SMSF Education Center

As an SMSF trustee this is your go to for information on running your SMSF

If you are about to embark on your SMSF journey or you have already started it is important to understand what is involved in being a trustee of an SMSF, the first thing to remember is that the Trustee (or director of the corporate trustee) is the person who is ultimately responsible for the Superannuation fund. Our friends at the ATO have created this short animated instruction to help you better understand what is involved. Remembering that we will be able to assist you with the ongoing maintenance of the SMSF. You can view the video here

As Elmbridge & Co is a corporate authorised representative of Advice Assist Australia, we can offer advice around your personal circumstances and as to weather an SMSF vehicle is right for you. However, if you have done your own research and fully understand the reasoning behind setting up an SMSF we can offer to establish your SMSF on an execution only basis and then assist you with the ongoing maintenance of the fund. This simply means that we are not taking into consideration any of your personal circumstances and are not providing advice around the establishment, simply preparing the documents for you. The ATO have a great video explaining some misconceptions around the SMSF that you can watch here. 

If you choose to use Elmbridge & Co to be the administrators of the SMSF, we can engage an external auditor, actuary when necessary and we are able to assist you with the management and lodgement of annual returns. To better understand some of the professionals you may use over the life of your SMSF you can view this short video here

The setup process will take you from creating all documents required, rolling over your funds, setting up the main bank account and registering the fund with ASIC & the ATO. This whole process can take between 4-6 weeks, however as there are third party’s involved this time can vary. 

Step one 

If you are seeking advice, we will need to go through the financial advice process where we will go over your personal circumstances and make a recommendation as to whether an SMSF is right for you. If you already have an SOA from a financial advisor you can provide that to us and we will be able to move forward. Where you are wanting us to proceed on execution only we will provide you with a statement declaring that we will need you to sign off before we proceed any further. 

Step Two

You will need to fill out our client information form providing  details for all members and declarations. all directors will need to apply for their Director ID number and all members will need to organise certified ID. 

Step Three

We will prepare all of the SMSF establishment documentation, request TFN & ABN registration and prepare the Macquaire bank account application. This will all be sent to you for signing and you will receive confirmations from Macquaire for the applications. 

Step Four

The ATO will now go through all of its complying checks, they look over all of the members ensuring there is no reason to not have the fund complying and the fund will then be discover able on the Super fund lookup register, generally after 4-7 days the fund will then change to “complying” status and we can move on with the establishment. 

Step Five

Once the fund is complying we will instruct Macquarie to finalise the account set up and we can then request the rollovers from your existing fund usually within 1-2 days. 

Step Six

We will then receive a confirmation of the rollover through the super stream system, this money will go directly into the SMSF’s Macquarie cash account. We will let you know when this has happened and you are then ready to make the next steps with your SMSF. 

You can watch the ATO video on SMSF establishments here

The trustee is the ultimate holding for the trust, this needs to be a legal entity, in the case that you run individual trustees, there must always be at least two, meaning that if one of the trustees passes away, another must take their place. As they are the ultimate holding ownership documents will need to be updated for all investments. 

A corporate trustee on teh other hand while it is more expenses to set up and maintain due to the ASIC filing fees, the entity will remain as the sole trustee for the super fund. The fund members will need to be directors of the company and the fund can function with only one director. If a member passes away, another director can take their place without the need to update documents. 

You can also vie the ATO video on this here

When making investments through the SMSF it is very important that the superannuation funds assets clearly belong to the super fund and that they are kept separate from the trustees personal assets. If any mistakes are made, it is very important that they are fixed to ensure your fund maintains its complying status . You can learn more about this through the ATO short video here.

Accessing your super money early

Unfortunately, some members believe that as it is “their” money, they can access it whenever they want. This is not true, to access your super you need to meet a condition of release. This is the reason for the “sole purpose test”. If you access your super money before then this can be a breach, trustees are also not allowed to loan money to a member or one of their close family members . You can learn more here

 

Self Managed Superannuation funds are highly regulated due to their nature, it is important to understand all of your ongoing obligations, we will be able to assist you through these when they fall due. 

Annual Return

The SMSF will require a tax return is lodged with the ATO every year, this return along with the financial statements also need t0 be audited by a registered independent SMSF auditor. You will need to ensure you have all of the documentation available to confirm your investments market value as at 30 June and confirm that the documentation clearly shows the fund is the owner of those investments. To learn more about this, you can go here

TBAR Reporting

Transfer Balance Account Reporting (TBAR) is a relatively new reporting requirement that reports the changes to pensions to the ATO, this is now mandatory to be lodged on a quarterly basis, this will likely means the we will need to process your superannuation fund on a more regular basis that once a year. 

Investment Strategy

An investment strategy is a mandatory record of what the SMSF is to invest in, it needs to take into account the needs for ALL of the members of the fund. It is also required to include the consideration for insurances for all of the fund members. The investment strategy needs to take into consideration liquidity of assets to pay fees when they fall due and the divestment of the investment assets. These will need to be reviewed regularly, to learn more about investment strategies you can view it here

One particular rule surrounding SMSF’s is that the effective management and control must be done in Australia. What that means is that decisions around the fund must be made while in the country, if one of the members is planning on leaving the country permanently then there may be an option to use an enduring power of attorney to have someone they trust step into their place as trustee and make all of the SMSF trustee decisions in their stead. Due to this large responsibility it is crucial that the correct person is selected in this instance. If the fund has multiple members and only one has left the country, the remaining members can maintain the central management and control of the fund. In the case there is only one member/director, if there is no one that can step in place with an EPOA then the member may look to wind up the fund to ensure the fund does not go into breach.

If you are intending to leave the country for an extended period you can contact our specialists to discuss your options further. 

There are many compliance laws surrounding SMSF’s, we will help you navigate those laws, however, with some of the harsher penalties of the fund becoming non-compliant may lead to the ATO taking half of the value of the super fund and the potential for trustee penalties. To better understand what may happen or if something accidental was to happen you can learn more about it here.

If something has happened with your SMSF that could lead it to becoming non-compliant, let us know so that we can act straight away and get the best overall solution for your fund. 

 

There may come a time in your SMSF’s life that it is no longer the correct vehicle. We can provide advice around maintaining your SMSF, however, If you decide you no longer wish to have the SMSF we can help you organise the windup of the SMSF. This process is simple enough, we will look at some of the steps: 

Check the Deed

As the deed governs the SMSF rules, we will need to ensure that we are abiding by all of the deed requirements to have the super fund wound up and vested. 

Agree to the windup

It will need to be documented that all trustees/directors are in agreeance to wind up the SMSF, if only one member wishes to leave, there may be an opportunity to remove that member but any existing members could carry on with the fund. 

Pay any final Fees & Taxes

We can assist you in determining what any final amounts are and assist you to organise to pay these out, the remaining amounts will be the member balances. 

Rollover/payout member balances

Once all of the fees are paid out then the remaining balances will need to be rollover over or paid out to the members if they have met a condition of release. In some circumstances this can be paid out by transferring the assets to the members, however, it may be prudent that all of the funds assets will need to be liquidated to cash to rollover the funds. 

Final return & Audit

We will prepare and lodge the final return and organise the final audit, this will be allocated for before the money is removed from the fund. We will let the ATO know during this process that the fund is now wound up. 

To learn more about this windup procedure you can watch the video here

As you can see there can be some complexities when managing your own superannuation, where possible the team here at Elmbridge & Co. will be able to assist you in many of these aspects and hold your hand through the process. If there are any points here that you would like to discuss further, or if there are questions that are not addressed here, please contact our office where we can discuss them with you further.