Setting up a new smsf is a relatively simple process, but it is imperative that the smsf setup is done correctly. There are issues that need to be considered in any smsf setup that may not seem important now, but could significantly affect the fund in the future. The first issue to consider in any new smsf setup is who the members will be, and who the smsf trustees will be. You will then need to consider what the investment strategy will be, and ensure that the fund is being setup in accordance with the sole purpose test. Once the smsf is setup, you need to consider the smsf administration requirements. All super funds need to be certified annually as compliant by a smsf auditor, which can be expensive. Also, you will need to take the time to meet with the other fund members to discuss the fund’s performance and ensure its objectives are being met. The setting up of a self managed super fund should be done by a professional, as the rules are quite arduous. In broad terms, the following steps must be taken. Of coarse, each step has a number of implications that your professional advisor can help you with, but here they are:
- Drafting of the trust deed or governing rules.
- Obtaining from the trustees their consent to act as trustees of the fund and declarations that they are not “disqualified persons”
- Obtaining from trustees (if appointed after 30 June 2007) a declaration that they understand their duties as the trustee of the SMSF
- Obtaining applications for membership of the fund, including member details and Tax File Numbers.
- Holding the first meeting of trustees
- Electing to be a regulated superannuation fund under the SISA
- Applying for a TFN and ABN for the fund
- Opening a bank account in the name of the fund
Ultimately, it is the trustees who have to action these items, but it is a good idea to do so under the guidance of a professional. To find out the cost of setting up a new fund, see our SMSF Fees section. Talk to your accountant about your smsf setup to ensure you get the best possible advice to suit your particular situation.