Setting up an SMSF
SMSF setup process
Once you have decided an SMSF is the right choice for you, here is a list of steps to help you get started.
|1.||Create a trust deed (and company trustee if chosen)|
|2.||Register your SMSF with the ATO|
|3.||Prepare an investment strategy|
|4.||Open your SMSF bank account|
|5.||Start making contributions|
|6.||Start investing your super|
What are the eligibility requirements
for an SMSF?
Anyone 18 years+ can be a trustee of a super fund except when he or she falls into any one of the below categories – that is, when he or she:
|Has a legal disability (such as mental incapacity)|
|Has been convicted of an offence involving dishonesty|
|Has been subject to a civil penalty order under the super laws|
|Is insolvent under administration (including being an undischarged bankrupt)|
A company can’t be a trustee if:
|A director or other responsibility officer of the company falls into one of the above categories|
|An action has started to wind up the company|
|A receiver, official manager or provisional liquidator has been appointed to the company|
SMSF Trustee Responsibilities
As a trustee or director of a company trustee you will have responsibilities under the law. A trustee must ensure the fund complies with the laws that apply to it, including:
- Acting honestly in all matters concerning the fund
- Acting in the best interests of all fund members
- Keeping investments in the fund separate from your other assets
- Developing and implementing a strategy for investing fund assets
- Providing certain information to fund members from time to time
You can find more information relating to trustee responsibilities at the ATO website.
Individual or company trustee?
Here is a comparison between using individual trustees versus a company trustee for your SMSF:
|Individual Trustees||Company Trustee|
|Up to 4 members who are also trustees||Up to 4 members who are also directors of the company trustee|
|Can have a fund with 1 member trustee. However there must be an additional person to also act as trustee||Can have a fund with 1 member who is also a director of the company trustee – no need to involve anyone else|
|A member can’t be employed by another member unless they are related||A member can’t be employed by another member unless they are related|
|Can’t be paid for the time and effort involved in running the fund||Can’t be paid for the time and effort involved in running the fund|
|Members have an equal say in the administration of the fund||Trustee directors have an equal say in the administration of the fund|
|Lower setup cost – no company trustee setup and ASIC fees required||Higher setup cost – company trustee setup and ASIC fees required|
|Higher ongoing costs and complexities if a change in trustees is required in future||Lower ongoing costs and complexities if a change in trustees is required in future|
|Many banks will not lend to an SMSF with individual trustees||More suited to SMSFs that plan to borrow in order to purchase an investment property|
Download your free ITP SMSF Information Pack
Still not sure about whether an ITP SMSF is right for you? Download our complimentary information pack to help you make a more informed decision.