Trustee Obligations

SMSF trustees are ultimately responsible for the operation of their SMSF. There are a number of duties, responsibilities and obligations associated with being a 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:

• Save only for their retirement - the sole purpose test means that an SMSF must be maintained for the sole purpose of providing benefits to members upon their retirement, or to their dependants if a member dies before retirement

• Have an investment strategy and invest responsibly - this requirement is to ensure that the best possible investment decisions are being made for the fund

• Keep proper records - this will ensure that trustees can verify their decision-making processes and an accurate history of the fund can be established

• Keep superannuation assets separate - money and assets of the SMSF must be kept separate from a trustee's personal assets and the assets held by employers who may contribute to the fund

• Do not lend superannuation money to members or relatives - no direct or indirect financial assistance may be made from the fund to a member or a member's relative

• Do not borrow money - SMSFs are prohibited from borrowing money except in some limited circumstances.

• Be aware of the rules when buying assets from a related party - trustees are prohibited from acquiring assets for their SMSF from a related party of the fund

• Do not allow in-house assets to exceed 5% of total assets

• Buy and sell assets at true market value - the purchase and sale price of SMSF assets should always reflect the true market value of the asset

• Make sure contributions are allowable - there are standards in the SIS Regulations designed to ensure that contributions are made for retirement purposes only, and not to avoid paying tax

• Do not allow disqualified people to be trustees - a disqualified person may not act as a trustee of a superannuation entity

• Do not take money out early - trustees must not take money out of their SMSF earlier than legally permitted as it is meant for retirement. Early access is permitted only in cases of severe financial hardship or on tightly restricted compassionate grounds

• Meet lodgment and payment obligations - All SMSFs must lodge a combined  Fund income tax and regulatory with the Tax Office each year

• Report information about benefits paid to members - the reasonable benefit limit system limits the amount of benefits a person may receive at the concessional tax rate during their lifetime

• Complete and lodge an activity statement for GST - if the annual turnover of a SMSF exceeds $75,000, the fund is required to register for GST and lodge a BAS statement at the end of each reporting period