Setting Up a Self-Managed Super Fund

20/04/2022

Setting up a self-managed super fund (SMSF) can give you the freedom to customise your super and maximise your investment. While this may seem appealing, you must first know how to set up a self-managed super fund the right way to maximise your retirement fund and avoid trouble with the ATO.

The first step is to fully understand what an SMSF is and why you may want one.

What Is A Self-Managed Super Fund?

DIY or self-managed super funds are similar to regular super funds. The purpose of your superannuation is to provide you with benefits that will support you through your retirement. The key difference is that, instead of trusting an established super fund to invest your retirement money wisely, you take it into your own hands.

Why Learn How To Self-Manage Your Super?

The biggest benefit to an SMSF is that you are in charge. It’s up to you and your fellow trustees to make the investment decisions that will directly impact your retirement. Along with this benefit comes the responsibility of being in charge of your own super. You will be held responsible for complying with all relevant laws as well as acting in the best financial interest of all trustees.

How To Set Up A Self-Managed Super Fund

It’s important to note that an SMSF isn’t for everyone. It takes time and expertise to successfully take on this major financial decision. It’s best to first consult a qualified professional for expert advice before you begin the process of setting up a self-managed super fund.

Here is a brief overview of how to set up self-managed super.

Establish Who Your SMSF Is For

Self-managed super funds can have up to six members. These members can be either individual trustees or corporate trustees in the form of a company. Each member will be a director of the SMSF with their own set of responsibilities and duties. They will also need to provide their Tax File Number (TFN) to make eligible contributions.

The Trust Deed

Every SMSF needs a trust deed. This legal document outlines how your SMSF will be established and operate. It covers details like the members of the fund, rules, investments, contributions, payments, and exit plans. All trustees must sign and date the trust deed, confirming that they understand their duties and responsibilities in relation to the trust.

This document is essential, not only for your SMSF to be set up correctly and eligible for tax concessions, but also to clearly determine the way the fund will work. A key part of this is dictating clear processes to follow when making decisions. Without the processes clearly defined you can run the risk of miscommunications within the fund and issues arising.

Starting Assets

To get any SMSF up and running, it needs assets. This can be a relatively small amount to start with until existing benefits can be rolled over and further contributions can be made. A licensed professional will be able to advise you on how much you need to start your SMSF.

Elect To Be Regulated By The ATO

If you intend to save on tax and comply with tax laws, this step is essential. Electing to be regulated by the ATO means that you have registered through the Australian Business Register. Once registered your fund will be listed so that your fund can receive rollover benefits from other established funds.