SMSF Setup & Management

A self-managed super fund puts you in charge of your own retirement savings – and makes you responsible for them. We are SMSF accountants in Bondi Junction: we set funds up properly, then do the accounts, the tax return and the compliance paperwork each year, so the trustees can concentrate on the decisions that are actually theirs to make.

Is an SMSF right for you?

An SMSF can be a good fit, and it is just as often the wrong one. The members of an SMSF are its trustees, so whoever wants the control also takes on the legal responsibility – and that responsibility stays with the trustees even when they pay professionals to help.

It tends to suit people who:

• want to choose the fund’s investments themselves – direct shares, term deposits, business real property – rather than an investment option in a large fund
• have the time and interest to make and record trustee decisions every year, not just once
• have a balance large enough that a fund’s fixed running costs – accounting, audit, the ATO levy – make sense against it
• want to run super together with a spouse or family members in one fund

It usually does not suit people who:

• would rather not think about their super at all, or have no interest in investing
• have a small balance, where the fixed costs eat into the returns
• want the fund to buy something for personal use – a holiday home, art on the wall, a loan to the family business. Fund assets must be kept separate from the members’ own, and the fund has to be run for the sole purpose of providing retirement benefits
• expect to live overseas for a long stretch, which can affect whether the fund keeps its tax concessions

Weighing it up against a retail or industry fund? Our article on comparing SMSFs with other super funds goes through control, cost and the work involved side by side, and the rise of self-managed super covers why so many people choose one.

This page is general information about how an SMSF works, not financial product advice. We do not hold an Australian Financial Services Licence, so we can explain how SMSFs work and handle the setup, accounts and compliance, but we can't recommend whether an SMSF is right for you. For that, speak to a licensed financial adviser – we are happy to work alongside yours.

Setting up your fund

Setting up an SMSF correctly is mostly a matter of doing things in the right order:

1. Choose the trustee structure. Either individual trustees or a company acting as trustee (a corporate trustee). With individual trustees, every member must be a trustee, and a single-member fund needs two trustees. With a corporate trustee, every member must be a director of the company, a single member can be its sole director, and each director needs a director ID.
2. Prepare the trust deed – the rules the fund runs by – and have the trustees sign their consents.
3. Sign the ATO trustee declaration. Every trustee or director signs their own, within 21 days of becoming a trustee or director.
4. Register the fund with the ATO, so it is a regulated SMSF with its own ABN and TFN.
5. Open the fund’s bank account in the fund’s name, and get an electronic service address so it can receive contributions and rollovers.
6. Write the investment strategy, and plan what happens if a member dies, loses capacity or wants to leave.
7. Roll over or contribute – only once the fund is set up to receive money, with every asset held in the fund’s name.

Which structure is better depends on how many members there are, what the fund will hold and what you expect to change later. A corporate trustee costs more to set up, but it is usually simpler when members join or leave, and it keeps the fund’s assets clearly apart from your own. We talk the choice through before anything is registered.

Both fees include the trust deed, the government charges (such as the ASIC fee for the trustee company) and a consultation on how to run the fund and keep its records. The full list of fixed fees is on our price list.

Running the fund each year

Once the fund exists, the work follows the financial year. Each year we:

• prepare the fund’s financial statements and member statements, with assets valued at market value as at 30 June
• record contributions, rollovers and pension payments correctly against each member
• prepare and lodge the SMSF annual return, which reports the fund’s income tax, regulatory information and member contributions, and pays the ATO supervisory levy
• prepare the minutes and trustee resolutions the year’s decisions need, and remind trustees to review the investment strategy
• get the file ready for the independent audit, and answer the auditor’s questions so the trustees do not have to

The annual accounts and tax return are quoted per fund, because the work depends on how many members and investments there are, whether there is property or a pension, and how organised the records are. We will tell you the fee before we start. Where the fund also needs planning around contributions or retirement, see tax planning.

The annual independent audit

Every SMSF must be audited each year by an approved SMSF auditor before its annual return can be lodged, and the trustees must appoint the auditor no later than 45 days before the return is due.

Our director, Thomas Murmylo, is an ASIC-registered SMSF auditor, but the independence rules mean a firm cannot audit a fund whose accounts it prepares, except in narrow cases. So we keep it simple: when we look after your fund’s accounts, an independent auditor audits it, and we work with that auditor directly. If someone else already prepares your fund’s accounts and you only need the audit, see our independent SMSF audit page.

What trustees are responsible for

Being a trustee is a legal role, not a title. Hiring us does not move the responsibility – it stays with you. In practice, trustees must:

• run the fund for the sole purpose of providing retirement benefits to the members
• keep the fund’s assets separate from their own and held in the fund’s name
• deal with related parties only on arm’s-length terms, and stay within the rules on what the fund can buy, lend and borrow
• make and keep a written investment strategy, and review it regularly
• keep records and minutes of their decisions, and have the fund valued, audited and reported each year
• never access super early or take payment for being a trustee

All trustees are equally responsible for every decision, including ones another trustee made. Getting it wrong can mean penalties for the trustees, disqualification, or the fund losing its tax concessions. Most problems we see are not deliberate – they start with a loan to a member, an asset in the wrong name or a missing valuation – which is why the annual accounts are the right place to catch them.

Thinking of buying property through the fund? The borrowing rules have just changed – read buying a house through your super before you plan anything, and talk to us about the structure you would hold it in.

Questions about SMSFs