SMSF trustees are ultimately responsible for the operation of their SMSF. There are a number of duties, responsibilities and obligations required of an SMSF trustee.
The SMSF trustee needs to act in accordance with the following:
The SMSF trust deed
The Superannuation Industry (Supervision) Act 1993
The Superannuation Industry (Supervision) Regulations 1994
The Income Tax Assessment Act 1997
The Tax Administration Act 1953
The Corporations Act 2001
Other general rules such as those imposed under other tax and trust laws
Trustees must meet the following requirements when running an SMSF:
Make sure that the sole purpose of the SMSF is to set you up for retirement or to provide death benefits
Create an investment strategy which considers all of the SMSF’s circumstances including investment risk, likely investment returns, liquidity and cash flow requirements, diversification of investments and insurance for members.
Separate the SMSF’s assets and your personal assets, so they’re not mixed
Comply with the superannuation and taxation laws for all contributions received by the fund and benefits paid to members
Keep updated SMSF records for the right amount of time and notify the Australian Taxation Office of any important changes to the fund
Arrange for an independent, ASIC registered approved SMSF auditor to audit the SMSF
Lodge the SMSF’s annual return with the Australian Taxation Office
Be aware of the penalties that may result from breaching superannuation or taxation laws
Follow the superannuation investment guidelines, so your SMSF investments don’t break any rules, including:
Don’t use the fund to lend to or provide financial assistance to members or relatives, for example, paying a relative’s school fees from the SMSF’s assets
Don’t purchase assets from fund members or related parties (except in special circumstances), for example, an SMSF member cannot sell the SMSF a residential property they own
Don’t borrow money (except in limited circumstances)
Don’t hold more than 5% of the fund’s investments in “in-house assets”. An in-house asset is a loan to or investment in a related party of the fund or an asset released to a related party. For example, investing in a company controlled by a member of the SMSF would be an in-house asset
Don’t enter into investments or selling fund assets on a non-arms length basis; for example, the SMSF should not sell an asset to one of its members at a price below its true market value.