SMSF set up

Not having a SMSF yet? We can help.

* SMSF set up - individual trustee
* Supply SMSF Trust Deed
* Appoint Trustees' Document
(Member Records)
* Minutes for SMSF
* ATO Trustee Declaration Form
* Apply for ABN
* Apply for TFN

$880 ( inc GST)

SMSF set up information

- easy 9 steps with 123eTax

It’s important for fund trustees to set up a self-managed super fund (SMSF) correctly to ensure that it is compliant with the government regulation -Superannuation Industry (Supervision ) Act. This will ensure the fund is eligible for the various tax concessions available under Australia’s superannuation system. Please also note that all members of the SMSF must also be trustees of the fund.

Here are some important steps for trustees to set up an SMSF :

(We are here to help you through these tasks.)

● Step 1. Consider appointing professionals to help you

● Step 2. Choose structure for your fund - individual trustees or a corporate trustee

● Step 3. Appoint your trustees

● Step 4. Create the trust and trust deed (back up by licensed lawyer)

● Step 5. Register your fund with the ATO and apply for an ABN

● Step 6. Set up an SMSF bank account

● Step 7. Getting an electronic service address for member contributions and rollovers

● Step 8. Prepare an investment strategy

● Step 9. Prepare an exit strategy

It’s worthwhile to obtain professional advice from an SMSF service provider to help you set up your fund. We can help you to manage your fund to ensure your ongoing legal compliance.

Step 1. Consider appointing professionals to help you

We are here to help you through all the tasks.

As an SMSF trustee, you can accept contributions and rollovers for your members from various sources but there are some restrictions, mostly depending on the member’s age and the contribution caps.

You need to properly document contributions and rollovers, including the amount, type and breakdown of components, and allocate them to the members’ accounts within 28 days of the end of the month in which you received them.

Professionals like us can help you with contributions you can accept, contribution caps, rollovers, personal deductions, tax on income - assessable contributions ... etc.

Step 2. Choose structure for your fund - individual trustees or a corporate trustee

When you set up your SMSF, you need to decide on the type of trustee for your fund. Your fund can either have individual trustees; or a company as the trustee of the fund.

Whichever choice you make, each SMSF member must play an active role in managing the SMSF because:
• With individual trustees, all members must be trustees.
• And with a corporate trustee, all members must be directors of the company.

So which type of trustee will suit you the best? Lets have a look at some of the differences:

> If you are the only member of your fund, you still need two individual trustees – so you plus one other person who is willing to be a trustee and not a member.
> If you have a corporate trustee – you can be the single member and the sole director of the company.

Ownership of fund assets must be recorded in the name of all trustees on behalf of the fund.

> For individual trustees – every trustee’s name must be listed. So if a member leaves or joins the SMSF, you’ll have to change the ownership documents.
> For a corporate trustee – only the company name is listed. So even if there is a change in SMSF members, you won’t have to change the ownership documents.

Whichever way you go, there are costs and fees involved in setting up an SMSF. It may cost a bit more to set up a corporate trustee, but that might be a small price to pay compared to the cost and effort involved in changing ownership documents.

If your SMSF breaks the super rules, each trustee can be fined thousands of dollars.
> If you have individual trustees, this will cost more in fines because each individual trustee is fined the penalty.
> If you have a corporate trustee, it only receives one penalty and the directors share the cost between them.

It’s a good idea to discuss the advantages and disadvantages of both types of trustee structures with us before you establish your SMSF.

Step 3. Appoint your trustees

The trustee declaration

The trustee declaration is a key document that you should take time to consider. It highlights important duties and responsibilities expected of you by the ATO. Lets take a look at 5 key duties and responsibilities that trustees must understand:

1. It is your responsibility to make sure the fund is run for the sole purpose of providing super to its members when they retire.
2. Protecting super assets in the fund,
3. Making decisions in the interest of members;
4. Making sure all actions taken are allowed under super laws; and
5. Implementing and regularly reviewing the fund’s investment strategy.

There are restrictions on what investments can be made by your SMSF.
You are responsible for making sure that your fund’s investments do not breach these rules.
You must know the rules on when your SMSF can receive contributions and when it can pay benefits to members.
You are responsible for making sure all contributions and payments comply with laws and are allowed under the trust deed.
You have administrative duties to perform including:
• Keeping records for required timeframes,
• Appointing an SMSF auditor each year,
• Lodging the SMSF annual return by the due date, and
• Notifying the ATO of changes to the SMSF.

You must make sure that every trustee or corporate trustee director completes a declaration within 21 days of starting.

If the ATO feels, that you don’t understand these responsibilities, the ATO can direct you to undertake an education course. Remember, even if you have an administrator or an SMSF professional managing your fund, you are still the trustee and the trustee duties and responsibilities remain with you.

Step 4. Create the trust and trust deed

We will provide this for you

A trust is an arrangement where a person or company (the trustee) holds assets (trust property) in trust for the benefit of others (the beneficiaries). A super fund is a special type of trust, set up and maintained for the sole purpose of providing retirement benefits to its members (the beneficiaries).

To create a trust, you need:
trustees or directors of a corporate trustee; governing rules (a trust deed); assets (an initial nominal consideration to give legal effect to the trust can be used, for example, $10 attached to the trust deed); identifiable beneficiaries (members).

Trust deed
A trust deed is a 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 as a lump sum or income stream. The trust deed and super laws together form the fund’s governing rules. 123eTax use experienced licensed lawyers to draft and back up the Trust Deed of the SMSF.

The trust deed must be:
prepared by someone competent to do so as it's a legal document; signed and dated by all trustees; properly executed according to state or territory laws; regularly reviewed, and updated as necessary.

Assets
To establish your fund, assets must be set aside for the benefit of members.

If a rollover, transfer or contribution is expected in the near future, a nominal amount (for example, $10) can be held with the trust deed. This amount is regarded as a contribution and must be allocated to a member.

If a member can't contribute to the SMSF (for example, they are over 65 or don't meet the work test), an administrative discretion is automatically applied to allow a nominal contribution for the member. The amount must be allocated to the member, solely for the purpose of registering the SMSF.

Step 5. Register your fund with the ATO and apply for an ABN

We will register for you

Once your fund is established and all trustees have been appointed (including signing theTrustee declaration), you have 60 days to register the SMSF with us by applying for an Australian business number (ABN).

When completing the ABN application you should:

> ask for a tax file number (TFN) for your fund
> elect for your fund to be an ATO-regulated SMSF. If you don't, your fund will not receive tax concessions and the members’ employers can't claim deductions for contributions
> register for GST (if necessary).
Two common errors in applications to register an SMSF and get an ABN are:

> the SMSF trust is not set up correctly before applying for an ABN, including setting aside an asset as the SMSF's property
> the details of the members, trustees or directors of the corporate trustee are incorrect or incomplete.

Step 6. Set up an SMSF bank account

You need to open a bank account in your fund’s name to manage the fund’s operations and accept contributions, rollovers of super and income from investments. This account is used to pay the fund’s expenses and liabilities.

The fund’s bank account must be kept separate from the trustees’ individual bank accounts and any related employers’ bank accounts.

You don't have to open a separate bank account for each member but you must keep a separate record of their entitlement, which is called a 'member account'. Each member account shows:

> contributions made by or on behalf of the member
> fund investment earnings allocated to them
> payments of any super benefits (lump sums or income streams).

Step 7. Getting an electronic service address for member contributions and rollovers

If your self-managed super fund (SMSF) will receive contributions from employers (other than related-party employers), it needs to be able to receive the contributions and associated SuperStream data electronically.

SuperStream is a data and payment standard that applies to super contributions made by employers to any super fund, including SMSFs.
To receive SuperStream data you need an electronic service address, which is a special internet address. It's different to an email address.
Your administrator may provide you with an electronic service address or you can use a SuperStream message solution provider.
When you receive an electronic service address, you must update your records with us. See Notify us of changes for how to update your details.
An employer will need the following information about your SMSF:

> Australian business number (ABN)
> bank account details (BSB and account number)
> electronic service address.

Step 9. Prepare an exit strategy

The last thing you think of when starting a Self Managed Super Fund is what will happen at the end! But you really should plan for the future when setting up your fund including if a relationship breaks down or if a member becomes incapacitated or dies.

There are a few things to consider when making your plans.

You need to have a plan for what will happen to the fund if a member leaves. It may mean adding a new SMSF member, changing the type of fund or winding up the fund.

Payments from your SMSF must meet the rules in the SMSF trust deed so make sure it covers situations like incapacity, terminal illness or death of a member.
Payments must also meet tax and super laws. In some cases, you may have to withhold tax before paying a super benefit.
You need to consider the insurance needs of members when you set up your investment strategy.

You should consider making a binding death benefit nomination if you want to say who will get your super benefits when you die. An SMSF adviser or estate planner can help you get this right.

It's also a good idea to consider what will happen if you become incapable of looking after yourself and your affairs.
You may want to appoint an enduring power of attorney who can act as trustee of your SMSF if it's ever needed.

If relationships in an SMSF break down, you must be prepared to sort out any issues that arise. You can force another member to leave or stay in the SMSF or exclude them from the decision-making process.

It pays to make sure your plans are set from the start so that you are prepared for the unexpected. An SMSF professional will be able to help you make these important plans.