If you believe recent media, an SMSF is somewhere between a fashion statement or for the purposes of evil.  The essential purpose of an SMSF is to provide retirement benefits for its members.  And, if that can be done tax efficiently, then benefits are obtained twice over.

What are the Tax Benefits?

- Contributions (up to $30,000 a year for under 49; $35,000 a year over 49) are tax deductible.

- In Accumulation Mode (contributions being made), earnings are taxed at 15%.

- In Pension Mode, the Fund pays no tax on earnings or capital gains.

- The pension is tax free to a member over 60.

These tax benefits are exactly the same whether in an SMSF or paid to a retail fund!  However, there are other benefits from operating an SMSF.

- Asset Diversification

Accumulate monies outside the business, for the principal purpose of use for retirement

- Budgeting

Members should receive fair salaries for their commitment, and also set aside superannuation.  To provide for these, the business must have sound strategy and systems and be operated to achieve sufficient profits to pay the owners.

- Credibility

Putting aside more than the statutory 9.5% indicates a successful business and is evidence of profitability, often making business sale easier.

- Investment Selection

Trustees are able to exercise greater choice and control over the investments of the Fund.

- Investment Cost

Investments selected by trustees are often obtained at better value/lower cost than those by retail managers.

- Asset Protection

Assets in a Fund are protected from creditors and liquidators (but must not be used to prop up a business in trouble).

- Estate Planning

SMSF's are a good vehicle for estate planning (they also are not within the scope of a Will, so attention to this is needed in preparation of an estate plan).

- Insurances

More flexible insurance arrangements can often be achieved through a fund (although recent changes limit these somewhat).

Costs

Costs to operate are not excessive, and can even be significantly less than those of retail funds.

Too much emphasis is put on the tax benefits and if that is the principal purpose of contribution, the benefits are the same as in all retail funds.  But, if the other benefits are important to you, then an SMSF is most attractive (even with the pettifogging rules).