How long does it take to set up an SMSF?

Setting up an SMSF can be done within one to two business days covering the legal and accounting works. However, your SMSF has to elect to be regulated by the Australian Taxation Office (ATO). The ATO will undertake checks on your application before issuing your SMSF with an Australian Business Number (ABN) and a Tax File Number (TFN).  The process of obtaining an ABN can be instant or take a month or two depending on your personal history with the ATO and is totally outside of the control of the accountant doing the setup.

When is an SMSF legally established?

An SMSF is legally established when the fund has assets. Generally, this is when a deposit is made to the fund’s bank account. However, opening a bank account will require a copy of the fund’s trust deed and ABN. Until the fund is registered it will not have an ABN.

Why is it important to have an ABN?

Until a fund is registered, marked as complying and receives an ABN the fund is unable to:

• receive rollovers from other superannuation funds or contributions via SuperStream
• receive contributions as employers are denied a tax deduction for contributions prior to an SMSF being regulated
• open a bank account as banks do not allow a SMSF to open a bank account prior to having an ABN

What checks are done by the ATO?

• checking the fund is legitimate and not a scam involving identity fraud
• the tax lodgement history of the members/trustees or corporate trustee checking for outstanding tax obligations or historical superannuation breaches
• data matching and finding members using their maiden name or the member’s name is spelled differently or addresses, or tax file numbers do not match ATO records
• checking on the trustees to see if they may be disqualified and unable to operate a SMSF
• checking the members/trustee history of insolvency

Why is an SMSF status on the Super Fund Look Up site important?

The ATO may hold up the registration of the new SMSF if the checks being made are inconclusive. The status appearing on the site would then be “Pending” or “Regulation details withheld”.

https://superfundlookup.gov.au/FAQ/SelfManagedSuperFund

Until the registration is complete and the status changes to “Registered” the members are unable to rollover super monies from other superannuation funds into the new SMSF or receive employer contributions through SuperStream. An employer may also require a statement from the SMSF trustee to say it is a resident regulated SMSF.

When the notice of compliance is issued the ATO changes the fund’s status to “complying” which is generally issued a few days after the fund has been registered.  Historically, the complying status did not issue until the fund lodged its first SMSF annual return which caused a lot of confusion about the status of the fund.