Key takeaways
- Setting up an SMSF follows a clear sequence: trustee structure, trust deed, registration, bank account, then rollovers and contributions.
- The fund must be registered with the ATO and elect to be a regulated fund within 60 days.
- An investment strategy must be in place before the fund starts investing.
- Getting the structure right at the start is far cheaper than fixing it later.
Setting up a self-managed super fund is a defined process. Done in the right order, it is straightforward. Done out of order, it can create compliance problems that cost time and money to unwind. This guide walks through the steps as they should happen.
1. Choose your trustee structure
Before anything else, decide whether the fund will have individual trustees or a corporate trustee. This shapes everything that follows, including the name the assets are held in. Most advisers favour a corporate trustee for flexibility, though it costs more to set up. We compare the two in corporate versus individual trustee.
2. Establish the trust and trust deed
An SMSF is a trust, so it needs a trust deed, the legal document that sets out how the fund operates. The deed must be prepared properly and signed by the trustees. If you are using a corporate trustee, the company is registered at this stage too.
3. Appoint trustees and sign declarations
Each trustee, or director of the corporate trustee, must consent to act and sign the ATO trustee declaration within 21 days of becoming a trustee. This confirms they understand their duties. Keep these declarations on file, as auditors check for them.
4. Register with the ATO
Within 60 days of establishment, the fund must register with the ATO, elect to be a regulated fund, and obtain a tax file number and ABN. This is what gives the fund access to concessional tax treatment.
5. Open the fund's bank account
The fund needs its own bank account in the fund's name, kept entirely separate from personal accounts. All contributions, rollovers, income and expenses flow through this account.
6. Prepare the investment strategy
Before investing a cent, the trustees must document an investment strategy that considers risk, diversification, liquidity and members' needs. See investment strategy for what it must cover.
7. Roll over and contribute
With the structure in place, you can roll existing super into the fund and start receiving contributions. See rolling over super to an SMSF for how that works.
Frequently asked questions
- How long does it take to set up an SMSF?
- The legal establishment can be done quickly, often within a few days. Registration with the ATO and opening the bank account can take a couple of weeks, and rollovers from other funds add time on top.
- Do I need an investment strategy before I invest?
- Yes. Trustees must have a documented investment strategy in place before the fund starts investing, and it must be reviewed regularly. Investing without one is a compliance breach.
- Can I set up an SMSF myself?
- It is possible, but most people use a professional to prepare the deed, handle registration and set up the structure correctly. Mistakes at setup are expensive to fix, so the support usually pays for itself.
