What SMSF managers should know about applying for an ABN

Like any super fund in Australia, SMSFs accumulate their members’ contributions and hold them for retirement. Contributions may be made by the members themselves through rollovers and deposits or by their employers and spouses. The SMSF’s trustees invest these contributions in different ways, and the profits or losses are paid back to the members. The members’ super contributions and investment returns are taxable, and the SMSF is often responsible for withholding the tax due. SMSFs need to register with the ATO and apply for a TFN and an ABN to facilitate tracking these tax transactions. Once your SMSF is registered and gets an ABN, you’ll have to open a bank account to handle all the transactions for the SMSF. 

However, SMSFs may only sometimes be eligible for ATO registration or getting an ABN. For this reason, the ATO recommends that SMSF trustees appoint a tax professional to help them set up and register their SMSF. The ATO’s checklist of tasks that SMSFs must complete before registering includes identifying and electing trustees, creating the super fund trust and preparing a trust deed, and confirming your super fund’s residency. Missing any steps or not providing complete and accurate information can result in your application being delayed or rejected. Unless some of the information you provide requires verification, you can complete the registration process online and receive an ABN almost instantly. 

While running your SMSF may seem to offer you more financial control, it often takes more time and costs than using a regular super fund. And the returns may not always be worth it. You may find trustees and members choosing to move to other super funds which offer higher returns, which can help increase their retirement income. 

Your responsibility as an SMSF manager also includes developing a plan for closing down the super fund. Closing down the SMSF can require auditing the super fund’s finances and rolling over member contributions to their new super fund accounts. The SMSF’s trust deed may specify some of this information, but consider checking the ATO’s reporting requirements before you wind up the SMSF. 

Only when you have met all the financial and tax-related obligations for your SMSF should you cancel its ABN. Remember that you and the other trustees are individually and jointly responsible for complying with Australian super laws as enforced by the ATO. You should plan for eventualities like the death of a trustee when setting up the SMSF and find out how such an incident can make your SMSF ineligible to continue operating as a super fund. For instance, if all of the SMSF’s trustees have moved overseas and the fund has no assets in Australia, it can become non-compliant. This can also trigger closing down the SMSF and transferring the funds to a compliant super fund.