What Can an SMSF Invest In?
A Self-Managed Super Fund (SMSF) gives you control over how your super is invested.
At the same time, that control sits within a regulated framework.
So while you have more flexibility, there are also clear rules that need to be followed.
This guide walks you through what an SMSF can invest in, and what you need to be aware of.
What can an SMSF invest in?
An SMSF can invest in a range of asset types.
But before anything else, each investment needs to meet legal requirements and align with your SMSF’s investment strategy.
In practice, most SMSFs invest across a mix of the following.
Shares
You can invest in:
Australian listed shares
international listed shares
Dividends from these investments form part of your SMSF’s income.
Property
This can include:
residential property
commercial property
Property is one of the most commonly discussed SMSF investments.
At the same time, it comes with specific rules, particularly around how the property is used and who it can be leased to.
Cash and term deposits
This includes:
bank accounts
fixed-term deposits
These are typically used to manage cash flow and cover ongoing expenses within the SMSF.
Managed funds and ETFs
You can also invest in:
managed investment funds
exchange-traded funds (ETFs)
These give you access to a diversified portfolio within a single investment.
Other permitted investments
Depending on how your SMSF is structured, this may also include:
bonds and fixed income investments
certain alternative investments
The key rule: your investment strategy
Every SMSF must have a documented investment strategy.
This is not just a formality.
It should reflect how your fund is actually intended to operate.
It needs to consider:
risk and return
diversification
liquidity
your retirement objectives
Every investment you make through your SMSF should align with this strategy.
The sole purpose of the fund
All SMSF investments must meet what is known as the sole purpose test.
In simple terms, your SMSF must exist only to provide retirement benefits.
This means:
you cannot use SMSF assets for personal benefit
investments must not provide current-day use
This is one of the key areas regulators focus on.
Related party rules
This is another area where it’s important to be clear.
SMSF transactions involving related parties are strictly regulated.
In general:
your SMSF cannot acquire assets from related parties, unless specific exceptions apply
all transactions must be done at market value
One common exception is business real property.
In certain cases, your SMSF may be able to acquire commercial property from a related party, provided the conditions are met.
Investing in property through an SMSF
Property deserves a closer look, because the rules depend on the type of property.
Residential property
If your SMSF owns residential property:
it must be held purely as an investment
you or related parties cannot live in it
it cannot be rented to related parties
Commercial property
Commercial property is treated differently.
In some cases:
it can be leased to a related business
the lease must be on market terms
it must meet the definition of business real property
Borrowing to invest (LRBA)
Your SMSF may be able to borrow to purchase property.
This is done through a Limited Recourse Borrowing Arrangement (LRBA).
Under this structure:
the loan is linked to a specific asset
the lender’s rights are limited to that asset
This adds another layer to the structure.
It also means the setup and documentation need to be handled carefully.
What your SMSF cannot do
There are clear limits on how your SMSF can invest.
For example:
you cannot use SMSF assets for personal use
you cannot buy residential property to live in
you cannot provide financial assistance to yourself or related parties
you generally cannot acquire assets from related parties outside of specific exceptions
These rules are part of maintaining the integrity of the structure.
Your responsibilities as a trustee
If you are running an SMSF, you are responsible for how it operates.
This includes making sure that all investments:
comply with superannuation laws
are properly documented
are made in the interests of members
Even if you work with professionals, the responsibility still sits with you.
Why compliance matters
SMSFs continue to be an area of focus for the ATO.
This includes areas such as:
property investment arrangements
related party transactions
borrowing structures
use of fund assets
If issues arise, this can lead to:
financial penalties
trustee disqualification
the fund being treated as non-compliant
This is why structure and ongoing compliance matter.
How we can help
We focus on SMSF setup and compliance.
This includes:
structuring SMSFs in line with ATO requirements
supporting compliance across different investment types
assisting with ongoing administration and reporting
If you’d like to understand what your SMSF can invest in and how this applies to your situation, you can speak with our team.
Ruby He
Ruby He is the founder of Real Accounting, a specialist firm focused on SMSF setup and SMSF Setup and Compliance.
With years of experience working with business owners and investors, she helps clients navigate SMSF structures with clarity, ensuring compliance while unlocking opportunities to invest in property through super.
Ruby is known for her practical, no-nonsense approach, simplifying complex regulations into clear, actionable steps. Clients value her guidance in structuring SMSFs correctly and her track record of supporting successful property investments within super.
Thinking of using your super to invest in property? Have a chat with Real Accounting.
Disclaimer
Real Accounting does not hold an Australian Financial Services Licence (AFSL) and does not provide financial product advice.
This article contains general information only and does not take into account your objectives, financial situation, or needs.
Before establishing an SMSF or implementing any borrowing arrangement, you may wish to seek advice from a licensed financial adviser to assess whether it is appropriate for your circumstances.