SMSFs and industry super funds differ in investment control, costs, administration, insurance and trustee responsibility. This guide sets out those differences alongside the superannuation settings that apply for the 2026-27 financial year, including the Division 296 tax that commenced on 1 July 2026.
The superannuation structure you use determines how your retirement savings are invested, administered and accessed. The choice usually comes down to an SMSF or an industry super fund, and the two differ on control, investment choice, cost, responsibility and support.
An SMSF gives you control over investment decisions and carries trustee responsibilities, administration requirements and compliance obligations. An industry super fund provides professional investment management and handles administration on your behalf. This guide sets out where the two diverge.
What Is an Industry Super Fund?
Industry super funds are large, APRA-regulated superannuation funds. They were established to serve workers in particular industries, including construction, healthcare, hospitality and education, and most now accept members from any sector. They operate on a profit-to-member model, so investment returns are retained for members rather than distributed to shareholders.
Professional fund managers handle investments. Members choose from a menu of pre-set investment options and do not select individual securities. The fund handles administration, auditing, compliance and reporting.
What Is an SMSF?
An SMSF is a private superannuation fund that members run themselves. An SMSF can have up to six members, and each member must be a trustee or a director of the corporate trustee. Trustees make all investment decisions, maintain fund records, arrange the annual independent audit, lodge the fund’s annual return with the ATO, and keep the fund compliant with the Superannuation Industry (Supervision) Act.
There were 672,805 SMSFs holding an estimated $1.06 trillion in assets across 1,239,977 members at the March 2026 quarter, according to ATO statistics.
SMSFs provide direct investment control, the ability to hold direct property, customised estate planning, and access to a wider range of asset classes than an industry fund menu offers. Those capabilities come with personal responsibility for compliance.
The Key Differences Between an SMSF and Industry Super Fund
| Feature | SMSF | Industry Super Fund |
| Investment control | High; trustees make the investment decisions | Limited to the fund’s available investment options |
| Regulation | ATO | APRA |
| Investment options | Shares, property, ETFs, cash and other eligible assets, subject to super rules | Pre-set options such as balanced, growth, conservative and ethical |
| Direct property | Yes, subject to strict rules | No direct property ownership by individual members |
| Annual costs | Largely fixed costs for audit, accounting and administration; vary with complexity | Fees vary by fund and investment option, generally a combination of fixed and percentage-based charges |
| Minimum balance | No legal minimum, although a higher balance makes the fixed costs proportionally smaller | Generally no minimum balance |
| Insurance | Trustees arrange their own cover | Default insurance is commonly available through the fund |
| Administration | Trustees are responsible for compliance, reporting and annual audits | Managed by the fund |
| Time commitment | Higher; trustees carry ongoing obligations | Minimal for members |
| Dispute resolution | Courts | AFCA |
SMSF Vs Industry Fund: The Cost Comparison
Cost is where the two structures diverge most, and the comparison turns on balance size.
SMSF running costs are largely fixed. ATO data for 2020-21, the most recent year with published expense detail, put median SMSF operating expenses at $4,139. Average total expenses were $15,507, a figure that includes optional investment, insurance and borrowing costs and is not comparable to the median operating figure. As a percentage of assets, fixed costs fall as the fund grows.
Industry super funds charge fees as a percentage of assets. APRA’s MySuper data puts median administration fees and costs at roughly 0.25% a year, or about $125 on a $50,000 balance. Investment fees sit on top of that and vary by option.
ASIC no longer nominates a minimum viable SMSF balance. Its current guidance, INFO 274, updated in February 2026, treats balance as one of a range of factors, while noting that expenses are proportionally higher and net returns lower for lower-balance funds. Advisers who previously relied on the $500,000 figure from ASIC’s earlier material should note it was dropped when INFO 274 replaced INFO 205 and INFO 206 in December 2022.
Superannuation Settings for 2026-27
The following rates and thresholds apply for the 2026-27 financial year and are relevant to both structures.
| Setting | 2026-27 |
| Superannuation Guarantee rate | 12% |
| General transfer balance cap | $2.1 million |
| Concessional contributions cap | $32,500 |
| Non-concessional contributions cap | $130,000 |
| Bring-forward (three-year) | $390,000 |
Payday Super also commenced on 1 July 2026, requiring employers to pay superannuation at the same time as salary and wages.
Division 296 Tax on Large Balances
Division 296 received Royal Assent on 13 March 2026 and applies from the 2026-27 income year. It imposes tax at the fund level on earnings attributable to large superannuation balances, and it applies to SMSFs and APRA-regulated funds alike.
The final legislation differs from the original 2023 proposal on several counts. It uses two thresholds rather than one, both are indexed, and it applies to realised earnings only. The proposal to tax unrealised capital gains did not survive.
| Threshold | 2026-27 amount | Additional tax on earnings above it | Indexation |
| Large Super Balance Threshold | $3 million | 15% | $150,000 increments |
| Very Large Super Balance Threshold | $10 million | A further 10%, so 25% in total | $500,000 increments |
First assessments are expected during the 2027 calendar year. Members with balances approaching $3 million should review their position with an adviser before the first assessment period closes.
The Benefits of an SMSF
Investment Flexibility
Direct investment control is the most common reason Australians establish an SMSF. An SMSF can hold individual ASX-listed stocks, direct commercial or residential property subject to the in-house asset and related party rules, term deposits, managed funds, gold, unlisted assets and international equities. An industry fund menu, however broad, does not extend that far.
A business owner can hold commercial premises in an SMSF and pay rent into the fund rather than to a landlord. No industry fund accommodates that arrangement.
Estate Planning
SMSFs allow binding death benefit nominations drafted to reflect specific family circumstances, and a corporate trustee provides continuity when a member dies. For families with complex estate arrangements this is often the deciding factor.
Tax Planning
SMSF trustees can time capital gains and losses, hold assets across accumulation and pension phases, and manage franking credits at the fund level. Industry funds pool member contributions and distribute credits proportionally, so that level of control is not available.
Rivkin SMSF helps Australians establish and administer their funds, including compliance support and investment management. Contact us for details.
The Benefits of Industry Super Funds
Lower Administrative Burden
Industry funds handle administration, compliance and reporting. Members carry no trustee obligations, arrange no audit, and lodge no annual return.
Cost Efficiency at Lower Balances
At smaller balances, the percentage-based fees of an industry fund come to less in dollar terms than the fixed annual expenses of an SMSF. The position reverses as the balance grows, and where the crossover falls depends on the complexity of the SMSF and the fee structure of the industry fund being compared.
Default Insurance Cover
Industry funds offer group life, total and permanent disability, and income protection cover at group rates that are generally lower than individual retail premiums. That cover ceases when a member exits the fund, which is a planning consideration before any switch to an SMSF.
Regulatory Protections
Industry fund members can take disputes to the Australian Financial Complaints Authority and may be eligible for statutory compensation in certain circumstances. SMSF members have neither; disputes go to the courts.
SMSF or Industry Super Fund: A Practical Decision Framework
The choice depends on your financial position, investment preferences and willingness to take on trustee responsibility. The relevant factors:
- Your super balance: There is no legislated minimum for an SMSF, but the fixed cost base makes smaller balances proportionally more expensive to run.
- Investment needs: An SMSF suits investors who want direct control or access to assets an industry fund does not offer, such as direct property.
- Time and responsibility: SMSF trustees are responsible for investment decisions, compliance, record-keeping and other legal obligations.
- Insurance: Check what cover you hold through your current fund and arrange replacement cover before rolling out.
- Professional support: Accounting, administration and advice reduce the trustee workload and add to the cost.
There is no balance or strategy that makes an SMSF suitable for everyone. The decision weighs control and flexibility against cost, responsibility and complexity.
Frequently Asked Questions
Can an SMSF outperform an industry fund?
Research commissioned by the SMSF Association from the University of Adelaide found SMSFs delivered a five-year rate of return 1.1 percentage points higher than APRA-regulated funds over the five years to June 2024. Three qualifications apply. The research is industry-commissioned. Performance varies sharply with fund size, with SMSFs above $200,000 returning materially more than those below it. And APRA funds outperformed SMSFs by 1.8 percentage points in the 2022-23 year alone. Outcomes depend on the investment decisions made within the fund.
What happens to my insurance when I switch to an SMSF?
Group life, TPD and income protection cover ceases when you exit your industry fund. Arrange replacement individual cover and confirm it is in force before initiating any rollover. Gaps between cancellation and new cover starting are common.
How long does it take to set up an SMSF?
A straightforward SMSF can be established within one to three weeks, covering trust deed preparation, ABN and TFN registration, and opening a bank account in the fund’s name.
Can I have both an SMSF and an industry fund account?
Yes. Maintaining both is legal. Some investors run an SMSF for specific investment strategies while keeping an industry fund account, particularly where that account holds insurance cover they have not replaced.
What is the maximum number of members an SMSF can have?
Six, following the 2021 change from four. All members must be trustees or directors of the corporate trustee.
Does Division 296 apply to industry fund members as well?
Yes. Division 296 applies to total superannuation balances regardless of which structure holds them, and a member’s balances across multiple funds are aggregated.
Conclusion
Industry funds suit members who want simplicity, lower entry costs, default insurance and professional investment management without personal responsibility for compliance. SMSFs suit members with sufficient balances, a specific investment strategy, and the willingness to take on trustee obligations with appropriate professional support.
The 2026-27 year adds a further consideration for larger balances. Division 296 now applies to earnings above $3 million and again above $10 million, and it applies wherever the balance sits.
Rivkin’s SMSF team assists with establishment, compliance, audit and ongoing administration. Contact us to discuss your circumstances.
