Step-by-step: How to set up an SMSF
Setting up an SMSF involves more than just paperwork. It’s about building a compliant structure that supports members long-term goals.
For the most up to date steps on setting up an SMSF, refer to the ATO website.
Step 1. Decide on your structure
Choose between:
- Individual trustees: Each member is a trustee of the SMSF.
- Corporate trustee: A company acts as trustee of the SMSF, and each member must be a director of the company.
Step 2. Choose trustees
All trustees or directors must eligible, i.e.
- Over 18 years old
- Not be legally disqualified
- Not be under a legal disability
Each trustee must sign a declaration confirming they understand their responsibilities under superannuation law.
Read the latest ATO guidance on appointing trustees.
Step 3. Create the trust and trust deed
A trust deed is a legal document that sets out the rules for how an SMSF will operate.
The trust deed must:
- Be specifically designed for your fund to align with its objectives and support the needs of its members.
- Clearly state that the fund exists solely to provide retirement benefits to its members or death benefits to their beneficiaries.
Step 4. Register your SMSF with the ATO
You will need to apply for things like:
- An Australian Business Number (ABN)
- A Tax File Number (TFN)
Step 5. Open a dedicated SMSF bank account
Your SMSF needs its own bank account to:
- Receive contributions and rollovers
- Hold investment income
- Pay fund expenses
This account will need to be in the fund’s name and separate from personal accounts. You’ll also need to notify the ATO of the account details.
Step 6. Get an Electronic Service Address (ESA)
An ESA is required to receive employer contributions and rollovers via SuperStream.
Definition: SuperStream
It’s the government’s platform where all employers are required to pay contributions and send information to super funds. Payments and data are electronically tagged and distributed to the appropriate fund providers, which is why your SMSF will need its own ESA.
Your ESA ensures payments and data are correctly routed to your SMSF.
Step 7. Develop an investment strategy
Your SMSF should have a written investment strategy that considers:
- Its member’s risk tolerance
- How all members would like to diversify assets
- Liquidity of investments
- Insurance needs
The investment strategy should reflect the retirement goals of all members and be reviewed regularly to ensure it remains aligned with the fund’s sole purpose of providing retirement benefits.
Step 8. Understand your ongoing responsibilities
Once your SMSF is set up, be mindful of obligations such as:
- Keeping detailed records - including but not limited to; all contributions, income, expenses, fees, trustee decisions, and fund activities
- Conducting annual audits
- Lodging annual returns with the ATO
- Staying compliant with superannuation laws
- Notifying the ATO of any changes related to your SMSF
Step 9. Consider your exit plan
When setting up your Self-Managed Super Fund (SMSF), it’s wise to plan ahead and think about any circumstances or unexpected events e.g. relocation overseas, retirement, that might lead you to close your SMSF.
Setting up an SMSF can offer flexibility, control and tailored investment opportunities. But it’s not a decision to take lightly. By understanding the setup process and your responsibilities, as a trustee and member, you’ll be better equipped to understand whether an SMSF is right for you.
Looking to get started? Download our 'how to get started' checklist
