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Superannuation contributions are being taken more seriously, as the contributions rate will be increasing from 9.5% to 12% over the next few years. If you wish to manage your contribution and having control on where to invest your money, an SMSF may be right for you.

There are no legal rules saying that Trustees have to use a specialist, such as an accountant to open an SMSF, although, you are able to establish an SMSF yourself. You can follow the steps explained below:

The documents below are templates only. They are not prepared specifically for your Fund. The templates should only be used by Trustees that are comfortable and competent to prepare their own Establishment documents and Financial Statements.  Where we audit your fund, we are not permitted to assist in the preparation of your financial statements according to APES 110, and we will not do so.

There are a number of administrative steps that must be completed in order to get the SMSF operating and active.

ABN and TFN Registration: The first step towards establishing the SMSF is by applying for an Australian Business Number (ABN) and a Tax File Number (TFN) through the Australian Business Register (ABR). See here for the link to the ABR website. After completing the application, you will receive the ABN Confirmation. Ensure you note down the ABN for your own safe-keeping. Be mindful, the TFN for the SMSF needs to be safe-guarded, similar to your own personal TFN. Please ensure you don’t share this with anybody except the other Trustees in the Fund or an authorised contact for the SMSF such as an accountant or specialist administrator.

Following the ABN application: The ATO, as the regulators for the SMSF, will review the ABN application. Be mindful that the Tax Office has a time frame of up to 56 days to finalise the initial checks to give the Fund’s ABN a ‘Complying’ status on the Super Fund Lookup. For further guidance on the setup times, see this page.

Commencing Operation: Please note, once the Funds ABN has been given a status of ‘Complying’ on Super Fund Lookup, you may commence operation of the Fund including rolling over your retail super into the SMSF and electing your employer to contribute directly into the SMSF. For further guidance on transferring benefits into the SMSF, please see here.

The SMSF Bank Account can only be formally opened and operating once the SMSF has a ‘Complying’ status on Super Fund Lookup.

The SMSF may need an Electronic Service Address (ESA) to receive employer contributions.

During the ABN application, the ATO may conduct an Audit on the Funds establishment. Do not panic if this occurs. This only means the ATO need to verify all the permanent files for the Fund and that the Bank Account for the SMSF has been applied for. It is basically you proving to the ATO that you are proactive and ready to be a Trustee of an SMSF.

As the Fund is a legal tax entity, it is ATO ruling that the Fund must have a set of permanent executed documents outlining the rules and declarations made by the Trustees of the SMSF. Please see the below template examples of the permanent files for an SMSF:

Trust Deed

Investment Strategy

Initial Minutes of Meeting

Trustee and Member Consent

ATO Trustee Declaration

Be mindful, it is your responsibility as Trustee of the SMSF to hold all original executed and signed permanent files for the above mentioned documents relating to your SMSF. Please see the information below relating to the permanent files for the Fund.

1. Trust Deed

The ATO sets out the guidelines on what is required for a Trust Deed. For further guidance on an SMSF Trust Deed, please see here. Download and amend to suit your SMSF.

Another option is to use a provider like Cleardocs that charges $154.50 for their Superannuation Trust (SMSF) package or DBA Lawyers whose SMSF set-up complete pack start at $400.

2. Investment Strategy

The SMSF should have an investment strategy setting out what to invest in and the risk profile of investments. For further guidance on SMSF Investment Strategies, please see here. Please note you can amend the Investment Strategy as you see fit for the specific purpose of your Fund.

3. Initial Minutes of Meeting

The new Trustee and Beneficiaries have to attend a meeting and prepare minutes noting the establishment of the new SMSF. The template meeting given above can also be used for future minutes of meeting in the future for the Fund.

4. ATO Trustee Declaration

Trustees should elect to be a complying SMSF in order to be taxed at the reduced tax rate of 15%. If you do not make this election the Trust will be taxed at a marginal tax rate of 45% (plus 2% of Medicare Levy). For further guidance on Tax within an SMSF, please see here. To read more in relation to appointing the Trustees for an SMSF, please see the ATO ruling here.

The Fund is required to prepare and lodge a Tax return for every financial year that it operates. It is important that Trustees maintain all copies to source documents that the Fund invests into including Dividend statements, property valuations even physical metal invoices. Ultimately, the SMSF must be used for the sole purpose of providing a retirement benefit to the Trustees of the SMSF.

Along with the Tax Return, a set of Financial Statements must be prepared to record the assets that the Fund has invested into including the allocation of earnings made by the Fund. For this reason, Member Statements are important to distinguish the proportionate holding for all Members within the Fund.

Please see the below for the important factors when preparing and lodging the Annual SMSF Tax Return.

1. Annual Financial Statement

Trustees should keep records of all transactions the SMSF conducts throughout the year to prepare a set of financial statements. Here is a template you can use to prepare your SMSF Financial Statements.

Recently, the Australian Accounting Standard (AAS) disclosed that SMSF Trustees will need to check that the Trust Deed of the Fund does not require the annual financial statements be prepared in accordance with the AAS. The template SMSF Trust Deed linked above refers to the financial statements being prepared in accordance and compliance with the super laws, meaning they can be prepared as Special Purpose Financial Statements (SPFS).

For further guidance on the recent ATO ruling surrounding Special Purpose Financial Statements, see here.

2. Tax Return

You should also prepare a tax return for your SMSF. All the information needed for the tax return will come from the template on the financial statements. This is similar to an individual tax return, and if you have done your personal tax return before, you should be able to complete the Fund return. Click here to download:

SMSF 2022 return and 2022 Annual Return instructions

SMSF 2021 return and 2021 Annual Return instructions

3. Audit

The only function the Trustees can’t perform themselves is the annual audit. The Trustees can prepare the financial statements and have the supporting documents ready. Attached below is the link with audit requirements. If you have all this in place, the audit can be conducted. Our fee is a fixed fee of $450 (max) but this is usually $350 per audit. Or you can use any provider you prefer.

If you want to engage us for audit, please provide the following:

4. Supervisory levy

Don’t forget there’s a $259 supervisory levy payable to the ATO. This is for the Fund, so if there’s more than one member in the SMSF, you will equally share this cost between beneficiaries. This is payable with the annual income tax to the ATO on behalf of your SMSF.

As Trustees of the SMSF, you are able to operate the Fund on a DIY basis. If you want to use an administrator, keep in mind total fees to run an SMSF. No use to pay the lowest administration fees and pay higher brokerage and receive low bank interest.

Superannuation Warehouse provides a great value SMSF service. If you want to use Superannuation Warehouse to perform these steps for you, we promote our service by having an SMSF set up service. Click here to set up a new Fund, or have a go yourself.

There is further guidance on how to operate your SMSF on this website. For the ATO information on SMSF guides, please see here.