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• Setting up a SMSF
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Setting up a SMSF

What is a SMSF and why should you set one up?

In setting up a Self Managed Superannuation Fund (SMSF), like any other superannuation fund, you create a trust fund. A SMSF has the following characteristics:

• the fund has four or fewer members;
• no member of the fund is an employee of another member, unless related;
• each member is a trustee of the fund; and
• no trustee of the fund receives any remuneration for their services as a trustee.

The advantages of a setting up a SMSF include:

• enhanced control and flexibility in investment decisions and strategies;
• a greater array of investment options;
• the ability to borrow to invest;
• lower fee’s than managed funds;
• tax efficacy with investment choice and timing; and
• simplified estate planning.

Steps involved with setting up an SMSF

To set up a SMSF firstly, a trust deed must be prepared establishing the fund and outlining its rules and obligations. The trust deed that sets up a SMSF must include provisions addressing:

• the name and assets of the fund;
• the criteria for appointment and removal of trustees;
• the trustee’s powers, discretions and duties;
• required contributions and benefit entitlements;
• the investment strategy of the fund; and
• the winding up of the fund.

When setting up a SMSF you must consider the following:

• trustee(s) must be appointed to the trust who must either be prospective members of the fund or      directors of the trustee company;
• Applications for membership must be obtained from each member of the fund.
• A trustee declaration must be completed by all trustees within 21 days of their appointment.

The following regulatory requirements must be complied with when setting up an SMSF:

• The trustee(s) must then elect for the fund to become a regulated superannuation fund.
• An ABN and a Tax File Number must be applied for.
• Death benefit nominations are to be obtained from all members.
• These can be binding or non-binding (indicative) and give the Trustee directions of who to pay any death benefit to and in what proportions.
• The death benefit nomination can be confirmed, amended or revoked at any time by notice in writing. 

Ferguson Cannon Lawyers have an experienced team of lawyers that will be able to assist you with all of your requirements relating to SMSFs. For any further queries please do not hesitate to contact Byron Cannon, Director, or Samuel Barber, Lawyer on 07 5443 6600, or email byron@fclawyers.com.au or sam@fclawyers.com.au.