Self Managed Super Fund

Setting up a Self Managed Super Fund

Preparing to set up your Self Managed Super Fund

You'll need to choose the best way to structure your fund so it complies with the law and suits you and the other members' circumstances.
Once you've decided to set up an Self Managed Super Fund you need to:

• Decide on the type of trustee for your fund (a company or up to four individuals)
• Make sure you (and the other members) are eligible to be a trustee
• Check the residency requirements your fund needs to meet to be a complying fund and receive tax concessions

Structuring your Self Managed Super Fund

For your fund to be a Self Managed Super Fund it needs to meet several requirements under the super laws.
The requirements are different depending on whether your fund is one of the following:

• A corporate trustee
• individual trustee
• a single member.

If your fund has individual trustees, its a Self Managed Super Fund if all the following applies:

• It has four or less members
• Each member is a trustee
• No member is an employee of another member, unless they're related
• No trustee is paid for their duties or services as a trustee

If your fund has a corporate trustee, it's a Self Managed Super Fund if all of the following applies:

• It has four or less members
• Each member of the fund is a director of the company
• Each director of the corporate trustee is a member of the fund
• No member is an employee of another member, unless they're related
• The corporate trustee is not paid for its services as a trustee
• No director of the corporate trustee is paid for their duties or services as director in relation to the fund.

Single Member Self Managed Super Funds

It's possible for you to set up your fund with only one member.
If you have a corporate trustee for a single member fund, the member needs to be one of the following:

• The sole director of the trustee company
• One of only two directors, that is either
  • related to the other director
  • not an employee of the other director

You can also have two individual trustees. One trustee needs to be the member and the other needs to be one of the following:

• A person related to the member
• Any other person who does not employ them

A trustee or director cannot be paid for their services as a trustee or director in relation to the fund.

Types of Trustees

Once you understand how you can structure your fund, you need to decide on the type of trustee you'll use.
You can choose either one of the following:

• A corporate trustee
• Up to four individual trustees

A corporate trustee is a company incorporated under the law that acts as a trustee for the fund. Generally, to be an SMSF, all directors of the company need to be members and all members need to be directors of the company. If you already have a company, you may choose to use it as trustee.

Your choice of trustee will make a difference to the way you administer your fund and the types of benefits it can pay, so you need to make sure it suits your circumstances.

When making a decision, the Australian Taxation Office recommends you:

• Discuss your trustee options with a Self Managed Super Fund professional
• Consider the benefits and costs of each type of trustee (for your situation).

If you would like to discuss your trustee options, call Rogerson Kenny Business Accountants on (03) 9802 2533. Contact Us

The following table contains some general information about the things you should consider when choosing the trustees for your fund.

	Individual Trustees	Corporate Trustee
Setting Up Your Self Managed Super Fund
Administrative Cost	The fund can be less costly to establish as you don't have to set up a separate company to act as trustee.	It can be more costly to set up the fund initially as you need to establish a company to act as trustee (if you don't already have one).
Single Member Fund	You can have a single member fund if you have two individual trustees (you can't be the only trustee).	You can have a single member fund and be the sole director of the trustee company.
Governing Rules	Trustees need to follow the rules in the following: The fund's trust deed The super laws	Directors of the corporate trustee need to follow the rules in all of the following: The fund's trust deed The super laws The company's constitution The Corporations Act 2001 (administered by ASIC)
Ongoing Administration & Reporting
Administration	The fund has less reporting obligations and can be simpler to administer. Changing trustees can mean increased paperwork and administrative costs.	Having a corporate trustee can make it easier to: Administer the ownership of fund assets Keep the assets of the fund separate from any personal or business assets.
Reporting	As a trustee, you need to: lodge a Self-Managed Superannuation Fund Annual Return (SMSF annual return) for the fund Pay an annual supervisory levy to the Australian Taxation Office (currently $150)	As a director of the corporate trustee, you have reporting obligations to ASIC (in addition to those of individual trustees). You need to pay an annual review fee to ASIC.
Changes to Trustees & Members
Administration of Fund Assets	Fund assets should be held in the name of all individual trustees as trustees for the fund. If there is a change in trustees, you need to: Change the name on the ownership documents (such as a title deed) for each fund asset Notify all relevant authorities This process can be time-consuming and costly if your fund owns many assets, such as a wide range of shares. This is why we typically recommend the use of a corporate trustee.	Fund assets should be held in the name of the company as trustee for the fund. If there is a change in directors, you don't have to change the name on the ownership documents for each fund asset (as the trustee is still the same).
Becoming a Single Member Fund	If your fund has two trustees and one leaves or dies, you need to appoint another trustee in their place for your fund to continue to be an SMSF.	If the company has two directors, and one leaves or dies, you don't have to replace them (a corporate trustee can have a single director). The trustee doesn't change if a member/director dies or leaves the fund.
Reporting	If there is a change in trustees or members you need to notify the Australian Taxation Office within 28 days.	If there is a change in directors, you need to: Notify the Australian Taxation Office within 28 days Report the change to ASIC within 28 days
Paying Benefits to Members	The trust deed needs to state that the fund's sole or primary purpose is to provide old-age pensions. Your fund can pay lump sum benefits provided the trust deed specifically allows it to.	Your fund can pay benefits in the form of a lump sum or pension.

Trustee Eligibility

In most cases, all members of the fund need to be trustees, so it's important to make sure all members are eligible to be a trustee.

Generally, anyone 18 years or over and not under a legal disability (such as bankrupt, minor and people with a mental impairment) can be a trustee of a super fund unless they're a disqualified person.

A person is disqualified if one of the following applies:

• They have ever been convicted of an offence involving dishonesty
• They have ever been subject to a civil penalty order under the super laws.
• They are considered insolvent under administration
• They are an undischarged bankrupt
• They have been disqualified by a regulator. 

A company can't be a trustee if one of the following applies:

• The responsible officer of the company (such as a director, secretary or executive officer) is a disqualified person
• They are a receiver, official manager or provisional liquidator has been appointed to the company
• Action has started to wind up the company

You'll need to declare that you and the other trustees or directors aren't disqualified when you register your fund with the Australian Taxation Office. In certain circumstances (such as minor dishonesty offences) a disqualified person can apply to the Australian Taxation Office in writing for a waiver.

Minors

Generally, members under 18 years of age can't be trustees of a super fund. A parent or guardian can be a trustee for a member who's under 18 years of age and does not have a legal personal representative.

Having a Resident Self Managed Super Fund

To be a complying super fund and receive tax concessions, your fund needs to be a resident regulated super fund at all times during the year. This means your fund needs to meet the definition of an "Australian superannuation fund" for tax purposes.

If your fund is a non-complying fund, its assets (less certain contributions) and its income are taxed at the highest marginal tax rate.

If a member moves or travels overseas for an extended period, this may affect the residency status of the fund.

Rogerson Kenny Business Accountants Melbourne can assist you with your accounting and auditing requirements. If you would like to appoint Rogerson Kenny Business Accountants as your approved auditor, or would like to discuss this topic further, click contact us or call us on (03) 9802 2533.

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