SMSF & Investing

What is a SMSF and how does it work?

A SMSF has the sole purpose of providing benefits to members in retirement or to their beneficiaries on death.

As all members are trustees, members control the entire running of the SMSF. Self Managed means you (as the trustee) manage the investments, make decisions; it’s the trustee responsibility to ensure compliance with relevant legislation. Many have found the best way to achieve this is the same as a company, where you hire an accountant to manage all the obligations necessary.

A SMSF is established much the same way as a normal trust.

A trust deed is required, trustees are appointed, members apply and are confirmed, ABN, TFN and GST (if necessary) are applied for with the ATO, an investment strategy and death benefit nomination forms are completed, an accountant and auditor are appointed and then the fund is ready to open a bank account.

Once the bank account is open, fund’s from other super funds (industry / retail) can be rolled in to the new SMSF. This works by completing the rollover form, then once approved, a cheque is sent to the trustees of the SMSF, who bank it and are then free to invest in allowable assets.

The SMSF’s bank account is the hub of all activity. Rollovers and contributions (personal, employer, etc) come in, pensions and expenses are paid out. Assets are purchased from there and investment earnings are banked. The most common investments in SMSF’s are:

Listed shares
Property (business real property and residential property)
Managed Funds
Term deposits
Cash
Unlisted shares or units
other investments

There is an annual requirement to have the SMSF audited and a tax return lodged. The ATO is the regulator of Self Managed Super Funds and pass the responsibility of auditing each SMSF to approved auditors, who will report to the ATO and trustees any breaches of the SIS Act.