I have had another look at how to set up SMSF again, but got confused as I did a while ago.

Could somebody point out the most relevant posts, which are valid today?

Is there something very simple?
Is personal account less involved than special purpose company?

Also, what is annual cost?
What is reasonable cost of accountant's role in annual reports?
Are there more than 1 reports a year?

Hope my post is not too silly.

G
The basic steps to set up a fund are

1/ Chose a name for the SMSF
2/ Decide on who are to be the SMSF members and they must also be trustees with a max number of 4 people. Special variations are possible and detailed information is available on the http://www.ato.gov.au site.
3/ Decide if you want an individual member trustee or a corporate trustee for the fund (Individual trustees are the most common choice).
4/ Purchase a trust deed that meets all your requirements for the fund (approx $300)
5/ Register your SMSF with the ATO to be regulated by them which can be done on line which provides the SMSF with a Tax file number and ABN number ($FREE)
6/ Open a separate bank account for the fund in the SMSF trustee name.
7/ Call a meeting of all trustees and members to sign and date the first page of the trust deed. Prepare a written statement of the investment strategy of the fund. Prepare a minute of this meeting for the funds records

THE SMSF IS NOW FULLY OPERATIONAL AND YOU CAN TRANSFER ASSETS IN TO IT IN THE TRUSTEE NAME.

You must keep records of all of the fund activities and transactions plus minute all decisions of the trustees.

Once a year after close off on the 30th June you must prepare a OPERATING STATEMENT and a STATEMENT OF FINANCIAL POSITION for the fund and have the funds records audited.

Once a year after the funds audit you need to file a tax return for the fund with the ATO plus pay the ATO administration fee which is currently $45 but will rise from July 1st.
Once a quarter you will have to return a completed Business Activity Statement Form to the ATO.

The annual cost of having an accountant carry out all your financial and tax reporting plus fund audit will depend on the size of your fund, the quality of your record keeping and the number of transactions of the fund during the year, but a figure of $2000 would be a fair average.

This information is just a guideline to get you started but if you are really in the dark you should get professional advice and also the ATO has lots of publications on SMSFs that provide lots of detailed information.

Regards KOTE

G

There are numerous companies that will set up a SMSF for you, just do a search.

Costs vary but some are not much more than the cost of a Trust deed (a must) and will give you guidelines for all the other requirements like how to develop an Investment Strategy (Important)

I went with Individual Trustee as the Corporate trustee wanted too much money.

Kote

Agree with all you said except I have never had to do a Business Activity Statement in the 4 years I have been running the fund.

Cheers

Ian

G,
Kote has set it out pretty well.

The only thing I suggest is that you get the trust deed from a firm that specialises in SMSF and discuss your requirements at personal interview.

In that I differ from Kote's suggestion to

4/ Purchase a trust deed that meets all your requirements for the fund (approx $300)

The trust deed is a lengthy and legalistic record of what a SMSF can and can't do.
At the moment there are suggestions to ensure that a trust deed covers the new rules bought in by Simplier Super changes from 1/7/07.
For existing SMSF members if these new rules are not covered a deed of variation or a new deed will be needed.

It takes an expert to understand the jargon and this is why I have only ever dealt with a firm specialising in SMSF, for set up and ongoing administration.

My firm prepares all minutes, records, tax return and arranges audit. It also provides specialist advice on a proactive basis.
Tax refund was banked by me on 14/8/06.
Cost is on the basis of work done, and not a percentage of assets of fund.
Last year cost was $3437.


Cheap is not always the best.

First of all, thank you very much for patience.

I don’t seem to be able to tackle complex issues quickly, I am toying with this one on and off for quite a few years now, and still not 100% ready.

What troubles me, that with age I will not enjoy attending matters and constant changes will make me virtually dependant on professionals, who must charge a fee, but it all erodes the pension.

Super fund managed by firms like AMP, Macquarie, Colonial are %-age based and cheapest is 0.65% if you keep money in CMT account, which I find ridiculous (but I might have this information wrong).


I looked at small firm SMSF service that provides:
Superannuation Consulting Services and education
SMSF establishment
SMSF administration
SMSF Audits
SMSF Trust Deed Services

Fixed fee between 0.5 – 1.0% (I did not ask how is it calculated, by work performed or % depending on size. I got folder with all the papers and did not have much discussion as I have one free consultation and I would like to be prepared)

Fees look something like that:
New fund (with trust deed plus statutory documents) $660
Establishment of corporate trustee $880
Update of trust deed $385
Fund name change $330
Change of trustee form $330

Pension Actuarial Certification:
Allocated pension certification $220 per pension
Market linked (or term allocated) pension certification $242

Consulting or advisory service – based on upfront fee

(All prices include GST)


Call me tight, but after brief inspection, I didn’t like so many fees.

I suppose I would only pay for some of them and if I choose individual fund I would not pay $880 for corporate and change of trustee form does not necessarily apply more than once, unless I change something.

Could somebody be kind to point out which fees are one off and which are charged annually?

I wander if future “simplified superâ€

ianh
Strange because the ATO has been sending me a BAS form every three months since GST came in. I am wondering if it is because we are paying pensions out of the SMSF because that is the only bit I fill in these days.
Regards KOTE

Many will disagree with my approach but I found it better for my family circumstances not to go further down the SMSF path and to transfer our superannuation funds to a public offer industry fund.

We now use AGEST but I'm not making a plug for that one as such. It, like other reputable not-for-profit funds, does accept salary sacrifice contributions and after-tax contributions, plus there is a choice (limited) of investment options. Low cost but your not necessarily going to shoot the lights out in regard to investment returns but then, if you are going for a 15 to 20+ year time frame, I'm not so sure that it matters in the long run.

These types of funds may suit but it is up to you.

G

To be quite honest the SMSF path is not for everyone and if you are not prepared to be a bit hands on then another choice will probably work out best for you in the long run.
The amounts you pay out in fees to run a SMSF is always going to be directly proportional to the degree you use professional services.

It is not expensive to get an accountant to set up an SMSF for you and a one off fee of $700 to $1000 total would be normal for everything involved including the trust deed.

As Pedro has remarked perhaps I should have said get a Trust Deed prepared for the needs of your intended SMSF. However all trust deeds have been prepared by a superannuation lawyer at some stage and most will contain a lot of standard paragraphs that will try to cover every eventuality that you might need.
Our trust deed was prepared for us by a specialist superannuation lawyer after a brief consultation and filling in a questionnaire. The initial cost was $300.and in the past 10 years we have not needed to update our deed at all, however it is now going to cost $275 to have the deed updated to take care of the big changes to superannuation that come into operation on 1st July, but these are not every day events or costs.

Even if you go for the Rolls Royce type SMSF administration service that Pedro Egoli uses, you still will be responsible for the keeping of the records that you hand over to your administrator. Also never forget that at the end of the day YOU AS THE TRUSTEE are still held legally responsible by the regulator for the operation of the fund and not the professionals you use.

Perhaps you should consider the simpler path of buying a pension and writing the extra cost down to the peace of mind of not having to administer a SMSF if you find it all a bit complex and time consuming.

Regards KOTE

Kote & IanH re quarterly ATO statements.

Not all funds are registered for GST. My SM allocated pension fund is not. I registered for GST when it first came in but was allowed by the ATO to deregister it after the first year.

However I am required to send both quarterly and annual PAYG instalment returns to the ATO.

As I take my pension as a single payment in the last quarter of each financial year three of my quarterly returns are nil returns and require little time to complete. The fourth quarter return contains information about the pension amount but is a nil return for tax withheld as the fund is tax exempt.

The data in the annual (PAYG) return is the same as for my fourth quarter return so, all told, I have to spend very little time completing each.

Cheers,
Catron

Kote & IanH re quarterly ATO statements.

Not all funds are registered for GST. My SM allocated pension fund is not. I registered for GST when it first came in but was allowed by the ATO to deregister it after the first year.

However I am required to send both quarterly and annual PAYG instalment returns to the ATO.

As I take my pension as a single payment in the last quarter of each financial year three of my quarterly returns are nil returns and require little time to complete. The fourth quarter return contains information about the pension amount but is a nil return for tax withheld as the fund is tax exempt.

The data in the annual (PAYG) return is the same as for my fourth quarter return so, all told, I have to spend very little time completing each.

Cheers,
Catron

Catron
You are quite right.
When GST first came in I used to fill in a BAS form every quarter and now I have just noticed that the forms title has changed at some time to a INSTALMENT ACTIVITY STATEMENT because we do not claim GST.
Like you we take our pension as a lump sum in the last quarter so the first 3 of the financial year are a nil returns.
regards KOTE

Catron ,
I followed same path as you for about a year, but then cancelled registeration with ATO and now only fill in the quarterly PAYG sheet.

G,
If you are confident of making investment decisions that is the main problem with SMSF in my opinion.
Having said that , you also need to have confidence in the administrator of fund, because they attend to all the loose ends that need to be done.
In my case I asked around and got good references from existing clients . This was over 14 years ago and during that time , there have been many changes to regulations with Super.

I think you will find that percentage quoted is based on assets of fund , whereas what I suggest is that you get an Administrator to charge on the basis of time taken only.

The range of between .5% -1% would be based on the (1)size of your fund (higher value would have influence on a lower rate) and (2) time taken (more transactions would mean a higher rate).
Either way they will want to get a certain return from doing the work for you.
Also check out the minimum charge.

If you do the sums you will probably see that those who charge a fixed rate on assets rather than for time taken will mean a higher cost to you.

Re the set up costs check out this thread from a while back

http://www.sharesguru.com/forum/viewtop ... t=set+smsf

At establishment you would have one off fees in the list you provided and these would include
New Fund (with trust deed etc)
Establishment of Corporate trustee

You would also not need the following at establishment

Update of Trust Deed
Fund Name change
Change of trustee

I would suggest you get a quote to establish your fund to see if it is generally in line with that outlined in above thread.

Others may have established funds recently and can provide up to date prices.

The annual fee I pay is a government levy ( i think it is going from $45 to $150) cost of accounting/audit ,preparation of minutes, compliance check, review of investment strategy , and any advice requested is charged out too. Last year $3400 odd for the lot.

From a personal point of view the technical and time consuming side of administration are non existent but as you say this costs.
However, the alternative of course , is to hand money over to a Super Fund Manager and they may not get you the same net return.

This also costs and if you are correct the cheapest rate for a Super Fund Manager is .65%

Good luck with your deliberations.