Establishing a Fund

Self managed superannuation funds must appoint trustees of the fund, as the trustees are responsible for ensuring the fund is properly managed and that it complies with all the legal requirements.

To be an SMSF all fund members must also be appointed as trustees of the fund (except single member funds).

The trustees are required to complete a signed declaration confirming that they are not disqualified from acting as the trustee of a complying super fund.

A corporate trustee may be required in the case of a single member fund.

Corporate trustees can also be used with multiple member funds as well. Corporate trustees have a few advantages over individual trustees. A corporate trustee can be simpler to use than an individual trustee; this can result in easier administration and fewer errors.

For example, a corporate trustee can help members clearly identify those assets that are owned by the fund and those assets that are owned by them; as assets held in the fund are held under the company name, not their individual name. Clearly identifying who holds which assets can help avoid such things as banking dividends in the wrong account.

Membership changes under a corporate trustee are often more simple then individual trustees. When changing membership under a corporate trustee it is a simple change in the directors of the company. Where individual trustees are used it may be necessary to change the ownership detail of all of the funds assets. For example, where a fund’s assets are held in the name of all individual trustees and one member leaves the fund, the ownership details of all the assets will need to be changed. This can be time consuming and costly.

There are also some disadvantages to using a corporate trustee. There are extra costs associated with incorporation and in meeting the ongoing compliance and reporting requirements under the Corporation Act. There are also higher penalties that can apply to corporate trustees where a breach of SIS has occurred.

Clearly identifying assets can also be a problem where trustees have used their trading company to act as the trustee of the super fund.

Essentially any one over the age of 18 can be a trustee of a SMSF except if they are a disqualified person. A person is disqualified if they:

• have ever been convicted of an offence involving dishonest conduct
• have been subject to a civil penalty imposed under SIS or
• are insolvent under administration (an undischarged bankrupt)
• have been disqualified from acting as a trustee of a superannuation fund by the regulator

A company cannot be a trustee if:

• a responsible officer of the company is a disqualified person
• a receiver, official manager or provisional liquidator has been appointed or
• the company has been wound up.

A responsible officer is a director, secretary or executive officer (SIS Act (10))

Within 60 days of signing and stamping the trust deed, the trustees must give the regulator a notice of election to be a regulated superannuation fund. This notice can not be reversed and advises the regulator that the fund will be subject to the requirements of the SIS legislation and thus will be entitled to concessional taxation treatment as a complying fund.

Elections must be lodged with the ATO by completing “Application to Register for the New Tax System Superannuation Entity” form.

A TFN for the super fund will be issued to the trustees after the lodgement of the “Application to Register for the New Tax System Superannuation Entity” form.

An ABN will be allocated to the super fund after the lodgement of the “Application to Register for the New Tax System Superannuation Entity” form.

A TFN for the super fund will be issued to the trustees after the lodgement of the “Application to Register for the New Tax System Superannuation Entity” form.

It is a requirement for the trustees of a SMSF to prepare and implement an investment strategy for the fund. The strategy must take into account the circumstances of the fund and should consider:

• Risk and return
• Diversification
• Liquidity and
• The ability of the fund to discharge its liabilities

The investment strategy should set out the investment objectives of the fund and detail how the fund plans to achieve these objectives.

Your Super Your Way assists each of our SMSF to formulate an investment strategy specific to the circumstance of the fund.

In the event of the death of a member it is important for their funds to be distributed as per their wishes. As apart of setting up your fund you have the choice of nominating who your beneficiaries will be. You can nominate your beneficiaries through the use of a binding nomination of beneficiaries form or for more complicated estate planning you can alter the fund’s trust deed to reflect the members’ wishes.

Where the member(s) of the SMSF require an insurance policy one will be set up.

It is important to have your SMSF insurance policies in-force before rolling over any existing superannuation funds with insurance attached, as your current insurances are likely to be cancelled once your super fund is rolled over and you do not want to be left unprotected.