Our 5-Step Guide in Setting up a Self-Managed Super Fund
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Our 5-Step Guide in Setting up a Self-Managed Super Fund

Author: Kristy Coulin

If you want more flexibility and personalisation in your financial future, setting up a self-managed super fund may be the way to do just that.

Self-managed super funds – also known as SMSFs – can be tricky, especially when you’re unsure how to navigate and strategise one for ultimate financial success.

An SMSF is a private fund that you control, which is where it differs from industry and retail super funds. When you manage an SMSF, you put your money in investments that you choose. If you decide that an SMSF is a good option, you need to start taking calculated steps to help set up your fund for the best results.

Seeing as dealing with finances can be challenging, many individuals work with a financial planner and an accountant to get proper guidance in setting up a fund. If you’re interested in building a self-managed super fund, asking for professional assistance and knowing the right steps can help you succeed.

5 Steps to Set Up a Self-Managed Super Fund

Step #1: Establish a Trust

When setting up a self-managed super fund and registering your fund with the ATO, you need to establish a trust. A trust will require the following:

  • Trustees
  • Assets
  • Identifiable beneficiaries
  • Intention to create a trust

Step #2: Obtain the Trust Deed

A trust deed helps iron out the rules and conditions of your SMSF; that’s why it’s crucial to start with a well-drafted trust deed. Because of this, getting help from professionals is vital, especially from someone who understands the superannuation law, allowing them to create a deed with maximum control and flexibility.

Step #3: Sign a Declaration

As a trustee or director of the corporate trustee of an SMSF, you need to sign a declaration form stating all your duties, responsibilities and obligations as a trustee or director. The declaration must be completed and approved within 21 days of you becoming a trustee.

Below are some of the obligations and responsibilities you have as a trustee of an SMSF:

  • Acting honestly and responsibly in all matters affecting the SMSF;
  • Acting in the best interest of the members;
  • Keeping SMSF assets separate from personal and business assets;
  • Formulating and implementing effective investment strategies;
  • Managing reserves responsibly, and many more;

Step #4: Lodge an Election with the Regulator

Within 60 days of establishing an SMSF, trustees must lodge an election regulated with the ATO. However, you should note that this election is irrevocable, and the SMSF is subject to the requirements of the relevant superannuation legislation. Besides that, the SMSF is also entitled to concessional taxation treatment with a 15 percent complying fund.

Remember to work with your financial adviser and accountant on this because without an election; you may end up paying the highest marginal tax rate.

Step #5: Open a Cash Account

As a trustee, you need to set up a cash account, so your fund can accept contributions, earnings from investments, and rollovers. Additionally, the account will also help pay expenses, including annual supervisory levy, accounting fees, member benefits, and tax liabilities.

The Bottom Line: Financial Planning Can Help Kickstart Your SMSF

Setting up an SMSF can be daunting. But working with a financial adviser can help streamline the whole process. With a financial planner’s support, you’ll rest easy knowing all your complex SMSF requirements are met and that every step is in place.

How Can Coastal Advice Port Macquarie Help You?

Everyone wants to have a secure financial plan, but most of us aren’t sure where to start. Thankfully, our experienced financial advisers are here to help.

Coastal Advice Port Macquarie guides clients to enjoy their dream retirement through excellent financial planning and personalised advice. From superannuation and retirement financial planning to creating self-managed super fund investment strategies, we’ve got you covered.

Looking for a financial adviser in Port Macquarie? Book a complimentary chat with our team today.

DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
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