and costs of an SMSF - Squirrel

Fees and costs of an SMSF

SMSF and flat fees can make a huge difference to your ultimate retirement balance.  When you first set up a fund there are a number of fees that your fund will need to incur.  

Often SMSF administrators will require you to pay some of these fees by EFT or credit card when you first establish your fund. At Squirrel we will generally pay these fees on your behalf so you’re not out of pocket. Once your new SMSF is established and funds from previous superannuation accounts are transferred in, we will debit the SMSF to cover these costs.

Here is a summary of the standard fees associated with establishing an SMSF:

  • $518.00 – ATO supervisory levy ($259.00 per year) payable to the ATO.  New funds are required to pay the first two years in advance
  • $469.00 – Registration of Corporate Trustee Company – this company registration fee is payable to ASIC.
  • $469.00 – Registration of Corporate Trustee Company for Bare Trust Trustee (needed for SMSF buying property) – company registration fee payable to ASIC
  • $500.00 – Legal deeds / Trust structures associated with SMSF establishment including SMSF Trust, Bare Trust for property, Binding Nomination Deeds

As you can see these costs quickly add up to around $2,000 and of course every business needs to make a profit of some type.

At Squirrel we charge a fixed fee of $2,882.77 to establish each SMSF regardless of its complexity and we pay every government levy cost on your behalf, so there will be no surprise fees later on. You can either pay this up front, or it can come out of your SMSF – so there will essentially be no upfront cost to you. 90% of our customers choose to pay the fee direct from their SMSF, which makes it a pretty seamless process to get started.

 

There is also a $110 +GST per month ongoing fee, which covers every cost associated with the running of your SMSF. This includes auditing, accounting and compliance – with no add on costs.

It’s important to compare apples with apples if you are shopping around.

Some providers will offer a “free” smsf establishment however it may come with a few tricky bits and pieces – like additional costs to register companies, additional costs for deeds for property purchase or you might find out that the ‘free’ offer is because they take a rebate or commission on the funds in your SMSFs bank account, trading shares or introducing you to a mortgage broker.  Sure sometimes these ‘free’ offers sound great but that ‘free’ can end up costing you a lot in the long term.

A quick example when ‘free’ isn’t really free:

  • A number of banks will provide SMSF administrators with a rebate of 27.5 basis points. So if you had $400,000 invested in cash deposits, that rebate is $1,100.00 per year that you miss out on. At Squirrel we don’t accept this rebate, and our clients see it on their statement every month as money going into their fund not to us.
  • When borrowing funds to purchase an investment property, it’s usual for the provider to pay an introducer an industry average of 63 basis points on the value of the loan as an introducer fee, and then a trailing commission of around 15 basis points for the life of the loan. On a $400,000 loan this equates to $2,520.00 on establishment and $600.00 per year in trail commission – or around $25,000 over the course of the loan.

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