A Self-Managed Super Fund (SMSF) is a private superannuation fund that you manage yourself.
Introduction
Self-Managed Superannuation Funds (SMSFs) are different from regular super funds managed by professionals. They are designed for those who want direct control over their retirement savings and investments. This article provides a simple guide for beginners on how to set up an SMSF in Australia.
Step 1: Understand Your Responsibilities
Before setting up an SMSF, it’s crucial to understand your responsibilities as a trustee. As an SMSF trustee, you’ll be responsible for managing your fund, making investment decisions, and ensuring your fund complies with the law. It’s a significant commitment that requires financial knowledge, time, and resources. Your accountant and other specialist professionals can provide you with appropriate advice around compliance and types of assets you can invest with your SMSF.
Step 2: Choose Your SMSF Fund Structure
You can set up your SMSF as either a corporate trustee or individual trustee structure. In a corporate trustee structure, a company acts as the trustee and each member is is a director. In an individual trustee structure, each member is a trustee. Each structure has its pros and cons, so consider seeking professional advice to choose the right structure for your situation. However, our customers prefer to use a corporate trustee structure as it is a requirement of most SMSF lenders, if you are looking to buy a residential or commercial property in your SMSF.
Step 3: Create the SMSF Trust and Trust Deed
The trust and trust deed form the legal foundation of your SMSF. The trust deed sets out the rules for establishing and operating your fund. You’ll need to appoint trustees, identify members, and define how benefits will be paid to members.
Step 4: Register Your Self Managed Super Fund
Once your trust is established, you’ll need to register your SMSF with the Australian Taxation Office (ATO). During registration, you’ll receive a Tax File Number (TFN) and Australian Business Number (ABN) for your fund.
Step 5: Set Up a Bank Account
Your SMSF will need its own bank account to manage the fund’s operations and accept contributions, rollovers of super, and income from investments. It’s also where you’ll pay out any super benefits and manage the fund’s expenses.
Step 6: Prepare an Investment Strategy
Your SMSF needs an investment strategy that outlines your investment objectives and how you plan to achieve them. It should detail the types of investments your fund will make and how much it will invest in each type.
Step 7: Implement and Review
Once your SMSF is set up, you can start making contributions and invest in real estate, shares and other assets in your SMSF. Regularly review your investment strategy to ensure it continues to meet your retirement goals.
Conclusion
Setting up an SMSF is a significant decision that comes with ongoing responsibilities. Doing this correctly from inception is crucial task that can bear significant implications in the future.
While this guide provides a basic understanding of the process, it is recommended to seek professional advice to ensure your SMSF is compliant and meets your retirement goals.
If you are new to SMSF, our team of specialist professionals can guide you to ensure that your SMSF is set up correctly, and provide advice around securing loans to buy commercial or residential real estate.
If you have an existing SMSF, you may qualify for our High Net-worth Client lower interest rates for real estate acquisition.
Talk to us today.