Steps To Setup Self Managed Super Funds In Australia

Self Managed Super Funds in Australia (SMSF) is a fund designed for few, not everyone. No doubt, it gives you greater control over your investments and a wider choice of assets in which to invest. But the sole purpose of an SMSF is to set up the fund, solely to pay retirement benefits to members and you cannot use assets in the fund for your current enjoyment.

You need to have minimum of $200,000 in super, otherwise the administrative costs would probably make the venture uneconomical. In addition to establishment costs, you can expect to spend some $1000 to $1500 a year on running your fund. Apart from the cost, you also need the skills and time to manage SMSF.
The first thing you need to do is consult your legal financial accountant and prepare a trust deed, which sets out the details of the trustees, how they are appointed, their powers and the conditions for contributions and benefit payments.

All SMSFs must have trustees above 18 years of age. As a trustee, few responsibilities include filing an annual Australia tax return, lodging member contributions statements and appointing an approved auditor to complete the annual audit.

The next step is to elect to be regulated by the Superannuation Industry (Supervision) Act (SISA) in order to receive concessional tax conduct.

As trustees, you have 60 days to lodge your election with the Tax Office. You do this by completing an application form to register for the new tax system superannuation entity. This can be done online at the Australian Business Register or by contacting personally. On submitting this form, you will be issued with a tax file number and an Australian business number.

Next step is to prepare an investment strategy, with the help of legal financial advisor, that takes into account risk, return, diversification, liquidity, cash flow, asset allocation and the ability to discharge existing and prospective liabilities.

The fourth step is to open a bank account in the name of the fund to keep your superannuation fund assets separate from your personal assets.

Harsh penalties can apply if you break the requirements set out in the legislation, such as failing to meet the sole purpose test of saving for your retirement or the fund borrowing money to invest. You also need to make important decisions about how to structure and run your fund.