Before you start an SMSF...
While some of these steps can happen very quickly (even instantly), the process usually takes 6-8 weeks but can take longer depending on how prepared you are and the decisions you make.
The ATO needs to formally approve your fund before it’s completely set up and ready to receive money. Prior to starting you should:
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Check with your lender if planning to borrow to invest in property – If you’re already considering the purchase of property within the fund you should first speak with your lender to confirm they will be able to set up a special type of loan agreement (it’s called a “Limited Recourse Borrowing Arrangement” or “LRBA”) within your SMSF when the time comes. Doing this first can save you a lot of time and heartache if for whatever reason you’re unable to borrow money to invest.
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Consider your insurances – You might have insurance in your current super fund. Remember you'll lose that if you transfer all your super to your new SMSF. If you want to keep it, you'll need to leave some money inside your existing industry / retail fund.
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Choose your suppliers – At the very least you'll need to appoint a fund administrator / accountant for your new SMSF. IF you set up a fund with Heffron we will fill that role. If you want someone else to do it, you will need to find out how to set up a fund with them.
Steps to set up your SMSF
Below we have outlined the steps you will need to take to start an SMSF including the decisions you’ll need to have made and the documentation you may be required to have ready in order to progress to registering with the ATO. You will also see in the right columns 'Who does what' and the approximate timings for each step.
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Steps |
Who does what |
Timings |
1. Choose your SMSF structureThere are two types of trustee structures for a self-managed super fund (SMSF) – either a corporate trustee or an individual trustee. You have full control over your fund either way, but there are some important differences. |
You |
Up to you |
2. Apply for Director ID/sIf you're setting up a corporate trustee you will need to apply for a Director ID (if you don’t already have one). |
You |
Immediate upon successful application |
3. Choose Trustees / MembersDecide who will be part of the SMSF (you're allowed up to six) and ensure all members agree to their responsibilities as trustees. |
You |
Up to you |
4. Choose the name for your SMSFChoosing your SMSF name is an exciting step in your SMSF journey. Over our years of experience, we have identified a number of tips for what to include in your SMSF name. |
You |
Up to you |
5. Choose your accountant / tax agentMost people engage an accountant or smsf administrator to deal with the accounting and tax requirements for their SMSF. They will also be able to arrange the set up documents and registration. |
You |
Up to you |
6. GST registrationMost funds don’t have to register for GST unless they’re investing in commercial property. But it may be worth doing anyway as you may be able to claim back some of the GST your fund pays on its purchases. If that is the case, you will need to register your SMSF for GST (this can be done by your tax agent as part of the set up process). |
Accountant / Administrator |
Immediate upon online registration |
7. Organise legal documentsA qualified professional can prepare essential legal documentation, including the trust deed to establish your fund's rules and structure. If you've chosen Heffron to be your SMSF administrator and tax agent, we will do this for you. Get in touch today. Like all tax agents, we have to carry out some checks to verify the identity of all new clients. See how we'll verify your identity before we send your documents. |
You |
Up to you |
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Accountant / Administrator |
Immediate or at worst 2-3 days |
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8. Register with the ATOApply for an Australian Business Number (ABN) and Tax File Number (TFN) and register the fund with the ATO. |
You |
Up to 56 days |
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Accountant / Administrator |
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9. ATO confirms 'complying status'This is where the ATO tells you it's officially registered your SMSF. You won't be able to progress further until this has been issued. |
ATO |
Can vary significantly. Allow up to 45 business days. |
10. Develop an investment strategyCreate a written investment strategy outlining how you (as trustee) will invest the fund's money and whether you'll take out insurance for the members. Every SMSF's investment strategy is different because it depends on your particular circumstances and your needs but your accountant / administrator will be able to provide a template to help you document your plans. |
You |
Up to you |
11. Set up a bank accountOpen a bank account in the name of the trustee of the SMSF for contributions, rollovers, and investment income. |
You |
Up to you |
12. Add money to the SMSFOrganise for existing super to be transferred into your SMSF bank account (called a 'rollover'). If you're moving all your existing super into your SMSF you can initiate this in myGov. If you're only moving part of your existing super into your SMSF you'll need to contact your existing fund for their requirements. Download our Guide on how to manage rollovers. Organise for your employer to start paying super contributions to your new SMSF bank account. |
You |
Up to 3 business days |
|
You |
Variable |
That's it! You can now start investing. Begin making investments in line with your investment strategy.
