If the prospect of being able to take control of your financial future by having your own self managed super fund (SMSF) seems like a good idea, there are a number of important steps you need to complete. If your SMSF is not set up correctly in the first place, it may cause significant issues in the future. Fortunately, we can make the process easier for you with our SMSF establishment service which walks you through the decision making process and takes care of all the paperwork and administration.
If you’re doing it yourself, the key decisions and steps you need to go through are:
SMSFs can have up to four members. Each member must also be a trustee, or if a corporate trustee is appointed, each member must be a director of the corporate trustee. Trustees manage the fund while members receive the benefits.
You have two choices for the trustee structure:
1. Individual trustees where each trustee is also a member of the SMSF,
2. Corporate trustee where you register a company to be the trustee and each member of the SMSF is a director of that company.
This is an important decision, as it will impact a range of other steps, such as the name in which the investments are held and how your fund will need to be run. While individual trustees are currently more common, a corporate trustee could be more cost-effective and provided greater control and protection. Also, a corporate trustee will be required if you intend to borrow in your SMSF.
The trust deed is a legal document that sets out the rules for establishing and running your SMSF and, along with the associated current superannuation laws, governs how your fund needs to be operated. The trust deed should be prepared by a qualified legal practitioner and be signed and dated by all trustees.
All new trustees must sign a ‘trustee declaration’ within 21 days of becoming a trustee or director of a corporate trustee, to show they understand their obligations and responsibilities. This document must be kept for at least 10 years. You can get the form from the Australian Taxation Office (ATO).
Download the Australian Tax Office’s Trustee declaration form
Your fund needs to be registered with the ATO within 60 days of being established. You need to elect for your fund to be regulated to advise the ATO that the SMSF will be eligible for superannuation tax concessions. This step also involves getting a Tax File Number and an Australian Business Number for the SMSF and if required, registered for GST.
Your SMSF must open a bank account in its own name so it can accept contributions and rollovers, receive income from investments and also to pay the fund’s expenses and members benefits. Your SMSF’s assets must be kept completely separate from your personal or business assets.
Before you start making investments in your SMSF you will need to prepare an investment strategy for your fund that takes into account all your members’ needs and circumstances. You will need to consider the fund’s investment objectives, how much you are willing to risk, how much income you need in retirement, the type of assets you would like to invest in and how quickly you can sell the assets if required. The trustees are also required to consider whether your fund should take out insurances on behalf of the members.
You will need to appoint an auditor that is registered as an approved SMSF Auditor with ASIC to review your fund’s activities and ensure it complies with the relevant laws. You need to appoint an auditor at least 30 days before the due date of the SMSF’s annual return.
You may also want to use the services of other professionals, such as a: