Smart Audit Guide to SMSF

By July 3, 2015 SMSF No Comments


Australian Superannuation (super) is where people are encouraged to put aside funds to be made available to them in retirement. Contributions to a super fund are usually treated in a most beneficial way. This can occur either at the time of making the contribution (usually 15% tax), on earnings in the fund (usually 15% tax), or on the benefits received at retirement age (usually 0% tax). At the end of December 2014 super assets were $1.94 trillion.

Superannuation funds are shown in the table below for December quarter 2014. SMSF’s hold the most assets.

Why would I want a SMSF?

  1. Influence more control over your investment
    1. Focus on the type of investments you want
      1. Shares perhaps – Australian or overseas
      2. Mining, banks, retail, construction, wholesaling, etc.
      3. Managed Share Trusts
      4. Ethical investments, or just best monetary returns.
    2. Perhaps property
      1. Residential
      2. Commercial
      3. Managed Property Trusts
    3. Perhaps other investments as well.
  2. Save fees
    1. Retail funds and Industry funds charge a percentage of assets.
    2. Most funds have a large range of fees and it is difficult to know how much until after you see it on the annual report.
    3. An SMSF can have up to 4 members, so fees are split between them. You can do the research yourself or choose to have advisers. The same can be said of the financials (if you have the expertise). The audit however, must be done by an ASIC registered auditor – such as Smart Audit Australia, and it has to be by an auditor not associated in preparing the financials.
  3. Accumulate investments into a more tax friendly environment.
    1. Some assets can be transferred from a personal name to SMSF (eg. shares, commercial property)
    2. Other assets,

How do I sign up for a SMSF?

We can assist here through the complicated legal procedures.

  • A Superannuation Trust Deed – a document of some 50 or so pages is drawn up to meet the requirements of the Superannuation Industry (Supervision) Act 1993 – SIS Act.
  • A decision is made whether to have a
    • Corporate Trustee or
    • whether the individuals will act as trustees.
  • Each proposed member of the fund then applies to join the fund as a member.
  • Each member then consents to being either
    • a trustee, or
    • a Director of the trustee company.
    • One or more directors of the trustee company will consent to being the public officer and secretary.
  • Each member then makes a Trustee Declaration for the Tax Office to say that they have read & understood the undertaking they are making to manage the Superannuation Fund correctly.
  • As the Superannuation Fund is not a person, it must be directed through a properly constituted meeting to document all decisions it makes. These are called Minutes and must be drawn up, signed, and kept securely for at least 10 years.
  • The SMSF will make a decision on its investment strategy and minute the decision.
  • The SMSF will make a decision on its members’ insurance strategy and minute the decision.
  • The SMSF needs to apply for Australian Business Number, Tax File number and perhaps GST registration.
  • A bank account (s) needs to be opened by the trustees in trust for the superannuation fund.

All of the above documents are considered and sighted in each annual audit of the SMSF.

A clean audit ensures that the SMSF remains a “complying” super fund and entitled to the associated benefits.