Setting up an SMSF takes a number of steps, in the right order. Here are the seven a new trustee should know about.
1. Get advice
Starting an SMSF can be tricky, and it's your retirement savings at stake. Before you begin, talk to a licensed financial adviser about whether an SMSF suits you, and to your accountant about how the fund will be run. Keep in mind that the fund's auditor must be independent: the person who advises you or prepares the fund's accounts can't also audit it.
2. Prepare the trust deed
The trust deed is the fund's rule book. It sets out how the fund is run, and it must be in place, and signed, to establish the fund.
3. Appoint the trustees and members
Decide who the members will be, and whether the fund will have individual trustees or a company as trustee. Generally every member must be a trustee, or a director of the trustee company. Each new trustee or director must sign the ATO's trustee declaration within 21 days of being appointed.
4. Register with the ATO
Within 60 days of the fund being established, apply for an ABN for the fund and elect to have it regulated by the ATO. This is how the fund becomes eligible for the tax concessions available to complying funds.
5. Open a bank account
The fund needs a bank account in its own name, kept separate from members' personal accounts. To receive employer contributions and rollovers, it also needs an electronic service address.
6. Roll over your super
Ask your current fund to roll your super over to the SMSF. Your existing fund or your accountant can tell you how.
7. Prepare an investment strategy
Before the fund invests, prepare a written investment strategy that suits all its members. If you're not confident with investments such as property, shares and fixed interest, ask a licensed financial adviser for help.
If you're a trustee, your accountant or financial planner can take you through each step.