Sunday , May 29 2022

An A-to-Z guide to Setting up Self Managed Super Fund

Self managed super funds have undoubtedly become a commonplace for everyone that has a clear vision for their future. More and more people feel that managing their own super fund is the best option for them. If you are someone who has considered the same option but doesn’t know where to start, then you have come to the right place. It is important to know how to set up an SMSF properly so that it is eligible for tax concessions, ready to receive contributions as well as being easy to administer. Below we will be going over everything you need to know about setting up your own self managed super fund.

Find a professional to help you

Setting up and taking care of an SMSF is not an easy task and you will need to rely on professionals along the way. Some of these professionals might include an accountant, a tax agent, a fund administrator, a legal practitioner, and a financial advisor. Now while you will probably be able to do some things on your own, other things may be better left for professionals who deal with SMSF’s every day.

Choose your trustees

This is the next step to setting up your SMSF and you have two different structures you can choose from. The first structure is being able to choose up to four different trustees and the second is choosing a corporate trustee. They both differ from each other in requirements, cost, succession, penalties, ownership of fund assets, and separation of assets. Choose a professional to help you go over these differences so you can choose which structure would work best for you.

Create the trust deed

The next step is creating the trust and the trust deed. To create a trust you must have trustees, assets, beneficiaries, and the intention to create a trust. The trust deed is a legal document which states all the rules for operating your fund. The trust deed itself must be prepared by someone who is qualified to do so, signed by all the trustees, dated by all trustees, properly done according to the laws in your state and also it must be maintained and updated regularly. You must have both of these things if you plan to set up your own self managed super fund.

Appoint your trustees

This goes hand in hand with creating the trust deed and is usually done the same day. All of the trustees must sign a trustee declaration stating that they understand all the responsibilities of being a trustee, these documents must be kept on file for future reference if they do not follow through with their responsibilities.

Double check your fund

Your fund will need to be an Australian super fund at all times in order to receive tax concessions. If it stops being Australian then it may become non-complying. This basically means that its income will start being taxed at the highest possible rate so you need to make sure that your SMSF stays within Australia to avoid this.

Register your fund

To register your fund any assets must be set aside, once the fund is established and all the legal documents have been drawn up you then have 60 days in which you need to register in the tax and super system.

Have an exit strategy

Last but not least, you must think about coming up with an exit strategy. Even though you are looking to set up an SMSF, it is always important to think about what happens if the SMSF ends. You must ultimately think about the events that could happen in future which include how the super will be paid in case death of a trustee occurs.