Trustee Obligations

Trustee Obligations

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.