Beyond Property: Why an SMSF May Still Be Worth Considering

Beyond Property:

Why an SMSF May Still Be Worth Considering

The recent changes affecting residential property borrowing inside SMSFs have prompted a lot of questions. One I keep hearing is: if I cannot borrow to buy property through my SMSF, is there any point?

I understand why that question is being asked. Over the years, the idea of an SMSF and the idea of borrowing to buy property have become closely linked in many people’s minds. For some, they became almost the same thing.

But they were never the same thing. And the legislative changes affecting residential property borrowing do not change what an SMSF actually is.

An SMSF is a superannuation structure. It is not a property investment strategy.

This article is not another explanation of the legislative changes. There is already plenty written on that. What I want to do here is take a step back and look at what an SMSF may offer, once we remove property borrowing from the conversation entirely.

I also want to be clear about something from the outset: an SMSF is not appropriate for everyone. Whether it makes sense depends on your individual objectives, financial circumstances, the costs and responsibilities involved, and whether the potential benefits are actually relevant to your situation. That is a conversation worth having properly, not a question with a universal answer.

Why This Conversation Matters Now

When residential property borrowing was available inside SMSFs, it became a dominant reason many people considered setting one up. The SMSF was the vehicle; the investment property was the destination.

From 10 August 2026, SMSFs can no longer enter into a new LRBA to acquire residential property. Contracts entered into before that date are protected, including where settlement occurs after the commencement date. Some people are now reassessing whether an SMSF is still worth their consideration.

I think that reassessment is worth doing properly. Because for some people, the reasons an SMSF may be appropriate have very little to do with property. And for others, the changes may genuinely shift the calculation about whether an SMSF is the right fit.

Both of those outcomes are fine. What matters is that the decision is based on the right considerations.

An SMSF Is a Superannuation Structure, Not a Property Strategy

This is the point I want to spend a moment on, because I think it gets to the heart of why so many people are confused right now.

An SMSF gives its trustees the ability to make decisions about how the fund’s assets are invested, within the rules set by superannuation law, the fund’s trust deed, and the fund’s documented investment strategy. Property was one of many things an SMSF could hold. It was never the defining feature.

Depending on its circumstances and the applicable rules, an SMSF can hold:

Australian and international shares
Exchange-traded funds (ETFs)
Managed investments
Cash and term deposits
Fixed-interest investments
Listed property investments
Certain direct property investments (residential property can still be held using cash inside an SMSF; the restriction applies to borrowing to acquire it, not to outright purchase)
Business real property, where the relevant requirements are met
Certain unlisted investments
Other permitted investments

Not every investment is appropriate or permitted for every SMSF. Investments need to comply with superannuation law and should reflect the fund’s investment strategy, liquidity requirements, diversification considerations and the members’ circumstances.

The point is not simply that there are many options. The potential benefit is that those options may allow the construction of an investment portfolio specifically designed around the members’ objectives and retirement goals, rather than a one-size-fits-all approach.

An SMSF can hold a fully diversified portfolio of Australian and international shares, ETFs, fixed income and cash without owning any direct property at all. For some members, that may be exactly the right approach. For others, it may not be.

Control Over Investment Decisions

One aspect of an SMSF that some people find valuable is the level of involvement they can have in how the fund’s assets are invested.

As trustees, the members of an SMSF are responsible for the investment decisions made by the fund. Subject to the rules, they can direct how the fund’s money is invested, review those decisions over time, and adjust the strategy as their circumstances change.

For some people, that level of involvement is genuinely meaningful. They want to understand exactly how their retirement savings are invested and have a say in the decisions being made.

But it is important to be clear about what control also means. Trustees have legal obligations. They are responsible for ensuring the fund complies with superannuation and taxation law. They need to make investment decisions that are consistent with the fund’s documented investment strategy and the interests of the fund’s members. That is a real responsibility, not a formality.

Greater involvement in investment decisions can be valuable for the right person. But it comes with genuine legal responsibilities that should be understood before establishing a fund.

For some people, those responsibilities are manageable and the involvement is welcome. For others, they may prefer the simplicity of having their superannuation professionally managed through an industry or retail fund, without taking on trustee obligations. Both are legitimate positions.

Transparency

Another aspect that some SMSF trustees value is having direct visibility over the assets held by the fund.

In an SMSF, trustees can generally understand what the fund owns, how assets are allocated across the portfolio, how individual investments are performing, what costs are involved in operating and investing through the fund, and how each investment fits within the overall strategy.

For people who want to be actively involved in understanding their retirement savings, this level of visibility can be valuable. They are not relying solely on reports or summaries produced by a third party. They can look at the fund’s assets directly.

I want to be careful here about presenting this as automatically superior to other arrangements. Other superannuation funds also provide reporting and member information. The difference in an SMSF is the nature of the trustees’ direct involvement and oversight. Whether that is important or valuable depends on the individual.

Thinking About Retirement, Not Just Accumulation

Superannuation exists for one purpose: to help provide financial resources in retirement.

That might seem obvious, but it is easy to lose sight of when a lot of the discussion around SMSFs focuses on what assets the fund can hold or how the fund’s investments are structured. Those things matter. But they should always be connected back to the person’s retirement objectives.

As members approach retirement, their priorities often shift. Accumulating wealth gives way to questions about generating retirement income, maintaining sufficient liquidity, managing risk as they get older, and making their savings last across what might be a long retirement.

An SMSF may offer flexibility in managing how investments are structured during this transition. But again, that flexibility is only valuable if it is used in a way that is genuinely aligned with what the member is trying to achieve.

At Panacea Wealth Management, the starting point for any conversation about retirement is not which superannuation structure to use. It is what the person actually wants their retirement to look like. From there, we can work through what financial resources are required, what strategy makes sense, and only then consider whether the structure needs to change.

The purpose of retirement planning is not to accumulate the largest possible superannuation balance. It is to create the financial resources and flexibility needed to support the retirement lifestyle someone actually wants.

Tax Considerations

Tax is sometimes raised as a reason to consider an SMSF. I want to be careful about how this is discussed.

An SMSF operates within Australia’s superannuation taxation framework. There may be strategic tax considerations relevant to a fund’s circumstances during both accumulation and retirement. But those considerations depend on the fund’s specific situation, investments, members and the applicable legislation.

An SMSF does not automatically produce tax savings. Establishing an SMSF because someone believes it will reduce their tax is not a sound basis for the decision.

Where tax planning is relevant, it should form part of a broader retirement strategy that starts with the person’s objectives rather than a tax outcome.

Estate and Succession Planning

For some people, how their superannuation is managed as part of their broader estate and succession planning is an important consideration.

An SMSF can form part of that planning. Questions around trustee succession, death benefit nominations and what happens to the fund following the death or incapacity of a member can be structured in certain ways that may suit particular circumstances.

I want to be clear that this is a genuinely complex area that involves superannuation law, taxation law and estate planning considerations working together. An SMSF does not automatically provide superior estate planning outcomes. What it may provide is flexibility that, when used appropriately and with proper advice, can be structured around a member’s particular wishes.

This is an area where specialist advice is essential, not optional.

SMSFs Are Not Appropriate for Everyone

I want to spend some time on this, because I think it is one of the most important things I can say.

Operating an SMSF involves real responsibilities and real costs. Trustees are legally responsible for ensuring the fund complies with superannuation and taxation law. That responsibility cannot be delegated, even when professionals are engaged to assist.

Depending on the circumstances, operating an SMSF may involve:

Accounting and administration costs
Annual audit costs
Financial advice costs
Investment costs
Legal costs where required
Ongoing record-keeping requirements
Time required to manage, monitor and oversee the fund

For some people, those responsibilities and costs are worthwhile given the potential benefits they are seeking. For others, an industry fund, retail fund or another superannuation arrangement may be more appropriate, simpler and more cost-effective.

The question is not whether an SMSF is better. The question is whether an SMSF is appropriate for your individual circumstances, objectives and willingness to take on trustee responsibilities. That is a different question, and the answer is different for every person.

Strategy Before Structure

This is the principle I keep coming back to, regardless of what a client initially comes to me wanting to discuss.

People should not establish an SMSF simply because they want access to a particular investment. The starting point should always be the person’s objectives.

Some of the questions worth working through:

What are you actually trying to achieve with your retirement savings?
When would you like to retire, and what does that retirement look like?
What assets and superannuation do you currently have?
What is your investment timeframe?
What level of investment risk are you comfortable with?
How involved do you want to be in managing your superannuation?
What potential benefits would an SMSF provide compared with your existing arrangement?
Are those potential benefits sufficient to justify the additional responsibilities and costs?

Only once those questions have been honestly worked through does the question of structure become meaningful.

In my experience, the strongest SMSF strategies are those where the structure supports clearly defined objectives, rather than the structure being selected first and the broader retirement strategy considered afterwards.

The Conversation Worth Having

The legislative restriction on new residential property LRBAs inside SMSFs is significant for people who were relying on that strategy. It is worth noting that the restriction applies specifically to borrowing for residential property. Business real property LRBAs are unaffected by the change, and residential property can still be purchased using SMSF cash reserves without borrowing. But for many people, this change does prompt a useful reassessment of what an SMSF may offer beyond that one strategy.

For the right person, an SMSF may offer meaningful involvement in investment decisions, genuine flexibility in how a portfolio is constructed and managed, and valuable transparency over how retirement savings are being invested.

For someone else, those potential benefits may not outweigh the costs, responsibilities and complexity involved in operating a fund.

Both of those outcomes are reasonable. The important thing is that the decision is based on the right conversation.

The question that matters is not ‘How do I set up an SMSF?’ It is ‘What am I trying to achieve with my retirement savings?’ From there, the right structure tends to become clearer.

Property was never the purpose of an SMSF.

Your retirement was.

About the Author

Arunava Chaudhuri (Arun) is a Director and Financial Planner at Panacea Wealth Management, holding qualifications including MPAcct, BCom, GradDipFinPlan and SMSF Specialist designation.

He works with individuals, couples and families across retirement planning, superannuation strategy, SMSFs, wealth creation, wealth protection and personalised investment strategies. All advice is delivered in plain language, tailored to individual circumstances.

This article contains general information only and does not take into account any person’s objectives, financial situation or needs. Before making a financial decision, you should consider whether the information is appropriate to your circumstances and consider seeking personal financial advice.