Take control of your retirement savings and build a future that aligns with your financial goals through a Self-Managed Super Fund (SMSF).
Why an SMSF Might Be Right for You?
An SMSF gives you control of your retirement savings and the ability to customise your investment strategies. Unlike traditional superannuation funds, an SMSF gives you direct control of where and how your funds are invested, whether that be in shares, property or other assets. With over 600,000 SMSF's in Australia managing nearly $880 billion in assets, this structure is popular for its flexibility and personal approach.
How to Set Up an SMSF Step by Step
Setting up an SMSF involves several steps to ensure compliance and get a fund that suits your financial goals. It’s essential to approach the process with a clear plan and the right professional support to navigate the legal and administrative requirements. Understanding how to set up an SMSF will help you avoid costly mistakes and get your fund up and running for the long term. Below we outline the steps to get started:
1. Get Professional SMSF Help
Setting up an SMSF comes with significant legal, administrative and financial responsibilities. Engaging SMSF professionals, such as an SMSF accountant, financial advisors and legal experts, can simplify the setup process and ensure you meet all the regulatory requirements. Initial setup costs range from $2,500 to $5,000, depending on the services used so plan for these expenses.
How Professionals Can Help Set Up an SMSF:
- Create the SMSF trust deed and corporate trustee entities
- Develop an investment strategy aligned to your goals
- Appoint an approved auditor for annual audits
- Set up financial systems and registrations (e.g. ATO, ABR)
See a full list of tools to help with your SMSF
2. Choose Your Trustee Structure: Individual or Corporate
One of the first decisions is whether to have individual trustees or a corporate trustee for your SMSF. This will impact the fund’s structure and administration.
Individual Trustees:
- 2–6 members, each of whom is a trustee
- Members are personally liable for fund decisions
Corporate Trustee:
- A company is the trustee, with each member a director
- More flexible especially for succession planning and membership changes
- Recommended for long term stability and simpler administration1.
3. Appoint Trustees or Directors to your SMSF
Trustees are critical to the success and compliance of an SMSF. Each trustee or director must:
- Be eligible and sign a declaration of their duties
- Act in the best interests of all members
- Ensure the SMSF complies with superannuation laws
- If the trustee is a corporate trustee, all directors must have a director’s ID.
An approved auditor must be appointed annually to maintain compliance and avoid penalties.
4. Create a Trust and Draft a Trust Deed
An SMSF is a trust. You’ll need to create a trust deed that outlines the rules for your fund. This document should be prepared by an experienced professional and signed by all trustees.
Key Points for Your Trust Deed:
- Clearly state the fund’s operational rules
- Include all members’ signatures
5. Register Your SMSF with the ATO and Get an ABN
To make your SMSF official, register it with the Australian Tax Office (ATO). This involves:
- Applying for an Australian Business Number (ABN)
- Obtaining a Tax File Number (TFN)
- Choosing to be regulated by the ATO to access tax concessions
Failure to register can mean your SMSF is not eligible for tax benefits.
6. Set Up a Separate Bank Account for the SMSF
Every SMSF needs a bank account for the fund. This account:
- Must be separate from personal or business accounts
- Should be used for all transactions, including contributions and expenses
- Requires meticulous record-keeping to track contributions and payments related to the SMSF
7. Get an Electronic Service Address (ESA)
An ESA is needed to process employer contributions and rollovers through the SuperStream network.
Steps to Get an ESA:
- Contact a SuperStream-compliant messaging provider
- Register the ESA with your SMSF to facilitate superannuation transactions
8. Develop an SMSF Exit Strategy
It’s essential to plan for the long-term sustainability and eventual wind-up of your SMSF. This ensures your fund can transition smoothly if circumstances change.
Include in Your SMSF Exit Strategy:
- Wind-up clauses in the trust deed to guide the closure process
- Professional legal advice for any complex exit arrangements or disputes
Frequently Asked Questions
Can Anyone Set Up an SMSF?
Not everyone can establish an SMSF. All trustees must be over 18, not bankrupt and not disqualified by the ATO. If unsure, seek professional advice.
How Much Does It Cost to Set Up an SMSF?
Initial setup costs are between $2,500 and $5,000 with ongoing costs including audit fees, accounting services and investment management. Budget for these expenses.
Can I Invest in Property with My SMSF?
Yes, SMSFs can invest in property, residential and commercial. However, strict conditions apply. The property must meet the ‘sole purpose test’ meaning it must only serve to benefit fund members’ retirement savings and not be used personally.
What Are the Responsibilities of SMSF Trustees?
Trustees are legally required to ensure the SMSF complies with all superannuation laws and regulations. This involves strategic decision making, responsible investment management and annual audits. Failure to meet these duties can result in penalties and the fund becoming non-compliant.
How Achieve Can Help You Set Up an SMSF
At Achieve Business & Financial Solutions, we provide SMSF administration services. Our experienced team provides comprehensive support in setting up, managing and maintaining your SMSF, so you can focus on growing your investments.
Ready to take control of your financial future? Contact us today to learn how our team can help you with seamless SMSF setup and ongoing management. Let’s make your financial independence a reality.
Get in touch with Achieve Business & Financial Solutions today!
Useful Links & Tools for Setting Up an SMSF
- Achieve SMSF Accounting Solutions Learn how we can help with SMSF setup, management, and compliance. Learn how we can help with SMSF setup, management, and compliance.
- ATO SMSF Setup Guide Comprehensive details on how to set up and manage an SMSF.
- ABR – Apply for an ABN Official site to register your SMSF and get an Australian Business Number (ABN).
- ABRS – Apply for a Director ID For corporate trustees, directors must apply for a Director ID.
- Super Fund Lookup Check the registration status of your SMSF.
- SMSF Association – Find a Specialist Find accredited SMSF specialists to help with setup and management.
- ATO – Find an SMSF Auditor Tool to find an approved SMSF auditor for compliance audits.
- SuperStream Messaging Providers List of SuperStream messaging providers for getting an electronic service address (ESA).
- ASIC Trustee Responsibilities Guide on the roles and responsibilities of SMSF trustees.
- ATO Residency Guidelines Guidelines to ensure your SMSF meets residency conditions for tax concessions.