SELF MANAGED SUPER - TRUSTEE OBLIGATIONS
If you intend to establish and maintain a Self Managed Superannuation Fund (SMSF)
it is important that as a future trustee of the fund you have a proper
understanding of what your obligations will be.
A SMSF is a compliance driven vehicle because of the generous taxation
treatment that is given to income and capital gains with the superannuation
environment. The regulatory authorities need to be comfortable that the SMSF
structure is not being abused.
Transactions must be not only recorded accurately, but the nature of the
transactions must also comply with all the relevant superannuation laws. For
example, a SMSF may purchase business premises with the member funds, but it
also essential that there is documentation proving that the transaction was
conducted on an arms length basis, and the level of lease payments determined on
a arms length basis. The transaction must also be in line with the investment
strategy of the fund and meet the prudent investor and sole purpose tests as
Trustees should also be aware of a requirement for all SMSFs to be audited.
In addition the auditor must be independent to the preparer of the accounts for
the SMSF. Often the trustees will hold crucial information that their accountant
or fund administrator will need to complete the annual financial statements. As
these statements must be completed within 9 months of the financial year end it
is a trustee responsibility to ensure that they have done all they can to assist
Trustees should be aware that just because you may be in a tight spot
financially, this does not entitle your SMSF to lend money to you. SMSFs are not
allowed to lend money to members under any circumstances. The ATO considers this
a major breach of the law and is actively pursuing trustees who have loaned
money out of SMSFs or made “early” payments to members.
Trustees sometimes believe that lending money to a related party or
business can be justified because the fund can earn a higher rate of return.
This is irrelevant as this is breaking the superannuation laws and is not
Another common issue is Trustees being unaware of the importance of keeping
track of documents, using the correct cheque books, and ensuring the fund
maintains sufficient liquidity in order for the fund to discharge its debts and
The ATO as Regulator provides two booklets namely, “Roles and
Responsibilities of Trustees Running a SMSF” and “It’s Your Money, But Not Yet”.
These booklets highlight the importance of understanding how various
professionals interact to provide the backoffice support for a SMSF and what
issues trustees should be aware of prior to making the decision to establish a
At all times it is advisable for Trustees to seek competent advice of a
specialist in self managed superannuation. Not knowing is not an excuse and once
a breach has occurred the auditor must report it to the ATO.
SMSFs can provide many advantages in terms of flexibility, control and
potentially lower fees. However, Trustees must be aware that these benefits come
with a responsibility to comply with the superannuation laws at all times.
Normally the best way of doing this is by maintaining regular contact with the
professionals assisting you in managing your SMSF.
Super Outsource is a specialist Self Managed Superannuation Fund
administrator and can provide you with fee based advice if you are interested in
following this issue further.
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particular investment objectives, financial situation or investment needs. You should assess whether the information on this web site is appropriate to
your particular investment objectives, financial situation and investment needs.
You should do this before making an investment decision on the basis of the
information on this web site. You can either make this assessment yourself or
seek the assistance of any adviser.