More than 50,000 new self-managed super funds were set up in 2025–26, a record according to the SMSF Association. Many new trustees budget for the obvious expenses, such as accounting and the annual audit. Yet the true cost of running an SMSF can also include insurance, valuations, legal updates, time, penalties when things go wrong and eventually the cost of winding the fund up.

Why costs matter more than they first appear

SMSFs can be expensive to set up and run, and in some cases can cost more than retail and industry funds. It also notes that the lower a fund's starting balance, the greater the impact of fixed costs on overall returns.

For example, a hypothetical fund with $4,000 in annual costs would pay the equivalent of 2 per cent a year on a $200,000 balance, but 0.4 per cent on $1 million. The figures are illustrative only, and actual costs vary widely.

Set-up and annual running costs

Establishing an SMSF typically involves a trust deed, choosing between individual trustees and a corporate trustee, registering the fund with the ATO and opening a bank account in the fund's name.

A corporate Trustee structure involves setting up and maintaining a company, which carries its own fees. Some trustees see it as simpler when members join or leave, but it is an additional cost to Factor in from the start.

Payday Super, which started on 1 July 2026, has added a practical consideration. SMSFs receiving employer contributions generally need a bank account that can receive payments through the New Payments Platform, and must respond to member verification requests.

Once running, every SMSF must be audited each year by an approved SMSF auditor, and must lodge an annual return. Most trustees pay an Accountant or administrator to prepare financial statements and the return.

The ATO also charges an annual SMSF supervisory levy. According to the ATO, the levy has been $259 since 2014–15. Newly registered funds pay $518 in their first annual return, covering the current financial year and the following one.

An actuarial certificate may be required in some circumstances when a fund pays retirement phase pensions.

Investment, insurance, valuation and legal costs

Investment costs can be easy to overlook because they are often deducted inside products. Brokerage, platform fees, managed fund fees and property costs such as agents, maintenance and rates can add up over time.

Insurance is another consideration. SMSF Investment strategy rules require trustees to consider whether the fund should hold insurance cover for members, and premiums paid through the fund reduce the balance.

Valuations can also carry a cost. SMSF Assets must be reported at market value, and assets without a readily available price, such as property or unlisted investments, may need periodic valuation evidence that the auditor can rely on.

The trust deed governs how an SMSF operates, and it may need updating as the law or the fund's circumstances change. Examples include adding members, changing trustees or ensuring the deed supports particular pension or estate planning arrangements.

Legal advice may also be needed for more complex matters, such as death benefit nominations, related party transactions or borrowing arrangements. These legal costs tend to arise irregularly, which makes them easy to leave out of a budget.

The cost of your time

Time is one of the least visible costs., research suggests SMSF trustees spend on average more than eight hours a month managing their fund, or more than 100 hours a year.

Trustees remain legally responsible for the fund's decisions even when they use professional advisers.

When things go wrong: penalties

Non-compliance can be expensive. The ATO can impose administrative penalties on individual trustees and directors of corporate trustees, and these must be paid personally. The ATO states they cannot be paid or reimbursed from fund assets.

According to the ATO, penalties range from five penalty units for some breaches up to 60 penalty units for contraventions such as lending to members, borrowing, in-house asset breaches and failing to notify the ATO of significant adverse events. The ATO lists a penalty unit at $364 for contraventions on or after 1 July 2026, so a 60 unit penalty equals $21,840.

In more serious cases, the ATO can issue rectification or education directions, disqualify trustees or make a fund non-complying. The ATO says a non-complying fund's income is taxed at the highest marginal rate, currently 45 per cent, and in the year it becomes non-complying the fund must include an amount equal to the Market Value of its total assets in assessable income.

Winding up and other emerging costs

Closing an SMSF also costs money. A fund being wound up still needs a final audit and a final annual return. According to the ATO, an established fund winding up does not need to pay the supervisory levy for that year, while a newly registered fund that winds up in its first year pays $259.

Trustees may also watch a separate proposal. SMS Magazine reports the federal government is consulting on special levies for the Compensation Scheme of Last Resort, under which SMSFs would collectively contribute about $23.79 million. The proposal is not final, with consultation closing on 5 October 2026.

The bottom line

The cost of an SMSF extends well beyond accounting and audit fees. Supervisory levies, investment and insurance costs, valuations, legal work, time and the risk of personal penalties can all add to the total, along with eventual wind-up costs. How significant these are depends on the fund's balance, investments and complexity. Individual circumstances vary, and