Setting up an SMSF in six steps

Take your super into your own hands with this six-step guide to setting up an SMSF.


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Do you want to take your super into your own hands with a self managed super fund (SMSF) but aren’t sure where to start? Don’t worry, setting up an SMSF isn’t as daunting as you might think. In this guide we’ll show you the six-step process to set up your own SMSF.

Let's get started.

Step 1: Hire the professional support you need.

Despite the name, a self-managed super fund actually requires a lot of different people to get the fund up and running, and to support with the ongoing admin. An accountant, tax agent or administrator will help set up the fund, manage its various accounts and finances and ensure you’re meeting your reporting and admin obligations with the ATO. It’s wise look for a tax agent that specialises with SMSF clients.

A legal practitioner can help set up your trust deed correctly (more on this in Step 3), and ensure your fund meets its ongoing legal requirements. You’re not obliged to use a financial adviser but you might find it valuable to get professional advice regarding your SMSF’s investment strategy.

Most importantly, you’ll need to appoint an approved SMSF auditor to audit your fund each year. This is a requirement of all SMSFs.

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Step 2: Decide your trustee structure.

You can be the only member of your SMSF or you can include up to four members (usually family). You’ll need to decide if you’d like an individual or corporate trustee structure.

In an individual trustee structure the SMSF assets are registered in the name of the individual trustees (the fund members themselves). However, with a corporate trustee structure the assets are registered under a company (who acts as the trustee), and the SMSF members act as directors.

There are pros and cons of both structures. An individual trustee structure is lower in management costs but has more admin. These responsibilities can become expensive and also a burden if you’re time-poor.

A corporate trustee structure is easier if the fund frequently changes members. Assets are held under the company name rather than the individual trustees' names. This structure means less paperwork to manage.

You can read more about SMSF trustee structures and trustees’ responsibility in our guide here.

Step 3: Create and sign the trust deed and trustee declaration.

The trust deed is a legal document that outlines the rules of the fund, how it will be operated and lists all members (you can have up to four members in your SMSF). Any professional such as an accountant, administrator or tax agent must prepare a trust deed and ensure all SMSF members sign and date it.

The trustee declaration is another document that highlights the responsibilities of all trustees as regulated by the ATO. Each SMSF trustee and director will sign their own declaration within 21 days to keep on file for a minimum of 10 years.

Step 4: Register your SMSF.

You must register your SMSF with the ATO within 60 days. You can register for an Australian Business Number (ABN) and Tax File Number (TFN), and elect the ATO to regulate your SMSF through the Australian Business Register.

An appointed professional can register the fund on your behalf. You’ll need to provide the SMSF name, date it was opened and the name of all trustees.

Once you register the SMSF with the ATO, you can register for an electronic service address. This is an Internet address for your SMSF that your fund administrator will provide you. You employer will use this address to send contributions to the fund.

Step 5: Open a bank account for your SMSF.

You need to open a bank account in your SMSF's name that is separate from all your members’ personal bank accounts. This account is used for the fund’s general cash flow, eg to pay any expenses or penalties, and receive investment returns such as rental income.

You can take a look at some dedicated SMSF cash accounts below.

Step 6: Roll over your super balance (if you want to).

You can now roll over any existing super you might have with another super fund into your new SMSF. You aren’t required to do this by law, but it’s definitely a good idea so you’re not paying multiple sets of fees across numerous funds.

To do this, simply fill in a Rollover Initiation Request form (available on your fund’s website) that transfers your balance over into your new SMSF. You can also log in to the MyGov ATO portal.

You’ll need to provide all the details for your SMSF so your previous fund knows where to send the money. Once your fund receives this request, it needs to action it within 30 days. This is also a great opportunity to look for any lost super you might have, so you can consolidate it into your new SMSF. Once you’ve finished these six steps and your SMSF is up and running, check out our guide on how to plan an investment strategy for your SMSF.

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