How to Set Up an SMSF


  • Consider superannuation legislation
  • Determine your SMSF structure
  • Establish your SMSF trust deed
  • Register your SMSF
  • Set up a bank account for your SMSF
  • Create an investment strategy

If you have decided to take the front seat in driving your superannuation, then this article will help you with how to set up an SMSF (Self Managed Super Fund).

There are generally five categories of superannuation funds:

  • Retail super funds
  • Industry super funds
  • Public sector super funds
  • Corporate super funds
  • Self managed super funds

While the first four categories are run by superannuation fund providers, SMSFs have become increasingly popular in the last 20 years because they are self-managed. This means that the members themselves are in charge of managing their funds and are thus responsible for the setup, management, compliance, and overall decision making.

Consider superannuation legislation

To set up your own SMSF, you need to ensure that it is compliant with superannuation legislation. An SMSF needs to be set up correctly for three key reasons:

1. To be eligible for the tax concessions that the superannuation environment offers. The income of a complying self-managed super fund is taxed at just 15%. That income includes:

2. So that your SMSF can receive member contributions.

3. So that the SMSF administration is as easy as possible.

According to the latest Australian Taxation Office (ATO) statistics, more than one million Australians are members of self-managed super funds. That number is steadily growing each year.

It’s likely that you’ll need professional advice for any or all the following aspects to set up your self-managed super fund.


Determine your SMSF structure

Your SMSF can have up to six individual trustees or a corporate (company) trustee. An SMSF Trustee is responsible for:

  • Preparing an SMSF investment strategy
  • Making investments
  • Accepting member contributions
  • Paying member benefits
  • Appointing an auditor who is registered with the Australian Securities and Investments Commission (ASIC) to conduct an SMSF audit
  • Lodging the self-managed super fund’s annual tax return with the ATO
  • Keeping the records of the SMSF to ensure compliance with superannuation legislation

Establish your SMSF trust deed

This trust deed will be a legal document setting out the rules for your SMSF’s establishment, operation, and administration. Note that these rules must be compliant with superannuation legislation.

Information contained in the deed will typically include:

  • The name(s) of the trustee(s)
  • The objectives of the SMSF
  • Member eligibility
  • Whether the self-managed super fund benefits will be paid as a lump sum or as an income stream
  • An exit strategy: this should outline the circumstances where the SMSF will be wound up and how member benefits would be paid in those circumstances (e.g. the payment of death benefits)

Register your SMSF

Every SMSF must be registered with the ATO to be eligible for the superannuation tax concessions that are available. This means you will need to apply to the ATO for a tax file number. Also, you can apply for an Australian Business Number (ABN) at the same time. If you intend to have a corporate trustee, the corporate trustee will need to be registered with ASIC.


Set up a bank account for your SMSF

Your SMSF will need to have a bank account that is separate from its members’ individual accounts. Member contributions are fund income is paid in to this account. Member benefits will also be paid from this account.

Create an investment strategy

An SMSF needs to have a documented investment strategy outlining how it will invest member funds. Fund investment options can include fixed interest, share, and property, or related products.

The investment strategy should consider:

  • The personal circumstances of members (e.g. their age, financial situation, and risk profile)
  • The benefits of a diversified investment strategy to reduce risk
  • The liquidity needs of the fund and how easily its investment assets can be converted into cash. For example, to pay for the retirement benefits of the SMSF members
  • The insurance needs of fund members

This article is for general information only. It does not make recommendations nor does it provide advice to address your personal circumstances. To make an informed decision, always contact a registered tax professional.