Role of SMSF in Australia

RESEARCH REPORT

Executive Summary
SMSF (self-managed super fund) is the major superannuation trust in the Australia, which
provides many benefits to its different members upon retirement. There are different data of
SMSF trust has been mentioned in this research report. These data can help to a reader for
knowing actual role of SMSF in Australia.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
LITERATURE REVIEW................................................................................................................4
Structure of SMSF, their management and regulation................................................................4
Investment in the SMSF funds in relation to other funds and the diversification in the SMSF
investment portfolio.....................................................................................................................5
DATA ANALYSIS.........................................................................................................................6
Analysis.......................................................................................................................................6
Recommendations......................................................................................................................13
CONCLUSION..............................................................................................................................14

INTRODUCTION
The SMSF i.e. the Self Managed Superannuation Funds are increasingly being used in the
Australian industry where the current contribution of these SMSF funds has increased to $700
billion in terms of assets that they hold (Chung, 2017). In the current research report, an analysis
will be made on the existing status of the SMSFs in the Australian market and the overall
structure, regulation management etc. will be evaluated. Further the report will also identify the
existing data that is available on the rise of investment in SMSF in the past 10 years and present
proper recommendations and conclusions for the data thus analysed.
MAIN BODY
LITERATURE REVIEW
Structure of SMSF, their management and regulation
As per the research paper published by Hoyle (2017), they present that the major reason
why the self managed superannuation funds i.e. SMSFs are becoming so popular is the self
control that they present to the investors as they are privately managed funds. The authors have
detailed on the structure of the SMFs stating that the sole purpose behind the SMSFs is that they
aid their members in retirement and death benefits. The tax file number, Australian business
number and the transactional bank account number are the major requirements behind opening
up SMSFs in the organisation. The SMSFs need to be registered under the ASIC i.e. Australian
Securities and Investments Commission and the directors of the company also need to be the
member of the SMSFs that they present. The SMSFs are usually made under some fund name
and the trustees are the major controlling and decision making bodies. Having a trustee is
mandatory for the SMSFs and the authors have presented two categories of such trustee i.e.
either corporate trustee or individual trustee. The trustees are the one who have extremely strict
obligations and are required to complete tax obligations, develop financial statements, maintain
records etc.
Another research paper published by the May (2017), states that the SMSF trustees are
heavily regulated by the ATO directly and the ASIC in an indirect manner. The ATO deals with
the financial compliance aspect where they evaluate that whether their financial reporting is
correct and comprehensive, whether the tax obligations that they need to comply with have been
fulfilled or not etc. The ASIC on the other hand deals with the regulation of the SMSF auditors
who are more independent. These are the key payers in ensuring the regulatory compliance of the
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