How To Setup A SMSF

A Self Managed Super Fund (SMSF) offers you much greater control over your superannuation than other types of super funds.

You can also invest in many different types of assets that are not possible to include in a regular superannuation fund.

But there are a few steps involved before you get started:

Make sure you meet the eligibility criteria

Almost anyone can create a SMSF! The only people who cannot are those that have been “disqualified”.

These people cannot be a trustee or a director of a trustee company for a number of reasons including, insolvency, they have been convicted of a dishonest act or been banned by the Australian Prudential Regulation Authority (APRA), Australian Securities and Investment Commission (ASIC) or the Australian Taxation Office (ATO).

Additionally, it may not be worth it for those that do not have a significant amount of superannuation or cannot contribute.

Execute the SMSF trust deed

To establish a SMSF you first need a trust deed which sets out who the trustees are and what their powers are.

It is important that your trust deed reflects current superannuation legislation and is kept up to date. Keeping it up to date is important because the superannuation laws change rapidly.

Apply for all tax registrations

In order to receive the concessional taxation treatment that applies to super funds, you must apply to become a regulated fund with the Australian Taxation Office (ATO). The ATO can also provide more useful information on setting up a fund, the trustee’s role and duties and check that your fund is structured correctly.

Once you are regulated with the ATO, you should then receive an Australian Business Number (ABN) and Tax File Number (TFN) for your SMSF.

Draft and agree on an Investment Strategy

You will need to prepare an investment strategy that sets out the manner in which funds are to be invested for the benefit of the members.

This strategy should take into account the risk taken with investments, expected returns, diversification, asset allocation and the liquidity of the fund.

We can help your SMSF come up with a plan that will maximise returns! Contact us today or enquire online to get in touch with our expert financial advisers.

Start investing

The final step is to open a bank account or cash management account in the name of the super fund.

Your SMSF bank account can:

  • Accept transfer in from any other super funds that you may have.
  • Be used to purchase investments.
  • Be used to pay bills and taxes, on behalf of the super fund.

Once you have your bank account set up, you can begin acquiring assets for your SMSF.

Note that before investing you will need to consider any restrictions on your ability to invest, what your funds investment strategy is and that you have complied with super laws.

Seek professional advice!

Setting up a fund without professional advice can be fraught with danger. What could go wrong?

  • The trust deed is an important document. If you set up the wrong type of trust deed it can be hard to change and may have income tax and regulatory consequences. Additionally, having an old deed means that you may be restricted from doing certain things, such as borrowing to invest.
  • A super fund must pass an audit every year. If you have not started off on the right foot then you are likely to fail the first year’s audit and attract the attention of the ATO.
  • There are many do’s and don’ts regarding allowable investments, member rules and a wide variety of regulations that need to be followed to the letter. Only a trusted adviser can assist you with these from the outset.

Set up a SMSF trust today!

For help setting up a structure that works best for you and meets all the regulatory requirements, speak to our SMSF experts! Enquire online today and our staff will contact you to discuss your situation.

Note: this website is for informational purposes only and should not be substituted for professional financial or taxation advice.