The Australian Business Register (ABR) from 1 January 2015 has updated the ABN application process for SMSFs.
Newly established SMSFs are now required to have assets before ABN can be issued.
This obviously creates issues as traditionally an SMSF would obtain an ABN prior to establishing a bank account and accepting contributions and rollovers.
There are a couple of ways this can be overcome:
- Contribution of physical cash by the members
- Utilising an account that doesn't require an ABN to open
Contribution of physical cash by the members
It is possible for the trustees of the newly established SMSF to hold a small amount of cash on behalf of the SMSF which they've received from a member. This amount can then later be deposited into the SMSFs bank account.
To use this alternative option, it is essential that the decision of the trustees to hold a small amount of cash is documented. We recommend a trustee minute is completed.
An example trustee minute (word doc) can be downloaded below.
This initial cash contribution - even if it is only $10 will be enough to satisfy the ATO.
This strategy only works when the members of the fund are able to contribute and have the scope under their contribution caps.
There is a special concession that applies when the members of the new SMSF are over 65. Read more about the concession is this article.
Utilising a bank account where no ABN/TFN needed to open
Many CMA accounts (Macquarie for example) used by advisers will issue an account number instantly upon set up, without the need for an ABN and TFN.
Provided the trust deed of the fund has been executed that day or before, a deposit can typically be electronically made into the newly established SMSF bank account before the ABN/TFN has been provided to the bank (these details can be provided at a later date).
This process would mean that the SMSF has satisfied all the requirements to apply for an ABN, namely:
- Trustees are present (company or individuals)
- Assets (initial consideration / contribution to give legal effect to the trust)
- Identifiable beneficiaries (i.e. the members)
- Intention to create a legal trust (i.e. signing the trust deed etc)
SMSF Establishment Form
To accommodate the above changes, we've added two additional questions to our SMSF Establishment Form:
- Value of the assets held by the fund
- When will the trustees execute the trust deed
You cannot proceed with the application if the SMSF will have $0 in assets - so you must select an alternative option.
You also need to notify us of when the trustees intend to execute the trust deed. Based on the date provided, we will apply for the ABN. If you specify a future date, we will apply for the ABN on that date.
If you have any questions or require any assistance on this issue, please submit a request or call us on 1300 362 943.