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How To Set Up A Self-Managed Super Fund (SMSF) With 10 Simple Steps?

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September 25, 2020

There are many fund trustees in Australia who are looking forward to setting up an SMSF structure for their members. There are several steps involved that they need to execute to set up an SMSF. By setting up an SMSF properly, you can ensure its adherence to the various superannuation laws. This also makes your SMSF eligible for certain tax exemptions concerning the superannuation system of Australia. So, to set up your SMSF impeccably make sure you execute the following 10 steps properly.

Top 10 Steps to Setup a Self-Managed Super Fund

Step 1: Create a Trust First

To get started, you must create your trust first. This is the beginning step before you set up your SMSF and get it registered from the ATO. Besides, there are a number of requirements you must fulfill for that. So, make sure your trust has the following things:

  • Genuine intention to make a trust
  • Eligible beneficiaries with a substantial identity of each
  • Sufficient assets and trustees

Once you meet these criteria, you need to move on to the next step of your SMSF setup’s creation.

Step 2: Procure a Trust Deed

Every SMSF must have a trust deed unfailingly. This is an important legal document that specifies the essential protocol concerning your fund’s successful creation and operation. Besides, a well-drafted trust deed also states the various superannuation laws and your SMSF’s operation according to these laws. So, it’s imperative that you get your trust deed drafted by a qualified legal practitioner. A trust deed consists of the following things in general:

  • The processes to wrap up your SMSF
  • The methods to appoint professional advisors correctly
  • Ways and time to pay the benefits 
  • Exact time to make the contributions
  • People who can become trustees and how they should be evicted or hired
  • All your SMSF members in particular and 
  • The goals of your fund

If required, your trust deed can also be personalized according to your fund members’ individual criteria and objectives. Aside from that, you can also buy a trust deed from an SMSF service provider created by top-notch legal professionals.

Step 3: Sign a Trustee Declaration

As a director or trustee of your SMSF’s corporate trustee, you should sign the trustee declaration. This is one of the most important SMSF setup steps in the successful creation of your SMSF. You must do so within 21 days from the date you became a trustee. By signing this form you will state that you have understood the following responsibilities and liabilities. 

  • Your legal and various other liabilities
  • The applicable rules concerning the management and purchase of your investments, payment of the benefits, and allocation of contributions.
  • The duties which you must comply with in general
  • You must deal with all the matters of your SMSF honestly 
  • You must optimize your fund solely to give benefits to your SMSF members. Alternatively, if they die you must give those benefits to their respective beneficiaries.

To sign your trustee declaration form, download it from the ATO’s official site.

Step 4: Record Each Member’s Individual TFN

Recording each member’s Taxation File Number forms an imperative part of SMSF’s operation. Failure to do so will refrain your fund from:

  • Accepting contributions on your spouse’s behalf and
  • Accepting the personal contributions

Additionally, your trustee members cannot receive a co-contribution from the Low Income Superannuation Contribution or Federal Government. Your SMSF will also deduct extra taxes from employer contributions.

Step 5: Get an ATO Registration

Get registered with the ATO within 60 days of your SMSF setup in Australia’s establishment. Lodge an election for your fund to be regulated by the ATO. This will make you eligible for the superannuation tax concessions as well. Do this by registering for Australian Business Number (ABN) at the Australian Business Register. You must also ask for a tax file number (TFN) during this procedure

Step 6: Create a Bank Account

Open a bank account for SMSF so it can perform the following functions effectively.

  • Accept income from investments
  • Accept the several cash contributions
  • Pay benefits and fund expenses to your members

Remember, the account must be opened in your trustees’ names. That apart its money should be kept separately from your personal and business assets. Make sure your fund already has financial assets of $3000-$5000 at the least. This will ensure that your fund has adequate cash to cover your SMSF setup costs partially or completely. These contributions will be counted towards your contributions caps later.

Step 7: Make an Investment Plan

Make an investment plan for your fund which includes all the pertinent needs of your trustee members. This plan should:

  • Specify the investments which must be made to meet the desired goals. This has to be done by specifying the portion of your fund for each asset category. These include shares, property, fixed-income, and cash) and
  • Outline your fund’s goals which can be easily understood and calculated.

Your trustees must deliberate on taking out insurance on your members’ behalf as well.

Step 8: Accept Contributions and Rollovers

You can make cash contributions into your account while rolling over money from another superannuation-complying fund. Your fund must prove your SMSF as a complying super fund. This should be done by verifying your fund’s details from the ATO’s official site. This will let you roll over your money to your well-operational fund.

Step 9: Hire Professionals

Hire one of the SMSF accountants

Hire one of the SMSF accountants to review your fund’s activities every year. This is to ascertain that your SMSF is complying with the various crucial laws properly.

Step 10: Get Ready for the Future

As a part of the SMSF setup process your trustee members should complete a binding death benefit nomination. This will make their beneficiaries entitled to their superannuation assets in case they die. Again, the nature of your trust deed will decide the options you are entitled to. You must also understand which nominations are inclusive according to your trust deed. You can also include a number of insurances for you and your SMSF members. 


So, these were the 10 crucial steps in creating an SMSF in Australia successfully. If you wish you can also get professional help to complete the same task more effectively.

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