Setting Up an SMSF Is a Designated Service

Most accountants have made their peace with company registrations by now. Ask whether incorporating a Pty Ltd for a client is a designated service under Tranche 2 and you get a fast yes.

Ask the same person about SMSF setups and the room goes quiet.

Super work sits in a different drawer in most firms. It gets handled by the super team, or the deed provider, or whoever chases the ATO registrations, and it rarely gets filed alongside trust and company work. An SMSF is an express trust. Somebody has to draft a deed to bring it into existence. Under item 6 of table 6, drafting that deed is a designated service, and the obligations that come with it have been live since 1 July 2026.

What item 6 actually covers

Item 6 catches assisting a person to plan or execute, or otherwise acting on behalf of a person in, the creation or restructuring of a body corporate or a legal arrangement, in the course of carrying on a business.

Legal arrangement includes an express trust. Your client’s SMSF is one.

AUSTRAC picked an SMSF for its own worked example, which tells you where they expect the confusion to sit. A financial adviser recommends a fund, explains the steps, introduces the client to an accountant and instructs that accountant to set up the trust. The adviser then reviews the deed and helps with rollover paperwork. AUSTRAC treats the adviser as making arrangements for someone else to provide a designated service under item 54 of table 1, and keeps them outside table 6 altogether. The accountant who drafts the deed sits squarely inside item 6, because drafting and facilitating execution of the deed directly advances the creation of the trust.

The line is drawn at those two words: directly advances. General advice about whether a fund suits the client influences a decision without building anything.

Flip the facts and the adviser lands inside item 6 as well. AUSTRAC says so plainly. Draft the deed yourself, or give advice detailed enough that the client could create the trust without any further professional help, and you are providing the service.

The trigger sits earlier than you would guess

You commence providing the service when you act on instructions in relation to the creation of the entity. Preparatory steps count, and AUSTRAC lists them: drafting and reviewing trust deeds, drafting documents that create corporate trustees, registering forms with ASIC.

So the trigger is well before deed execution. It lands at the moment you accept the instruction and start doing something with it. Opening the file and beginning the draft is doing something with it.

That ordering matters because initial customer due diligence under sections 26F and 28 has to be finished before you start providing the service. Collecting documents is a different thing from verifying them, and verification takes time you will not have if the file opens Monday and the client wants a registered fund by Friday.

The customer column is where firms get caught

Here is the part I think is genuinely underappreciated, and it is the reason I wanted to write this piece.

Table 6 has a customer column, and for item 6 that column does something unusual. Where the service is creating an express trust, your customer is the person giving you instructions plus the proposed trustee, the proposed settlor and the proposed beneficiaries. Where the service is creating a company, your customer is the person instructing you plus the beneficial owners and directors of that company.

Now run that over an ordinary SMSF setup with a corporate trustee.

You are creating an express trust, which is one item 6 service. You are also registering a Pty Ltd to act as trustee, which is the creation of a body corporate, and that is a second item 6 service under the same engagement. A fund can have up to 6 members. In a fund with a corporate trustee, every member has to be a director. Add the settlor who signs the deed for a nominal sum.

The engagement letter has one name on it. The CDD file can easily run to 6 or 8.

Figure 1. A standard SMSF setup with a corporate trustee produces two item 6 services and one combined CDD population.

Where the boundary sits across the life of a fund

The tests in table 6 look forward. A service is regulated where it relates to something in progress or still to come, which is why the boundary falls where it does across a fund’s life. The same forward looking logic runs through the rest of the table, and it is worth reading alongside which accounting services trigger Tranche 2.

Two of those rows are judgement calls rather than settled ground, and I have marked them that way on purpose. AUSTRAC guidance sets out an interpretation and the courts decide the rest. The same care applies when a tax driven change of structure starts to look like something more, which I have written about in when a tax restructure becomes a designated service.

Two registers, and only one of them is on your calendar

The ATO gives you 60 days from legal establishment to register the fund and elect for it to be regulated. Trustees have 21 days from appointment to sign the trustee declaration under regulation 6.17. Both deadlines run forward from a fund that already exists.

The AML obligation runs the other way. Initial CDD sits before the first act of drafting, drafting sits before execution, and execution is the moment the fund exists and those familiar deadlines begin.

Put plainly: by the time the timetable you are used to starts, the AML work should already be behind you.

In practice: the setups that cause trouble are the ones that arrive sideways. A long standing business client rings, mentions that a mate suggested a fund, asks you to get it moving, and names his wife and adult daughter as members. There is no engagement letter yet, no formal instruction, and the deed provider portal takes about 20 minutes. I have seen files reach an executed deed inside two working days on exactly that pattern. Under Tranche 2 the same timeline needs initial CDD on 5 people to fit into a window that does not exist. The fix is dull and it works. No drafting instruction goes into the deed portal until the CDD file is complete for every proposed member, every proposed director and the settlor.

Three changes worth making this quarter

Move CDD to the top of the SMSF setup checklist, physically above the deed order. Checklists get worked top down, and this one gets worked fast.

Write the customer list by role rather than by name: instructing person, proposed trustee or trustee directors, settlor, each proposed beneficiary. Names change between the first phone call and the executed deed. Roles hold still.

Decide once, in writing, how your firm treats deed updates and trustee swaps, and keep the reasoning on file. A documented position you can point to is worth a great deal more than a call you made in your head 8 months earlier. If you want the CDD population, the verification evidence and the timing all sitting in one auditable place, that is the job HP-KYC was built for.

Technical reference (current as at July 2026)

• Designated service: item 6 of table 6, section 6(5B), Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Assisting a person to plan or execute, or otherwise acting on behalf of a person in, the creation or restructuring of a body corporate (other than a corporation under the Corporations (Aboriginal and Torres Strait Islander) Act 2006) or a legal arrangement, in the course of carrying on a business.
• Legal arrangement (section 5): an express trust, a partnership, a joint venture, an unincorporated association, or a similar arrangement including a foreign arrangement. An express trust is one created expressly or intentionally in writing by a settlor. Testamentary trusts and trusts arising solely by operation of law are excluded.
• Customer for item 6: the person, and in addition, where the body corporate is a company and the service is creating it, the beneficial owners and directors of that company; where the legal arrangement is an express trust and the service is creating it, the trustee, settlor and beneficiaries.
• Restructuring for item 6: a change to the legal form of the body corporate or legal arrangement, including through a merger or demerger. Staffing profiles, IT systems and small business debt restructuring under the Corporations Act 2001 sit outside it, although item 4 may apply separately to some debt restructuring.
• Commencement: obligations apply to table 6 designated services provided from 1 July 2026. Enrolment with AUSTRAC is required within 28 days of first providing a designated service, and by 29 July 2026 at the latest.
• Initial customer due diligence: sections 26F and 28. Required before the designated service is provided, subject to the delayed initial CDD provisions. Collection of information is a separate step from verification.
• Item 3 of table 6: receiving, holding, controlling (including disbursing) or managing a person’s money, accounts, securities, virtual assets or other property as part of assisting in a transaction, other than in a circumstance covered by section 6(5C).
• Record keeping: AML/CTF customer records for 7 years after the end of the customer relationship (section 111). Tax records for 5 years (section 262A, Income Tax Assessment Act 1936).
• Penalty unit: $364 from 1 July 2026.
• SMSF establishment, tax side: the fund must be legally established before it can be registered, and registration with the ATO is due within 60 days of legal establishment. Trustee declarations are due within 21 days of appointment under regulation 6.17 of the Superannuation Industry (Supervision) Regulations 1994. Directors of a corporate trustee need a director identification number before the fund is registered.
• Sources: AUSTRAC, Professional services (Reform) guidance, page last updated 16 October 2025; ATO, Setting up an SMSF and Register your SMSF.

This article is general information and is not a substitute for advice on your own circumstances.