How to set up a Self Managed Super Fund. SMSF

How to set up a Self Managed Super Fund. SMSF

How to Set Up a SMSF

1. Establishing the Trust Deed

Before you can set up a SMSF, you are required to have a trust deed. This deed effectively sets out the rules for setting and managing the day to day running of your Super fund. Along with Superannuation and Tax legislation, they form the governing rules in which the find must adhere to.

It also outlines the powers, responsibilities and duties of the trustee’s of the fund along with the rights of the members.

The trust deed needs to cover:

– The funds purpose/objectives

– Who are to be the trustees and members of the fund

– When and how contributions can be made

– How and when benefits are to be paid either through pension or lump sum

The trust deed needs to be specifically drafted to meet the needs of the members retirement while ensuring it meets all of its obligations.

2. Appointment of Trustees

When the deed has been tailored, the next step is to appoint the trustees. These can be either a corporate trustee or individual trustees. All trustees or directors (if corporate trustee), must be consent in writing to their appointment.

3. How are the assets of the Fund to be held?

Firstly the fund receives assets via rollover of existing funds, or alternatively from the contributions of members. It’s important to note that the fund’s assets need to be held in the name/s of the trustees. There also needs to be no misunderstanding between a trustees personal assets and fund assets- failure to do this can have severe consequences. For this reason it is usually safer to have a corporate trustee established for the sole purpose of administering the SMSF.

4. All trustees must sign a Trustee Declaration

All trustees (or directors of the corporate trustee) must sign a trustee declaration within 21 days of becoming a trustee (or director). This declaration needs to be made available to the Australian Tax Office if asked for.

5. Each Tax File Number needs to be recorded

All members tax file numbers need to be recorded and made available if required

6. Election to be a ‘Regulated Fund’

You need to register your fund with the ATO and request your fund to be regulated within 60 days of establishing it. Electing to be regulated means that the fund has the opportunity to qualify for the concessional tax treatment offered to regulated Superannuation Funds. You will require a Tax File Number (TFN), for the fund as well as an Australian Business Number (ABN), and if required, register your fund for GST.

7. The fund requires the opening of a bank account

In order to accept cash to the fund a bank account needs to be set up in the funds name. You need to ensure that you have records outlining each members benefit in the fund.

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Advice Warning
Any advice provided in this publication should be considered General Advice as it does not take into account your personal needs and objectives or your financial circumstances. You should therefore consider these matters yourself before deciding whether the advice is appropriate for you and whether you should act upon it.