DIY SMSF

Downloads

Noted below is the process we follow to setup a new SMSF. Prospective Trustees who want to set up an SMSF themselves can refer to the documents linked below.

1. Trust Deed

The ATO provides guidelines for what is required from a Trust Deed. Here’s a Trust Deed that we’ve prepared based on the ATO requirements. Download it and amend it to suit your SMSF.

Alternatively, you could use a provider such as Cleardocs, whose Deeds will cost you $137.50 each.

2. ABN and TFN registration

SMSFs are regulated by the ATO. The ATO also arrange for the registration of new Funds. You can apply for an ABN yourself from the Australian Business Register. The web address is:
https://abr.gov.au/

 

A vital ingredient of sustained success is occasional failure.

— Malcolm S. Forbes, Forbes Magazine, 1919 - 1990

 

3. Trustee Minutes

New Trustees and Members are required to hold an initial meeting at which they must prepare minutes noting the establishment of the new SMSF. Use the attached Initial Minutes for this meeting and for similar meetings in the future.

4. Investment Strategy

SMSF Trustees need to prepare an investment strategy setting out what the Fund will invest in, with a risk profile of the investments. You can download this Investment Strategy Template and amend it to suit your Fund.

The Tax Office also has an video explaining the importance to have an investment strategy in place when you operate your SMSF. To view the video, please click here.

5. Trustee Declaration

In order to be taxed at the reduced tax rate of 15%, Trustees must elect to be a complying SMSF. If Trustees don’t do this, the Trust will be taxed at a marginal tax rate of 49%. Download the Trustee Declaration here.

6.Member Applications and Trustee Consents

To become a Member of an SMSF, you will need to sign a Member Application form. Trustees of an SMSF also need to sign a Trustee Consent form to declare that they are eligible to act as a Trustee and they must act based on the Member’s best interests. For our template, please download here.

7.Annual Financial Statements

Trustees should keep records of all transactions the SMSF conducts throughout the year. These should then be used to prepare a set of financial statements. Here is a template you can use to prepare your SMSF 2014 Financial Statements.

8. Tax Return

You must also prepare a tax return for your SMSF. All the information needed for the tax return will come from the template on the financial statement. This is similar to an individual tax return and, if you’ve done your personal tax return before, you’ll have no problem completing the Fund return.

Click here to download:

9. Audit

The only function the Trustees can’t perform themselves is the annual audit. The Trustees should prepare the financial statements and have the supporting documents ready. Attached below is a link to the audit requirements. If you have all this in place, the audit should be a mere formality. We can carry out your SMSF audit for a price that’s fixed at a maximum of $450. In most cases, the price is $350 per audit. You can also benchmark our offering to the market by doing a Google search.

The following documents noted below are invaluable if you want to make sure you have everything ready prior to the audit. The audit steps we use are set out on the audit page.

For the 2015 Financial Year, please download the following documents:

For the 2016 Financial Year, please download the following documents:

For the 2017 Financial Year, please download the following documents:

10. Supervisory levy

Don’t forget there’s a supervisory levy payable to the ATO. This is for the Fund. If the SMSF has more than one Member, the cost will be shared between the Members. The levy, along with the annual income tax, is payable to the ATO on behalf of your SMSF.

Conclusion

The DIY SMSF route is open to you as Trustee. Feel free to use it. If you want to use an administrator, look at the total fees. Consider flexibility too. There’s no point in paying the lowest administration fees if you end up paying more for brokerage and receiving lower bank interest.

Superannuation Warehouse provides a great value service which it promotes by offering an SMSF set up. If you’d like Superannuation Warehouse to be your SMSF service provider, simply сlick here to set up a new Fund or have a go yourself.

This website contains a wealth of information on SMSF’s. If you’d like to view additional ATO information on SMSF’s, click here.

  • Liam Shorte

    Hein does Point 5 need to be updated now for new Marginal Tax rates? Keep up the good work.

    • superannuationwarehouse

      Liam,

      Thanks for the note and we updated the page to reflect the higher taxes. From 1 July 2014 the top tax rate increased from 45% to 47% to allow for the budget repair levy. And Medicare increased from 1.5% to 2%. So the top rate is indeed 49%. This means the top marginal tax rate is now up from 46.5% to 49%.

      Ouch!

  • DrPen

    Hi, all the steps above are excellent. I you are wanting to set up a SMSF that can invest in property via a loan, what extra steps are involved?

    Also, is it true the SMSF can only invest in one financed property at a time?

    Cheers,
    Hugh

    • superannuationwarehouse

      Hugh,

      An SMSF can invest in properties with either a bank loan
      or a related party loan. Because the SMSF cannot have any long term
      liabilities in the Fund, a structure needs to be established to hold the
      loan. Therefore the bare trust structure:
      http://www.smsfwarehouse.com.au/smsf-investments/property/investment/

      An
      SMSF can invest in multiple properties at the same time. However, each
      bare trust can only hold a single asset. But multiple bare trusts can
      sit under the SMSF. Note also the Custodian Trustee Pty Ltd can act as
      Trustee for multiple Bare Trusts. This means for sunsequent properties
      your Fund purchase, we charge $950 only for the Bare Trust. We do not
      have to set up a corporate Trustee or Custodian Trustee again. For more
      info on the property investments and bare trusts, please see here:

      http://www.smsfwarehouse.com.au/smsf-investments/property/bare-trust/

      Trust this makes sense.

  • Jon

    Hi Hugh,

    Part 1: We have established a corporate trustee which manages our SMSF with my wife and I as the only director/members. The Corporate Trustee owns an investment property with an ADI bank as mortgagee. However, that mortgage has now been paid out. The commercial property is currently leased out with 1 year to run on the lease.
    Q1: Now that the mortgage on the investment property is paid out, are we required to transfer the property out of the Company back to the SMSF or can we simply leave it under the Corporate Trustee. If so, is there a timeframe in which that transfer is required to be done? ?
    —————
    Part 2: Assuming we don’t want to purchase any more property under that Corporate Trustee, there seems little value in maintaining the Corporate trustee company given the cost and work of maintaining it annually. We are therefore considering deregisterring the corporate trustee company.

    Q2: If we decided to get rid of the Corporate trustee company but retain the SMSF, I suppose we’d need change the SMSF to a Individual Trustee structure and then transfer the property to the SMSF. Do you have any guidance of how to do that and what paperwork is required. Also, in that scenario, how do we transfer the property to the SMSF without incurring stamp duty on the transfer? Are there special SRDO forms to use?

    • superannuationwarehouse

      Jon,

      With the property paid off, there’s no need to maintain the bare trust structure. There would be a clause in the Bare Trust Deed noting the property will revert to the SMSF once the loan is paid off. There might be fees or stamp duty to transfer the property, so an option is to keep as small loan amount and leave the Bare Trust structure in place. As far as stamp duty goes, there should not be any as there’s no change in beneficial interest if the property move from the Bare Trust to the SMSF. But all states differ on this, so please check this for your state.

      A Corporate Trustee is a company that only costs $43 per annum as an annual ASIC fee. If you do have the structure in place, it may be best to leave it in place. Remember the Corporate Trustee does not have to submit any tax returns as all transactions take place in the SMSF. .

      Trust this helps
      Hein

  • Stef

    Hi Hein,

    Could I please ask for some advise as how to record in my
    “Financial Statements 2015” spreadsheet a Rollover transfer out amount from my SMSF
    account to a retail fund super account that I hold?

    Specifically, where should I show this rollover / transfer out amount in the Balance Sheet and/or in the Income Statement?

    Thank you.
    Stef

    • Hein Preller

      Stef,

      The Roll-over is an income in the Income Statement. In the Balance Sheet, it gets added to the Member balance.

      The objective is to have the total of the IS agree to the movement in the BS. This entry would achieve the balance.

      Also remember a roll-over is not taxed in the Tax Return. So its in the IS but not taxed.

      Trust this answers your question.

  • Danny

    Hi Need some advice re the accounting entries for the initial recognition (and ongoing transactions) recognising the exchange rate differences for deposits in other currencies. Is this an income item or a reserve item? Thanks

    • Hein Preller

      Danny,

      The overseas bank account need to be multiplied by the exchange rate to convert it to AUD. The bank account is then displayed on the face of the Balance Sheet.

      The movement in exchange rate is noted in the Income Statement and expensed or taken as an income. In addition to this, the realised gains or losses are tax but the unrealised portion can be added back for the tax calculation, meaning the SMSF will not pay tax on unrealised gain.

      Trust this answers your question.

      • Danny

        Thanks Hein. If claiming the $250k balance exemption would these gains still be taxable.

        • Hein Preller

          Danny, there’s 2 concepts here: the money coming into the SMSF and then the return these funds generate in the SMSF.

          The returns the funds make (in this example FX gains) will be taxed the same irrespective where the funds came from, i.e. concessional contributions or an exemption for small business, which you are most likely referring to.

          • Danny

            Thanks Hein. I understand that all concessional contributions are taxed. The account I am referring to is an via OptionsXpress which has been set up in order to purchase US shares (when transferred it converts to $US). This account is then used to fund any purchases we make.

            To clarify then you are saying that the Foreign cash account $250k balance exemption does not apply to super funds. Is this correct?

          • Hein Preller

            Danny, I’m not sure what you refer to for $250k. To transfer funds from one bank account to another, even overseas, has no tax effect. Its only to income on the account that is taxable, i.e interest received or FX variances.

          • Danny

            Thanks Hein

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Superannuation Warehouse is an accounting firm and do not provide financial advice. All information provided has being prepared without taking into account of the Trustees’ objectives, financial situation or needs. Because of that, Trustees are advised to consider their own circumstances before engaging our services.

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