The self-manged super fund (SMSF), or Diy Superannuation Fund, is an effective and convenient way of saving for your retirement and luckily, it is becoming more and more popular among Australians. In fact, SMSFs are the fastest growing sector within the super industry. They differ from other types of super funds mainly in terms of their structure, as their members also take on the role of trustees. Being both a member and a trustee, you have more control over where and how your money is invested.
One SMSF can have between 2 and 4 members where each member can function as either an individual trustee or a director ( in case when the trustee is a company). Running your own super fund comes with many advantages some of which include a vast choice of investment possibilities, lower taxes and smart estate planning. This means that you get to choose where to invest your money, whether that be in shares, property or maybe direct mortgages. Moreover, when making contributions to your fund, you can save a lot of money on taxes since most SMSF contributions are tax deductible. For the sake of helping you out to fully enjoy your retirement days, here are the steps to setting up your Diy superannuation fund.
Decide on a trustee structure
The first step is to decide if you and other members of the fund will have the role of an individual or a corporate trustees. If you decide on a corporate trustee structure you’ll need to create a company and register it with the ASIC (Australian Securities and Investment Commission).
Obtain a trust deed
To make sure your fund is set up properly and complies with the relevant laws and regulations, you must obtain a trust deed. This is a legal document that contains all the rules that you should follow when running the fund. A qualified legal practitioner should prepare the document which then must be signed and dated by all the members of the SMSF.
Sign a trustee declaration
By signing a trustee declaration, members acknowledge that they understand their duties, rules and other obligations towards the fund. Once you become a trustee you have 21 days to sign the declaration form which you can get from the Australian Taxation Office (ATO).
Register your fund
For your fund to be compliant with the law, it must be registered with the ATO. To do this you will need to apply and get an Australian Business Number (ABN) and Tax File Number (TFN) for your SMSF. Once you set up your fund you usually have 60 days to get it registered and elected to be regulated. This way you will ensure the SMSF is eligible for tax benefits.
Open a bank account
The final step is to open a bank account for your super fund where you will keep your super money completely separated from your personal assets. The SMSF account will accept all the investment income, cash contributions, tax benefits and you can also use it to pay for all the fund’s expanses.