In the past, many people have been ignorant towards Super as they saw Super as wasted money, like a tax and not really theirs. As people’s Superannuation balance grow, they start taking it more seriously, and with compulsory Super Contributions rising from 9.5% to 12% over the next few years, there is even a greater focus on Super.
Firstly, there are various SMSF service providers trying to sell SMSF set-up services, with fees ranging from many hundreds to a thousand or more. At the other extreme some companies will do it for free, but watch out for their catches as they might have restrictive conditions (not so at Superannuation Warehouse). Some SMSF providers will also lock you in with a suite of providers e.g. banks and stock brokers. Be careful as this might cost you a lot in the long term. The right choice for you will depend on how comfortable you are in dealing with financial and legal arrangements. The fact you are reading this means you have an interest in your retirement future, and that’s a good thing.
Most Accountants will generally charge around $800 to establish an SMSF for you. The annual fees are around $1000 for the accounting, audit, compliance and audit functions. See this comparison table for various provider offering and costs.
What follow now is a set of documents we use in setting up an SMSF.
1. Trust Deed
The ATO sets out the guidelines on what is required for a Trust Deed. Here is a Trust Deed we prepared, based on the requirements of the ATO. Download and amend to suit your SMSF.
2. ABN and TFN registration
The ATO is the regulator of SMSF’s and arrange for the registration of new Funds. You can apply for an ABN yourself from the Australian Business Register. The web address is:
3. Trustee Minutes
The new Trustee and Beneficiaries have to attend a meeting and prepare minutes noting the establishment of the new SMSF. Use the attached Initial Minutes for this meeting and similar meetings the Trustees will conduct in future.
4. Investment Strategy
The SMSF should have an investment strategy setting out what to invest in and the risk profile of investments. See this Investment Strategy Template you can amend for this purpose or use it if it suits your Fund.
5. Trustee Declaration
Trustees should elect to be a complying SMSF in order to be taxed at the reduced tax rate of 15%. If you do not make this election the Trust will be taxed at a marginal tax rate of 45% (plus 2% of Medicare Levy). Download the Trustee Declaration Template.
6. Annual Financial Statement
Trustees should keep records of all transactions the SMSF conducts throughout the year to prepare a set of financial statements. Here is a template you can use to prepare your SMSF Financial Statements.
7. Tax Return
You should also prepare a tax return for your SMSF. All the information needed for the tax return will come from the template on the financial statements. This is similar to an individual tax return, and if you have done your personal tax return before, you should be able to complete the Fund return. Click here to download:
The only function the Trustees can’t perform themselves is the annual audit. The Trustees can prepare the financial statements and have the supporting documents ready. Attached below is the link with audit requirements. If you have all this in place, the audit can be conducted. Our fee is a fixed fee of $450 (max) but this is usually $350 per audit. Or you can use any provider you prefer.
If you want to engage us for audit, please provide the following:
9. Supervisory levy
Don’t forget there’s a $259 supervisory levy payable to the ATO. This is for the Fund, so if there’s more than one member in the SMSF, you will equally share this cost between beneficiaries. This is payable with the annual income tax to the ATO on behalf of your SMSF.
The DIY SMSF route is open to you as Trustees. Feel free to use this. If you want to use an administrator, look at the total fees. Also flexibility. No use to pay the lowest administration fees and pay higher brokerage and receive low bank interest.
Superannuation Warehouse provides a great value SMSF service. If you want to use Superannuation Warehouse to perform these steps for you, we promote our service by having an SMSF set up service. Click here to set up a new Fund, or have a go yourself.
There are lots more information on how to operate your SMSF on this website. To see the ATO information guides on SMSF’s, click here.