A self-managed super fund or shortly known as SMSF is a superannuation trust structure that offers financial payment to its members when they are in the period of retirement. The main difference between this type of super fund and other funds available is that the members are also the trustees of the fund and they all have a high level of control over the fund. The popularity of the SMSF is constantly increasing and with a good reason. If you are one of the number of people who are trying to set up their SMSF you need to continue riding this simple guide. But, despite everything your will read, you will still need a professional advice before setting up a SMSF, during its establishment and while the fund is operating. Not setting up an SMSF correctly may bring you huge problems in the future.
The first step in the process is to decide how many members the fund will have. SMSF comes with the ability to have up to four members and each of them can be a trustee or if there is a corporate trustee, each member must be a director of this corporate trustee. Trustees are those who actually manage the fund while members are those who are receiving the benefits.
Once you determine the number of the trustees you need to choose the structure. The main purpose of the SMSF is to provide its members with retirement benefits. When it comes to structure, you have two choices. One is individual trustees where each of them is also a member and the second one is corporate trustee where you create a company as a trustee, with each member of the SMSF. If you choose corporate trustee structure, you will need to find a name for the company and register it with ASIC. If you choose the individual structure and you are the only member of the fund, you will need to find another person to be a trustee.
Another thing is to get a trust deed. The trust deed is a document that determinates the rules for the fund. The deed should be dated and signed by you and other trustees but should be prepared by a qualified and legal practitioner. Specialized companies and SMSF administrators can also help you with the trust deed.
According to the law, each trustee of the fund should sing a declaration. This declaration shows that they have a full understanding of what are their responsibilities as trustees. This declaration should be signed within 21 days of becoming a trustee or a director of a corporate trustee. You can get this document from ATO and you should keep it for about 10 years.
You have to elect for the fund to be regulated in period of 60 days of set-up. This step also includes getting a tax file number for the fund, an Australian business number and registered for GST if required. The next thing is nominating you and other of to be members of the fund. As a trustee, you must approve and meet each application. While approving your application it is a formal process everything to be recorded.
Opening a bank account in another step from setting up a SMSF. The account should be in your SMSFs name to accept rollovers of investment earnings, contributions, and super benefits, and to pay the expenses related to fund as well. The asset for your SMSF should be separated from your personal assets.
Deciding an investment strategy is another important consideration. Consider the investment objectives of the fund, how much income you need, how much risk you are ready to take, the type of assets, diversification and how quickly you can sell assets. Write down the investment strategy and make sure you keep the copy of it.
Last but not least, choose your service provider. You will need help from an accountant, possibly lawyer. Instead of using services from accountant you may want to rely on specialist SMSF administrator that have the knowledge to take care of all aspects of setting up an SMSF.
