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Steps you need to take when setting up your SMSF

04 August 2017

It is important that you seek the advice of a professional when setting up your SMSF to ensure it is ATO-compliant. Not meeting ATO requirements can cost you your fund’s compliance status before you even start. This can result in you forking out a hefty establishment fee for a super fund that may never get off the ground.

In general, there are 11 important steps involved in setting up your SMSF including:

  1. Decide on either an individual or corporate trustee structure for your SMSF.
    • You need to consider the cost, the way your fund assets are registered, and the complexity of the trust structure that you choose for your SMSF.
  2. Decide on the trustee members and obtain their written consent.
    • Trustees can be members of either an individual or a corporate trustee structure – each with four members or less.
    • If a corporate trustee structure is chosen, all members of the SMSF must be directors of the company that is set up as the corporate trustee.
  3. Establish the corporate trustee.
    • A company trustee will need to be registered separately with ASIC, and an ASIC fee will apply.
  4. Draw up the trust deed.
  5. Set up a bank account.
    • Open a bank account for the SMSF with a bank of your choice.
  6. Apply for an ABN and tax file number.
    • This is a separate ATO application. The ATO service standard for issuing ABNs and tax file numbers is up to 28 days. You will need to take this into account when planning your timeframe for the establishment of your SMSF.
  7. Register for GST
    • GST registration is only applicable if your fund acquires commercial property.
  8. Membership application forms should be executed by each member.
    • Each member should sign an application for admittance as a member.
    • Each member should also declare their tax file number.
    • Death benefit nomination forms should be filled out and completed. These will advise the trustees where your super balance should be paid to in the event of your death.
  9. Review your insurance cover.
    • It is important that you consult a financial adviser to review the existing insurance held in your super fund.
    • Once a rollover application is received by your existing fund, all insurance will be cancelled when the rollover is processed.
    • Cancelling insurance may mean you can never get the same cover for the same price again.
  10. Rollover your balances held in other super funds.
    • You will need to complete forms and submit them to your existing fund, so that they transfer your super balance to your new SMSF.
    • You should note that timeframes for rollovers vary from fund to fund. You should check your rollover fund first before signing any property purchase contracts.
  11. Develop an investment strategy
    • It is recommended that you consult a licenced financial adviser to develop an investment strategy.
    • An investment strategy is an important compliance document. The trustees must review it annually to ensure that the fund investments are ATO-compliant.
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