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5 Key Steps for Setting up a Self Managed Super Fund

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Setting up a self managed super fund (SMSF) appears like a daunting prospect at the very beginning.

Without being aware of this process, adults can approach this initiative from a number of different angles.

This is a method that allows partners and family members of no more than three people to combine their superannuation assets into a collective balance.

These funds can be diverse and the pie can grow, utilising the best of the open capitalist market to expand retirement savings.

To boil this fund down to its absolute essentials, we will walk through the five steps to successfully establish a SMSF.


1) Create a Trust

Before citizens have the chance to complete setting up a self managed super fund, they need to create a trust. This is designed to hold onto the assets and establishing a structure in the process. A SMSF for individuals can include anywhere from two to four members while a corporate trustees can derive of one to four members. The trust has to outline these participants as well as a written intention to make the trust, listed assets and any identifiable beneficiaries.


2) Acquire a Trust Deed

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There has to be parameters in place with these types of financial tools, ensuring that there is fairness and transparency. Setting up a self managed super fund will therefore require a trust deed, outlining regulations commensurate with the Superannuation Industry Act of 1993 while offer amendments that are in line with specified rules at the time the trust deed was established. This is where the intervention of an accounting firm will smooth over any of the complicating components and offer clarity for the trustees.


3) Sign the Declaration

One of the most important steps for setting up a self managed super fund is signing an official declaration. This form outlines that the trustee or trustees are fully aware of their responsibilities and obligations involved with the SMSF. The signing must be completed inside three weeks of the creation of the fund, putting a signature to a document that details the need for diligence, care, honesty and responsibility among other key stipulations.


4) Lodge Election Through a Regulator

Setting up a self managed super fund is a process that has to go through the most official of channels courtesy of the Australian Tax Office (ATO). This is where trustees lodge an election through the ATO within the span of 60 days. Once that action has been carried out, the SMSF will be under the same scrutiny as any other superannuation account while enjoying a tax rate of 15%. A lack of an election will increase that marginal tax rate, so it is in the interests of the participants to proceed through this step.


5) Start the Cash Account

In order for individuals to arrange setting up a self managed super fund, they must inject the account with some capital. Those earnings from investments give the SMSF legitimacy and outlines to the individuals involved where they can make such contributions and how much tax they pay for each transaction.


The good news for those that still feel lost or short of assistance with setting up a self managed super fund is that there are specialist operators out there in the accounting field who can carry the load. Many of the actions required to make the SMSF a reality will involve continued intervention from the trustees, but these expert accountants will have the resources, insights and plans to take the client from the concept stage to completion. The sooner that mark is reached – the sooner clients can see their nest egg grow.