Setting up an SMSF

It’s important for fund trustees to set up a self-managed super fund (SMSF) correctly to ensure that it is compliant with superannuation legislation. This ensures that the fund will be eligible for the tax concessions available under Australia’s superannuation system. All of the members of an SMSF must also be trustees of the fund.

Firstly, it’s important that the fund is set up to satisfy the sole purpose test that underpins Australia’s superannuation system. To satisfy this test, the fund must be set up for the sole purpose of providing retirement funds for its member/s.

Important tasks and decisions for trustees when setting up an SMSF include:

• choosing fund members
• choosing the trustee structure for the fund (i.e. individual or corporate),
• creating the SMSF trust deed,
• applying for an Australian Business Number (ABN) and registering the fund with the Australian Taxation Office (ATO),
• setting up an SMSF bank account,
• getting an electronic service address and arranging for member contributions and rollovers,
• creating an investment strategy,
• creating an exit strategy, and
• appointing an independent auditor who is licensed by the Australian Securities and Investments Commission (ASIC).

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

It’s important to understand that there are both set up and ongoing costs associated with SMSFs.