What You Need to Know Before You Sign Anything

SONAS WEALTH  |  THE SMSF COACH

SMSF TRUSTEE EDUCATION SERIES

By Liam Shorte  |  Fellow SMSF Specialist Advisor™  |  Financial Planner

⚖️  General Advice Disclaimer This article is general information only and does not constitute personal financial, legal or tax advice. The rules governing SMSFs are complex and individual circumstances vary significantly. You should obtain advice from a licensed financial adviser before acting on anything in this article. The author holds AFSL authorisation through Sonas Wealth Pty Ltd, corporate authorised representative of Viridian Advisory 476223.

Hi, I’m Liam Shorte — better known as The SMSF Coach. As a Financial Planner and SMSF Specialist Advisor with over two decades helping families take control of their super, I’ve seen it all. Every week I speak to people who’ve been approached about setting up a Self-Managed Super Fund (SMSF). Some of those approaches are genuine but many are not.

Too often, what looks like helpful advice is really a cleverly disguised sales pitch — designed to get you to move your super so the promoter can sell you their product, charge high fees, or worse, put your retirement savings at risk. The ATO is watching this space more closely than ever, and the consequences for getting it wrong as a trustee are serious and personal.

This is your no-nonsense guide before you sign anything.

1. How Are You Being Approached? Sales Pitch or Genuine Advice?

Legitimate SMSF advice starts with your situation — not the adviser’s product. A proper adviser asks about your retirement goals, risk tolerance, existing super balance, insurance needs, available time, and whether an SMSF even makes sense for your circumstances. Only then do they make a recommendation.

The product-led approach works the other way around. The SMSF is not the goal — it is the vehicle. Someone wants to sell you a property, a managed fund, an unlisted investment, or a crypto platform. The SMSF is simply how they access your superannuation balance.

Warning Signs in How You Were Approached

• Unsolicited contact — cold calls, emails, social media ads, or “free seminars” promising to “unlock the power of your super”.
• Pressure to act fast — “limited time offer”, “EOFY special”, or “get your money out before the rules change”.
• Promises that sound too good to be true — guaranteed returns, easy access to your super before retirement, or “we’ll handle everything so you don’t have to lift a finger”.
• Focus on a single product — a specific property deal, crypto scheme, or investment the promoter (or their related parties) controls.
• A referral chain where the adviser, accountant, mortgage broker and property manager all recommend each other — and all earn from the same transaction.

If the conversation quickly moves to rolling your super into a new SMSF so they can “invest it for you” or “help you buy that investment property” — stop. That is usually the gateway to selling their product, not acting in your best interest.

💡  From The SMSF Coach Ask yourself one question before you go any further: is this person excited about my retirement goals, or excited about my super balance?

🚩  Red Flag 1:  The Approach Starts With a Product, Not Your Situation You were contacted unsolicited — by phone, email, social media or a seminar. The pitch centres on a specific investment or property rather than a review of your financial situation. You feel pressured, rushed, or told there is a deadline you must meet. The adviser cannot clearly explain what they earn if you proceed — or refuses to tell you.

Quick Licence Check — Do This Before Anything Else

Anyone who recommends you set up an SMSF must hold an Australian Financial Services (AFS) licence, or be an authorised representative of a licensee. This is not optional — it is the law. Check them on:

• The ASIC Financial Advisers Register (search at moneysmart.gov.au)
• The Tax Practitioners Board register (if they are advising on tax matters)

No licence? Walk away immediately and consider reporting them to ASIC.

2. Do They Provide Genuine Education — or Just Hype?

Real SMSF education explains the responsibilities, not just the glamour. Any adviser worth trusting will make sure you understand what you are signing up for before you commit to anything.

What Proper Education Must Cover

• The sole purpose test — your SMSF must exist solely to provide retirement benefits to members. No personal benefit, no holidays, no business bailouts.
• Arm’s length rules — every transaction must be done on commercial terms, as if with an unrelated third party.
• Your annual audit obligation — an independent approved auditor must review your fund every single year.
• Investment strategy requirements — you must have a written, current strategy that actually reflects how your fund is invested.
• Record-keeping and valuation duties — all assets must be valued at market value at 30 June each year, with supporting evidence.
• Your personal liability as trustee — you are personally responsible for compliance. Administrative penalties cannot be paid from fund assets.

Red flag material is all glossy brochures and “success stories” with no mention of the paperwork, record-keeping, or what happens if you get it wrong. If they say “we’ll do it all for you” and gloss over your ongoing trustee duties, they are not educating you — they are disarming you.

💡  From The SMSF Coach An SMSF puts you in the driver’s seat, but you still have to steer. If the promoter doesn’t equip you to understand the road rules, they’re not coaching — they’re selling.

🚩  Red Flag 2:  No Meaningful Education Is Being Provided The conversation focuses on the benefits of an SMSF but skips the responsibilities, compliance obligations and time commitment.You have not been told that as trustee you are personally responsible for every investment decision, every lodgement, and every breach — even accidental ones.There is no discussion of your existing insurance or how it may be affected when you roll your balance into a new fund.There is no Statement of Advice (SOA) documenting why an SMSF is specifically recommended for your situation.

3. The True Costs of Running an SMSF

Here is the reality the glossy flyers rarely show. The cost of running an SMSF is one of the most consistently misrepresented aspects of the whole conversation — and for many people at lower balances, it is the deciding factor.

What You Should Expect to Pay

Setup costs: Expect $1,400–$2,000 for a proper trust deed, corporate trustee structure, ATO registration, and an initial investment strategy. Cheap setups often cut corners on documentation you will regret later.

Ongoing costs: Based on the latest ATO statistical data, median annual operating expenses run to approximately $4,139–$4,628 per year. This includes auditor fees, accounting, administration, and the supervisory levy.

Many people are shocked to learn the real annual cost often lands between $3,500 and $6,000 once everything is factored in — before investment fees, platform costs, or adviser fees.

Cost Item	Typical Range	Notes
Trust deed & company setup	$500 – $1,500	Higher for corporate trustee structure
Accounting & tax return	$1,200 – $3,000+	Increases with complexity
Independent audit	$300 – $900	Mandatory every year
ATO supervisory levy	$259	Netted in annual return
Financial advice fees	$2,000 – $5,000+	If you engage an adviser
ASIC company annual fee	$67 / year	Corporate trustee only
LRBA / bare trust setup	$1,500 – $3,000+	Required if borrowing for property
Actuarial certificate	$300 – $600	If fund has pension-phase members
Investment & platform costs	Varies widely	Brokerage, managed fund fees, platform access
Insurance review	Varies	Critical — existing cover is often lost on rollover

The old ASIC figure of $13,900 per year was significantly overstated, but the ATO’s median numbers are the ones you should use as your benchmark. If your balance is under $500,000–$750,000, those fixed costs can seriously erode your returns when expressed as a percentage of your balance.

🔑  Before You Proceed: Demand Written Fee Disclosure Total fees expressed in dollars AND as a percentage of your fund balanceA side-by-side comparison between the SMSF and your current super fund, after all fees and taxFull disclosure of any referral fees, commissions or benefits the adviser or their network receivesConfirmation that ATO administrative penalties are your personal liability — not payable from fund assets

🚩  Red Flag 3:  Costs Have Not Been Fully and Transparently Disclosed You have only been quoted setup costs, not ongoing annual running costs.No comparison has been provided between the SMSF and your current fund as a percentage of your balance.No one has mentioned that ATO administrative penalties are personally payable by trustees — not from the fund.Insurance implications of rolling out of your current fund have not been raised.

4. The Most Common Mistakes — and What the ATO Does About Them

The ATO regulates more than 630,000 SMSFs and its compliance data makes uncomfortable reading: contraventions increased by 10% in the 2024 income year, and by a further 13% in the first half of the following year. Here are the traps that catch trustees out most often.

Mistakes I See Every Year

• 🚨  Illegal early access — setting up an SMSF specifically to withdraw funds before you meet a condition of release (generally age 60 with retirement, or age 65 regardless). This is the ATO’s single biggest compliance focus.
• Lending to yourself or related parties — or using SMSF assets to support a struggling business. The ATO’s estimate of prohibited loans this year is $231.7 million.
• In-house asset breaches — investing more than 5% of the fund’s assets in related-party assets or loans.
• Poor record-keeping and valuations — no market-value asset valuations at 30 June, missing trustee minutes, or unsigned trustee declarations.
• No investment strategy — or a strategy that does not match your actual investments.
• Mixing personal and fund money — paying private bills from the SMSF bank account, or depositing SMSF income into a personal account.
• Contribution cap breaches and NALI — non-arm’s length transactions that trigger punitive tax at the highest marginal rate.
• Ignoring ATO authority notices — including excess contribution determinations and commutation authorities. Not responding does not make them disappear.
• Non-lodgement of annual returns — approximately 85,000 SMSFs had not lodged their 2023 return as at early 2025. Non-lodgement removes your complying status from Super Fund Lookup, cutting off employer contributions and rollovers.

🚩  The Cost of Getting It Wrong Administrative penalties can reach 60 penalty units — currently around $18,780 per breach, per trustee. Loss of complying fund status means the fund’s income is taxed at 45% instead of 15%. Trustee disqualification goes on the public record and applies to all future SMSF roles. These penalties are paid personally by trustees — not from the fund.

Real ATO Cases That Should Make You Think Twice

The ATO does not just issue warnings — it acts. The following court and tribunal decisions illustrate what happens when things go wrong.

📋  ATO Case: NSW Promoter — Federal Court Penalty One of the most striking enforcement actions involved a NSW promoter who set up (or attempted to set up) 35 SMSFs for 68 individuals. She charged fees to help people who were not eligible to access their super to roll it into a new SMSF and withdraw it immediately — often the same day — for home renovations, stamp duty and personal expenses. The Federal Court imposed a $220,000 penalty and banned her from setting up SMSFs for seven years. The individuals involved were also exposed to back-taxes, penalties and trustee disqualification.

📋  ATO Case: Ryan v Deputy Commissioner of Taxation [2015] FCA 1037 The Ryans withdrew nearly $210,000 from their SMSF in 68 transactions over three years, leaving a minimal balance. Withdrawals were treated as loans but were completely undocumented, unsecured, interest-free and had no repayment date. The Federal Court found breaches of the sole purpose test, the prohibition on member loans, and the arm’s length requirement. Each trustee was fined $20,000 ($40,000 combined), disqualified as trustees, and had their remaining benefits rolled into a public fund. They were ordered to pay the ATO’s costs.

📋  ATO Case: Fitzmaurice and Commissioner of Taxation [2019] AATA 2217 The Administrative Appeals Tribunal upheld the disqualification of a trustee following cumulative breaches: lending to a member, sole purpose test violation, illegal early release, missing annual returns, investments not at arm’s length, failure to maintain current asset valuations, and record-keeping failures. Critically, the Tribunal held that vague verbal advice from the fund’s accountant was not a valid defence. Primary responsibility for compliance rests with the trustee — not the adviser.

Other Schemes the ATO Has Shut Down

• Property “rebate” arrangements where part of the purchase price is secretly returned to the member personally.
• Contrived property development joint ventures that use related parties to divert profits into the SMSF at non-commercial rates, triggering non-arm’s length income (NALI) rules.
• High-return crypto or offshore investment apps pushed after an SMSF is established, using the fund balance as the entry ticket.

📊  ATO Enforcement in Numbers — 2024-25 Over 660 SMSF trustees disqualified in 2023-24, largely due to illegal early accessMore than $7 million in administrative penalties and $16 million in additional tax raised$481.8 million estimated in illegal early access and prohibited loans in the most recent year10% increase in contraventions in 2024 income year, with a further 13% rise in early 2025Most common contraventions: member loans (19%), in-house assets (16%), asset separation (13%)

5. My Final Coaching Advice

An SMSF is a genuinely powerful tool — I’ve helped hundreds of families use them successfully for direct property, shares, and real retirement control. But only when it is the right fit and set up properly. The key question is always: who is this arrangement actually serving?

✅  Before You Say Yes: Your Pre-Commitment Checklist Ask yourself honestly: is this person acting in my best interest, or theirs?Demand clear, written disclosure of all fees and ongoing costs — in dollars, not just percentages.Insist on a Statement of Advice (SOA) that documents why an SMSF is recommended for your specific situation.Insist on proper education about your trustee responsibilities before you sign anything.Check every licence on the ASIC Financial Advisers Register and the Tax Practitioners Board.Get a second opinion from an independent SMSF Specialist Adviser who has no connection to the product being recommended.Confirm your existing insurance coverage position before rolling out of your current fund.If anyone promises access to your super now for a non-retirement purpose — stop. That is illegal, and the ATO will find you.

💡  From The SMSF Coach An SMSF done right is one of the best structures available for building retirement wealth. An SMSF done wrong — for the wrong reasons, promoted by the wrong people — can cost you your retirement savings, your trustee status, and years of financial recovery.

📌  Key Takeaways ✅  An SMSF is right for the right person — but the approach, the advice, and the cost disclosure must all check out first.🚨  If someone approached you unsolicited and led with a product, the starting position is one of conflict of interest.💰  Understand the full annual cost (typically $3,500–$6,000+) and compare it to your current fund before deciding.⚠️  The most common contraventions are member loans, in-house asset breaches and non-lodgement — all carry personal penalties.🔑  Always verify licences, demand a written SOA, and get an independent second opinion.📋  The ATO will find non-compliance. Trustees cannot hide behind their accountant or adviser.

Thinking About an SMSF — or Want a Second Opinion? If you’d like a no-obligation conversation about whether an SMSF is right for your situation — or you want a straight-talking second opinion on an offer you’ve received — reach out. That’s what The SMSF Coach is here for. http://www.smsfcoach.com.au  |  Sonas Wealth, Sydney www.sonaswealth.com.au

Always make sure that you’re your strategy complies with relevant superannuation and tax regulations before implementation

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why not contact us at our Castle Hill or Windsor office in North West Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.

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Liam Shorte B.Bus FSSA™ AFP

Financial Planner & Fellow SMSF Specialist Advisor™

      

Tel: 02 9899 3693, Mobile: 0413 936 299

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