A. Determine Trustee Structure and Eligibility
An SMSF is a trust structure which means it must have trustees who are trusted with the responsibility for all affairs of the fund.
There are two types of trustee –
1. Individual members, and
2. Corporate (a special company for a super fund, not a regular company). There is a cost to establish a corporate trustee, Often ranging from $400- $1000, each fund member will also be a director, and there are annual ASIC fees, but an advantage is it allows simpler changing of fund members and asset name ownership. Seek legal advice.
Eligibility to be a trustee or director is important – a person is disqualified if they have a prior conviction of an offence involving dishonesty, subject to criminal penalty by super law, considered insolvent, un-discharged bankrupt or been disqualified by a regulator (ATO or APRA).
B. Prepare Trust Deed, Execution and Consent
Being a trust an SMSF must have Trust Deed, a document that sets out the rules to establish, operate and wind up the fund. The trust deed is a legal document usually prepared by a legal practitioner, ideally a super specialist. It needs specialist assistance.
The trust deed can impose more stringent rules than those in the super law, however it cannot create rules that are inconsistent or less lenient than the law. The legislation will prevail over any rules that do not comply.
Execution means to sign and date the deed, and the trust it established once all trustee/members sign.
All trustees must also
1. Read: Self-Managed Super Funds – Key Messages for Trustees (ATO, NAT 71128) and
2. Each must sign a written consent to their appointment and understanding of their role: Trustee Declaration (ATO, NAT 71089).
Then the fund accepts written application letters by each member to join.
See NAT 71128 and 71089 (need one for each member)
C. Obtain ABN, TFN, Elect to be Regulated, Open Bank Account
Trustees then apply to the ATO for an Australian Business Number (ABN) and Tax File Number (TFN) for the SMSF and advise the ATO the fund elects to be regulated by the ATO, in order to be legally entitled to the concessional tax treatment. Some funds may have an advantage to register for GST where taxable supplies are expected to be over $75,000, but is optional below this amount. Seek advice.
A separate bank account must be opened in the name of the trustees and the SMSF. A cash management account with flexibility and high interest such as Macquarie Cash Management could be considered.
Use NAT 2944 Application for ABN registration for superannuation entities, or apply online.
D. Rolling other Super Fund Monies and Accept Contributions
Trustees then can apply to their current super funds and request all or part of the monies to be withdrawn and deposited into the new SMSF. You can also deposit your own after tax money to gain the tax advantages to save for retirement, but limits apply. You can direct your employer to pay your SG super to your SMSF, or leave them to continue paying to the current fund if left open with a small amount.
Get our FREE Expert Guide – Self-Managed Super and You – it has all the info you need to know, with bonus TIPS and CHECKLISTS to determine if SMSF is for you and what steps are needed to set up, as well as how to get your SMSF set up FREE. It also gives you ALL the Aust Tax Office publications about SMSF (NAT XXXX). Get your copy now – click “Download” top right hand side above. You’ll also get monthly SMSF news, investment teaching and upcoming seminar and workshop briefs! Download your FREE Guide now!
Interested to know what self-managed super (SMSF) is all about, how to get setup FREE and if it is for you? We have FREE seminars and bonuses every month – Self Managed Super Fund Roadmap (all you need to know) see 1 SMSF – FREE Seminars or call us 0407 361 596