There are a number of steps that need to be considered and completed in order to set up an SMSF. An SMSF needs to be set up correctly so that it’s eligible for tax concessions, able to receive contributions and is as easy as possible to administer.

Consider appointing an SMSF professional to help you

You will need to appoint an approved SMSF auditor each year to audit your fund…this is a regulatory requirement. You may also want to consider appointing SMSF professional service providers such as an accountant, lawyer, tax agent, financial adviser or SMSF administrator. These service providers can help you set up and run your fund. In some cases, you can even purchase “off-the shelf” kits from specialist providers to establish and manage your fund.

Remember though…you will still be responsible for making sure your fund is managed properly. The following provides a high level overview of the main steps involved in setting up an SMSF. We recommend that you consult with an SMSF professional to determine your requirements.

Choose individual trustees or a corporate trustee

One of the first things you will need to decide is if your SMSF will use an individual or a corporate trustee. If an individual trustee is used, the members (up to four) are also the trustees. If a corporate trustee is used, the company is a trustee and the members are directors.

There are some advantages to using a corporate trustee as it is much easier to add or exit members with a corporate trustee. There are also additional costs involved. You should discuss this decision with an SMSF professional as there are specific requirements that must be considered.

Create the trust and trust deed

The trust deed is the legal document that sets out the rules for establishing and operating your fund. It includes such things as the fund’s objectives, who can be a member, and whether benefits can be paid (lump sum or income stream).

The trust deed and the superannuation laws together govern how the fund will be run. The trust deed must be:

  • prepared by a qualified person
  • signed and dated by all trustees
  • properly executed according to state or territory laws
  • regularly reviewed, and updated as necessary. 

Appoint your trustees

One you have settled on your trust deed, you must appoint all trustees (and directors if a corporate trustee is used). All trustees are bound by the trust deed and are equally responsible if its rules aren’t followed. There are eligibility requirements that must also be met by the trustees.

Register your fund

Your SMSF needs to be registered with the ATO. You must also arrange to get a TFNand ABN and register for GST if required.

You must also meet the Australian residency requirements in order to be a complying/regulated superannuation fund and receive the superannuation tax concessions.

Set up a bank account

You’ll need to set up a bank account in your SMSF’s name. This account is used to manage the fund’s operations and accept cash contributions, rollovers of superannuation amounts and income from investments. This account is also used to pay the fund’s expenses and liabilities. 

Rollover your super and accepting contributions

If you have other superannuation accounts you may decide to consolidate your existing superannuation balances into your SMSF.

If your SMSF is to receive contributions from your employer (other than related-party employers), it needs to receive the contributions and associated data electronically. You will need to set up a SuperStream data electronic service address (special internet address) and provide your employer with information about your SMSF. 

Set up an investment strategy

Before you start making investments you need to have an investment strategy. This sets out your fund’s investment objectives and details the types of investments your fund can make.

Your investment strategy should be in writing and must:

  • be reviewed regularly to ensure it continues to reflect the SMSF member(s) requirements
  • consider whether to hold insurance cover (such as life insurance) for each member of the SMSF.

You might also be interested in:

What is an SMSF?

Is an SMSF right for you?

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