1. Understand the laws and obligations of a SMSF

Setting up your own SMSF is a significant financial decision. As such, it is important to understand the laws that apply to superannuation funds, including use and access of funds, choice of investments, reporting obligations and income taxes.

In particular, a SMSF must appoint a Trustee who is responsible for administering the day to day operations of the fund and is held responsible for its investments and activities. A Trustee may be a person or a company.

SMSF’s must be operated independently of the Trustee’s personal affairs. As such, the Trustee has an obligation to ensure the SMSF is run for the benefit of all members of the fund.

2. Determine the structure and members of the SMSF

A SMSF can generally have up to 4 members, who must usually each be a Trustee (if the Trustee is not otherwise a company). However, members must not be employees of another member, unless those people are related.

Individual Trustees must meet the following requirements:

• Be aged over 18 years and not under a legal disability
• Not be a disqualified person.
  • A disqualified person includes someone who has been: convicted of an offense involving dishonesty, subject to a civil penalty under superannuation laws, considered insolvent, an undischarged bankrupt, disqualified by a regulator.

A company Trustee must not meet any of the following:

• A director, secretary or member of the executive team is a disqualified person
• The company is under liquidation or receivership
• The company is to be wound up

3. Obtain financial advice and appoint an advisor

You should seek financial advice before setting up a SMSF. Please contact eSuper Solutions if you would like a referral to our preferred financial advisor.

Your financial advisor should also be able to assist you in managing the fund’s investments, including acquisitions, sales and gathering annual investment reports.

4. Create your SMSF

A SMSF’s legal form is a trust and accordingly is created by way of trust deed.

A SMSF must meet the sole purpose test – that is, be operated for the sole purpose of providing for the retirement of its members. An investment strategy, in conjunction with the Trust Deed and superannuation laws, will govern how the fund is operated on a day-to-day basis.

The fund will also need to be registered with the Australian Taxation Office.

eSuper Solutions can assist you in setting up your SMSF and providing the required documentation and registering the fund. Please contact us for assistance.

Note that it will also be necessary to obtain the Tax File Numbers for each member of the fund.

5. Set up a bank account to manage the fund’s investments, income and expenses

A bank account will be required in order to accept superannuation guarantee and voluntary contributions from members. It will also be used to receive income, manage payments of expenses and invest any excess according to the fund’s investment strategy.

6. Compliance obligations

A SMSF has compliance obligations that it must met in order to avoid penalty rates of tax being applied.

Lodgement and disclosure obligations include:

• Preparation of full financial accounts, audited by a registered auditor
• Preparation and lodgement of income tax return with the Australian Taxation Office
• Preparation and lodgement of business activity statements (quarterly or monthly) may also be required.

At eSuper Solutions, we can provide you with a full suite of professional administration services.

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