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A Step by Step Guide to Setting up an SMSF

Summary

A Self-Managed Super Fund (SMSF) provides the ultimate control over your retirement savings. However, setting up and maintaining an SMSF requires careful planning, knowledge, and adherence to compliance requirements

 

 

Introduction

A Self-Managed Super Fund (SMSF) provides the ultimate control over your retirement savings. However, setting up and maintaining an SMSF requires careful planning, knowledge, and adherence to compliance requirements. This guide takes you through the essential steps of a Self-Managed Super Fund Setup, providing clear instructions and details.

Table of Contents

  1. Step 1: Create and Implement an Investment Strategy
  2. Step 3: Register Your SMSF
  3. Step 4: Set Up a Bank Account
  4. Step 5: Manage Rollovers and Contributions
  5. Step 6: Manage Investments and Compliance
 

 

Step 1: Establish the SMSF Structure

Choosing Your SMSF Structure

  1. Individual Trustees: Requires at least two trustees (all members are trustees).
  2. Corporate Trustee: Requires one or more members (all members are directors).

Comparison Table: Individual vs Corporate Trustee

Feature

Individual Trustees

Corporate Trustee

Setup Cost

Lower

Higher

Admin Cost

Lower

Higher

Trustee Changes

Must update all asset ownership details

Simple director changes

Member Flexibility

Less flexible

More flexible

Legal Liability

Trustees personally liable

Limited liability for directors

Step 2: Create and Implement an Investment Strategy

Key Requirements

  1. Risk and Return: Assess the risks involved with each investment.
  2. Diversification: Ensure asset diversification to minimize risk.
  3. Liquidity: Maintain adequate liquidity for paying benefits.
  4. Insurance: Consider the insurance needs of all members.

Investment Strategy Template Outline

Section

Description

Introduction

Purpose and objectives of the investment strategy

Objectives

Return targets, time horizons, and risk appetite

Asset Allocation

Guidelines for asset classes

Insurance

Outline of members’ insurance needs

Review Frequency

Regular review and updates

Step 3: Register Your SMSF

Registration Process

  1. Obtain TFN & ABN: Register with the Australian Taxation Office (ATO) for a Tax File Number (TFN) and Australian Business Number (ABN).
  2. Elect to be a Regulated Fund: Complete the election within 60 days of establishing your SMSF.
  3. Open a Bank Account: Dedicated SMSF account for contributions and rollovers.

Key Documents Required

  • Trust Deed
  • Trustee Declarations
  • Minutes of Meetings
  • Investment Strategy

Step 4: Set Up a Bank Account

  • Open an account in the name of the SMSF.
  • Ensure the account is solely used for SMSF transactions.
  • Authorize access for trustees or directors.

Step 5: Manage Rollovers and Contributions

Handling Rollovers

  • Obtain all member details and rollover forms.
  • Submit a request to the existing super fund.
  • Deposit rollover funds into the SMSF bank account.
 

Contributions Management

Contribution Type

Cap (2023-24 FY)

Notes

Concessional

$27,500

Deductible contributions, e.g., employer

Non-Concessional

$110,000 (standard)

Tax-free, non-deductible contributions

 

$330,000 (bring-forward rule)

For members under 75

Step 6: Manage Investments and Compliance

Investment Management Best Practices

  1. Diversify investments.
  2. Monitor investments regularly.
  3. Adjust the investment strategy as needed.

Compliance Requirements

  1. Annual Audit: Engage an independent SMSF auditor.
  2. Annual Return: Submit an SMSF annual return to the ATO.
  3. Lodgment Deadlines:
    • New SMSFs: 31 October.
    • Existing SMSFs: 15 May.

Conclusion

Establishing and maintaining an SMSF involves meticulous planning and strict compliance. By following this structured guide, you can confidently navigate the complexities and leverage the flexibility and control an SMSF provides.

ADDITIONAL INFORMATION:

Contact My SMSF – Contact Us | SMSF Setup, SMSF Accounting and SMSF Loans (mysmsfproperty.com.au)

ATO SMSF Setups –

https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf

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