How to Set Up a Self-managed Superannuation Fund?




Investing in superannuation is beneficial to those who do it for several reasons. In fact, everybody should invest in it. Many people invest in superannuation. However, most have complained about the retail and industry super funds being insufficient for their expectations. So, they resort to a self-managed super fund (SMSF).

An SMSF is a legal structure monitored by the ATO that controls an individual’s retirement and future finances. It is different from the super funds, and the members investing in SMSF are also the trustees. However, not many people are totally aware of setting up a self-managed super. 

Therefore, this page instructs you with the essential steps to set up your SMSF with responsible platforms. Go through each of the steps carefully to be able to set yourself an SMSF.

Establish a Trust

It is the most basic and essential step of setting up an SMSF. You establish a trust by registering the SMSF with the ATO. A trust includes the assets, identifiable beneficiaries, trustees, and the intention of creating a trust.

Get a Trust Deed

The trust sets the terms and conditions of operation for the SMSF. Therefore, it is essential to have a trust deed that is well-drafted. A competent legal practitioner or a recognised deed provider needs to prepare the trust deed. That is because they understand the law of superannuation.

It ensures that the trustee gets total control and flexibility. After the completion of the deed, the trustee needs to execute the same as per the rules of the State.

Sign a Declaration

On becoming a director or trustee of an SMSF, you need to sign a declaration form. This form states all the duties, responsibilities, and obligations of your role as the trustee or director. Additionally, the declaration should be approved and completed within 21 days after you become a trustee.

Lodge an Election with the Regulator

Once you establish the SMSF, the trustees should lodge an election to regulate with the ATP. It will be an irrevocable election advising the ATO about the subjective nature of the SMSF toward the requirements of the superannuation legislation. 

It will be entitled to concessional taxation treatment at a 15% rate of complying fund. When an election notice has not been lodged, the SMSF won’t be considered a complying fund for the purposes of taxation. Instead, the highest marginal tax rate will be imposed on the SMSF.

Open a Cash Account

As the trustee, you need a cash account set up. This way, you can fund the rollovers, contributions, and earnings from investments. This account will hold the expenses like the accounting fees, annual supervisory levy, member benefits, and taxation liabilities. 

Summing Up

Setting up an SMSF is a big decision. It comes with legal compliance and responsibilities. It can be costly and time-consuming. Also, whether a self-managed super fund is appropriate for you will depend on the current super balance, investment knowledge, the type of investments, and the time you have to manage the fund.

The information, however, on this page is generic. It would be best to run your research to be updated with the latest knowledge and proceed accordingly. Once you are all prepared with the SMSF and cash account, you will have better chances of gaining the associated benefits.

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