What is a reasonable cost for an SMSF and Bare Trust setup together?

Fees to set-up a new SMSF are dependent on the trustee structure adopted and on-line DIY service vs professional setup. A DIY service is aimed at investors who want to do it themselves and don’t need professional support. This type of service can be cheaper but there is a higher probability of compliance errors which can be very costly in the long-term. There are also online providers who offer “free” set-ups but unsurprisingly they are generally very poor quality and come with strings attached such as limiting investment options, trading platforms and supported bank accounts which the provider is then making their money off by clipping the ticket on those investments. It also means you don’t have a corporate trustee which is a very poor decision long term.

SMSF Setup Cost

A professional SMSF set up is more expensive as it includes flexibility and personalised services of SMSF specialised trained accountants. The set-up fees for the SMSF using a professional firm like SMSF Australia will be $2,000 + GST. Keep in mind you can reimburse this to yourself from the SMSF once your monies have rolled over into the SMSF. This covers the corporate trustee fees from ASIC, the registered office, the SMSF Deed, the ATO registrations, your Electronic Service Address and initial compliance documents, assistance with rollovers from existing super funds and the license costs for the Class Super software. Basically, an all-inclusive package fee rather than a piecemeal approach of adding additional fees as you move through the various stages of the setup.

Bare Trust Cost

A bare trust is only required to be set up when an SMSF decides to purchase real property under a limited recourse borrowing arrangement (LRBA). This is setup after the SMSF is up and running which is sometimes done by lenders themselves as part of their legal fees or by the accounting firm supporting your SMSF. The Bare Trust references the exact asset being purchased (eg. The address of the property) and other details. If it is being setup by SMSF Australia it costs $1,400+GST as a one-off fee including ASIC costs for the corporate trustee and legal/accounting costs for the deed and setup of the entity.

Comparing Costs of SMSF & Bare Trust Setups

There is no one firm that is right for everyone or anyone pricing model which suits all clients. As a rule, we would suggest considering the following in your decision-making process:

do you want to DIY your setup or have the support of a lawyer and an accountant?
does the price you are being quoted include separate corporate trustees for the SMSF and the bare trust?
is the provider connected to a real estate developer using an SMSF structure as an incentive to purchase properties where the developer has a vested interest?
If someone is offering to do something for you for free, knowing they run a business and are in it to make money, how are they really being paid?
what are the ongoing costs?
is the provider experienced at setups?
does the provider have lawyers as well as accountants helping with the setups?
does the proposed SMSF deed meet the fund’s requirements, and does it allow the trustee to invest in assets which are permissible under the Superannuation Industry (Supervision) Act 1993 (SISA)?

SMSF Australia fees to set up an SMSF and a bare trust is all inclusive providing you with:

experience accountants and lawyers helping to guide you and answer your questions
a new corporate trustee for your SMSF
An SMSF trust deed from a specialist SMSF law firm which is designed to be broad in its powers to allow trustees to invest in any assets or make any decisions which are permissible under SISA
Class super platform fee including the fund’s Electronic Service Address (ESA)
ATO registrations for ABN and TFN applications
ATO trustee declarations
SMSF investment strategy template
our time to organise the transfers or rollovers of existing super and assist clients by guiding them through the process and apply for ATO registrations
new corporate trustee for the fund’s bare trust
bare trust deed
declaration of trust as evidence the bare trustee owns the property on behalf of the SMSF

Whilst an SMSF or an LRBA must have separate trustees neither arrangement legally requires a corporate trustee. However, we always highly recommend it for the following reasons:

ease of administration especially when there is a change of trustees such as a member exiting the fund, a member dies or becomes legally incapacitated (including a member with dementia) or perhaps a divorce or relationship breakdown or bringing in the children in as new members or their spouses – all fund assets must be transferred to the new corporate trustee or all of the individual trustees when there is a change
separation of assets is easily defined between the fund and the bare trust as well as members and other related parties
single member funds cannot have a single individual trustee but can have a single director corporate trustee
most states do not allow 6 individual trustees and if you are taking advantage of the rules allowing 6 members the SMSF trustee may have to be a corporate trustee
innocent mistakes or breaches of SIS which results in a monetary penalty is magnified when there are individual trustees as the penalty is imposed on each trustee but is not imposed on each director of a corporate trustee

Do I need a Statement of Advice (SOA) to set up an SMSF?

If you decide to set up an SMSF and direct SMSF Australia to prepare the paperwork you are not required to obtain an SOA as we are not providing financial advice. However, it is advisable to obtain an SOA from a registered financial planner if you are not sure if an SMSF is right for you. Similar to setting up an SMSF, where you instruct us to set up an LRBA an SOA is not legally required.

Anyone providing financial advice must have an Australian Financial Services License. The advice must be given in a formal SOA. A licensed financial advisor or financial planner provides financial advice after reviewing your personal circumstances and financial goals and considering your current and future plans.

What are the Stamping rules for a Bare Trust?

A bare trust must be stamped in many states still and some still charge fees to provide these services. For instance, in NSW ad valorem transfer duty is payable upon the purchase of real property for an SMSF. Upon execution of the bare trust, transfer duty of $750 is payable to the office of state revenue (OSR). Double duty may apply when the bare trustee transfers the property back to the SMSF trustee subject to “an apparent purchaser” exception. The SMSF constitutes the real purchaser, with the bare trustee acting as the apparent purchaser, demonstrated by:

a declaration made by the bare trust trustee confirming the property was acquired on behalf of the SMSF;
SMSF bank statements evidencing the deposit was paid directly by the fund;
LRBA documentation confirming the balance of the purchase price was sourced from borrowings
loan agreement and statements showing the fund as the borrower responsible for repayments.