The sole purpose of a Self Managed Superannuation Fund (SMSF) is to provide a means to save for retirement and thus provide financial remuneration to its members upon retirement. The difference between SMSFs and other superannuation funds is that the SMSF members are also the trustees of the fund, taking on more responsibility. The trustees are decision makers of the Self Managed Superannuation Fund.
When establishing an SMSF the trustees are required to read and sign a trustee declaration provided by the Australian Taxation Office (ATO). It covers a range of duties and expectations of a trustee.
Here is a summary of some key trustee responsibilities:
- Ensure the fund is maintained solely for the purpose of providing benefits to members upon retirement or their beneficiaries upon death;
- Stay informed of relevant legislation to SMSFs and keep the trust deed up to date;
- Implement and regularly review the fund’s investment strategy;
- Make decisions in line with obligations and best interest of members and not for personal gain;
- Accept contributions and pay benefits as specified by law and the fund’s trust deed;
- Choose investments that are permissible for SMSFs and purchase them at market value;
- Borrow money according to the strict guidelines of limited recourse borrowing arrangements;
- Engage a qualified SMSF Accountant and Tax Agent;
- Appoint an independent and registered SMSF Auditor;
- Keep financial statements, annual return and audit report for at least five years;
- Retain all other documents for at least 10 years, for example minutes, changes to the fund;
- Notify the ATO of any changes to the fund, for example changes to members, trustees, name of fund, address etc.
Managing your own SMSF comes with responsibilities, duties and important decision making while the fund is in operation. All trustees are equally responsible for managing the fund including the decision making process. There are various actions the ATO can take when trustees do not comply with the legislation, depending on the severity, this can range from educational courses to prosecution.
Regardless of the SMSF professionals engaged to help you manage your fund, as an SMSF trustee you are ultimately responsible for your fund and your knowledge about how your fund operates.
Should you require further information about SMSF trustee responsibilities, contact Concise Super on 03 9838 3055.
This information is for general information only and does not constitute financial advice or take into account your personal needs, objectives and financial situation. Before making any decisions, we recommend you seek professional advice.
August 2018 ~ Kerrie Salvatore, Concise Super
© Concise Super 2018