One of the most important things to understand before setting up a multi-member SMSF is how ownership of investments actually works inside the fund. Many people assume:
- “My gold is mine”
- “Their crypto is theirs”
- “We each own separate investments”
In a standard SMSF, that is usually NOT how it works.
In short, there are two main ways investments and asset ownership can be structured within a multi-member SMSF:
- Pooled Structure – where all members proportionally own all SMSF assets according to their member balances.
- Segregated Structure – where specific investments are allocated to individual members within the SMSF.
1. Pooled SMSF Structure (Standard SMSF)
Most SMSFs operate as a pooled structure. This means:
- the SMSF owns all investments as a whole,
- members do not own separate assets,
- and each member owns a percentage of ALL SMSF assets according to their member balance.
Example
Person A has $90,000 = 42%
Person B has $70,000 = 32%
Person C has $55,000 = 26%
SMSF total = $215,000
The SMSF buys:
- Gold = $150,000
- Silver = $45,000
- Cash at bank = $20,000
Ownership works like this:
- Person A owns 42% of the gold, silver and cash
- Person B owns 32% of the gold, silver and cash
- Person C owns 26% of the gold, silver and cash
The investments belong to the SMSF as a whole and are apportioned between members accordingly. This is the standard and most commonly used SMSF structure.
Pooled SMSFs are generally simpler and more cost effective to administer because there is usually only one bank account, one shared investment pool, one set of accounting records, and fewer compliance and reporting requirements.
Importantly, the SMSF pays the expenses as a whole fund, and those costs are apportioned between members according to their ownership percentage. For example:
- if a member owns 42% of the SMSF,
- they effectively bear 42% of the SMSF fees and expenses.
This includes accounting fees, audit fees, ASIC fees, taxation liabilities, and other SMSF expenses.
The fees are not usually split equally unless each member has contributed equally.
Why This Matters
If you have multiple members in your SMSF:
- all members need to agree on the investment strategy,
- all members share exposure to all investments,
- and all members proportionally share gains, losses, income and expenses.
This is why it is important that all members are aligned on what the SMSF invests in.
2. Segregated SMSF Structure
A segregated SMSF structure allows investments to be specifically allocated to individual members. For example:
- one member may hold gold and silver,
- while another member may hold cryptocurrency or shares,
- without all members proportionally owning every asset.
This creates more separation between member investments and allows for more customised investment strategies.
However, segregated structures are significantly more complex to manage. They generally require:
- separate bank accounts or investment structures,
- more detailed accounting,
- additional compliance work,
- and higher ongoing administration requirements.
Because of this, additional fees apply for segregated SMSFs.
Which Structure Is Better?
Pooled structures are usually best for:
- spouses and families with aligned goals,
- members comfortable jointly owning investments,
- and clients wanting simplicity and lower administration costs.
Segregated structures may suit:
- members wanting separate investment pools,
- members with very different investment preferences,
- or clients wanting more separation and autonomy.
The Most Important Thing
Before setting up a multi-member SMSF, every member should clearly understand:
- how ownership works,
- how investments are apportioned,
- how fees are shared,
- and whether a pooled or segregated structure better suits their goals.
This is one of the most important SMSF decisions to understand BEFORE establishing your SMSF.
Learn more about our SMSF setup process here https://freedomffs.com.au/smsf-setup/