If you’re new to SMSF, here’s a handy glossary of some of the industry’s most commonly used term and acronyms.



The Australian Business Number (ABN) that will be issued to your SMSF as part of the set-up process. Before a bank account is opened, the bank will always ask for the ABN of your Fund as well as the Trust Deed.

Accrued Benefits

These are the total amounts saved in your SMSF so far and owed to the Beneficiaries. Every year, the accrued benefits would increase as contributions and net income are added to the Members’ Liability.

Accumulation Phase

While you’re contributing into your SMSF towards retirement, you are in what’s known as the accumulation phase. Once you retire, and you’re ready to draw a pension stream, your benefits move from the accumulation phase into the pension phase. In fact, the benefits don’t actually “move” anywhere; they simply take on a different status and they’re treated differently in terms of taxation within the SMSF.


The SMSF must have the status of a Complying Superannuation Fund (CSF). That is to say, it must comply with SISA (Superannuation Industry (Supervision) Act 1993) standards. As such, it is taxed concessionally at a maximum rate of 15%. To remain compliant, the single most important requirement is that the Fund meets the Sole Purpose Test, i.e. providing benefits to the SMSF’s members on or after retirement, paying benefits to members on the death of a member, or paying benefits to be passed on to a member’s dependants or legal representatives. To retain complying Superannuation Fund status, all trustees/members must be familiar with SISA standards and understand their role in running the Fund

Allocated Pension

This is a popular type of pension stream that can be drawn at regular intervals (but at least annually) from your SMSF once you have satisfied a condition of release; usually retirement after the age of 55 or on turning 65. The amount you’re allowed to withdraw each year depends on minimum and maximum amounts that are calculated annually based on your age and, of course, the amount of funds available in the SMSF. There is no guarantee that this form of pension will last your entire lifetime. Upon your death, the balance may be paid to your spouse or other designated financial dependant, either by way of a reversionary pension, a new pension stream or a lump sum.

Asset Class

Different assets fall into different categories or classes, and the main ones are shares, fixed interest and property. These can be broken down further into sub categories such as listed or unlisted and, Australian or international. As diversification is an important consideration when planning the investment strategy for your Fund, Trustees should give thought to each of these classes in order to arrive at the best investment portfolio for their current stage of life and eventual retirement needs. The asset classes will be set out in the Investment Strategy.


This is the Australian Taxation Office. SMSFs are regulated by the ATO. Complying Superannuation Funds are entitled to concessional tax rates of 15% unless the ATO advises the trustees that the Fund has become non-complying (you don’t want this!). A non-complying Fund will be taxed at 45%. It is crucial therefore, that Trustees ensure that their Fund is complying at all times.

Arm’s Length transactions

The Trustees must not invest with related or associated parties, and must ensure that investments are made or maintained on commercial terms (at full market value and return).

Australian Prudential Regulation Authority (APRA)

APRA is a Federal Government body, established in 1998 to oversee and regulate the financial services industry, including banks, building societies, life insurance, credit unions and most members of the superannuation industry.
It handed over the regulation of SMSF’s to the ATO in 1999.

Australian Securities and Investment Commission (ASIC)

Another Federal Government body, this one mainly deals with the Corporation’s Law and the Financial Services Reform Act. If your SMSF has a Corporate Trustee, we liaise with ASIC to ensure that the company is formed and maintained to ASIC requirements. Note that Superannuation Warehouse normally sets up SMSF’s with individuals rather than corporate entites.



A Member of an SMSF may also be referred to as a Beneficiary. At Superannuation Warehouse, we tend to use the term Beneficiary rather than Member. A Beneficiary is a person for whom contributions are made or who receives benefits from the Fund. In retirement, a member has the option of receiving a lump-sum payment, a pension or a combination of both.


The amount of accrued entitlements in an SMSF that is held for the Beneficiary.


Capital Gains Tax

Depending on the difference between the cost price of purchasing an asset and the sale price of disposing of the same asset, the result will be either a capital loss or a capital gain. Wherever the difference is a gain, capital gains tax is payable in the income year the asset was disposed of. SMSF’s pay capital gains tax at a rate of 15%; however, if the asset has been held for more than 12 months the ATO allows a Capital Gains discount, reducing the tax rate to 10%. It is, therefore, crucial that Trustees retain all documentation relating to the buying and selling of assets.

Complying Superannuation Funds

When a new SMSF is established it must choose to be regulated under the SIS act in order to become a complying Fund. Only a complying Fund is entitled to concessional tax rates.

Concessional Contributions

If you are salary sacrificing, self-employed, or running your own business, you may consider making before tax contributions of up to $25,000 per financial year into your SMSF.


A contribution is money paid into the SMSF by either a Beneficiary or an employer. All contributions are preserved until a condition of release is satisfied by the member, usually by retiring at the age of 55 or by reaching the age of 65.

Corporate Trustee

SMSF Trustees tend to be individuals rather than corporate entities. This is most often the case with funds set up by Superannuation Warehouse. However, this is not to say that a company cannot perform the function of Trustee. If a Corporate Trustee is chosen, all directors of that company must be Members of the Fund.



This is a common form of income earned in an SMSF. Many superannuation Funds buy shares in companies with the expectation of receiving dividends at regular intervals.

The advantage of this kind of income is that the tax on most (though not all) of the dividends has already been paid by the company that issued the dividend. This kind of dividend is called a franked dividend and tax has been paid at the current company tax rate of 30%.

As complying superannuation Funds only pay a tax rate of 15% the remaining 15% can be put towards paying tax on other income, e.g. contributions into the SMSF. The company pays no tax on unfranked dividends. The superannuation Fund must, therefore, pay tax on this income at 15%.


One of the considerations Trustees must make is a diversification in assets that fits the Members’ investment objectives.


Trust Deed

A Trust Deed is a document setting out the main rules for the SMSF. The ATO is the regulator of SMSF’s and set out the minimum criteria a Trust Deed should address, e.g. the Funds objectives, who the Trustees and Members are and when benefits can be paid.

There are many deed providers selling SMSF trust deeds or you can download a free deed from our website. The deed we have is written in such a way that it does not need amended every time there’s a legislative change. Our deed has been signed off by lawyers and is tailored for each SMSF we administer.

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