If you have less than $200,000 in superannuation, then the administrative costs would probably make the venture uneconomical. In addition to establishment costs, you can expect to spend some $1500 to $2000 a year on running your fund.
Aside from costs, you also need the skills and time to manage your own fund, or use the services of an accountant and financial planner to ensure that you are fully compliant.
Nevertheless there are some advantages in having your own super fund, not least that it gives you greater control over your investments – and a wider choice of assets in which to invest. But the sole purpose of an SMSF must be to provide money for your retirement so you cannot use assets in the fund for your current enjoyment.
If you decide to establish your own, where do you start? According to the Australian Taxation Office, there are four key steps:
- Establish the trust and other documents that a SMSF specialist will prepare.
- Elect to be a regulated fund, obtain a tax file number and an Australian business number
- Prepare an investment strategy
- Open a bank account
We can help with the process of establishing the deeds etc but as we cannot advise you on whether it is the right financial decision for you we recommend that you see our Financial Planner as he holds an Australian financial services licence.
The trust deed sets out such matters as the details of the trustees, how they are appointed, their powers and the conditions for contributions and benefit payments. You must make sure the trust deed is dated and properly executed.
All SMSFs must have trustees and in turn all members of the fund must be appointed trustees. Anybody aged over 18 can be a trustee as long as they have not been convicted for an offence involving dishonesty or are undischarged bankrupts.
As a trustee, you are legally responsible for the actions of the fund. Your responsibilities include filing an annual tax return, lodging member contributions statements and appointing an approved auditor to complete the annual audit. The next step is to elect to be regulated by the Superannuation Industry (Supervision) Act (SISA) in order to receive concessional tax treatment.
We would also help you in applying to the ATO for the ABN and Tax File Number together with electing to be a regulated fund. The Investment Strategy would be prepared in conjunction with the trustees and also the financial planner. All that is then left to do is open a bank account and have your current superannuation rolled over to your SMSF.
For further information in this area please email one of the directors who are listed on our contact page.
