General duties as an SMSF trustee
Your duties and responsibilities of being an SMSF trustee are serious and shouldn’t be taken lightly. The penalties can be quite onerous if breaches occur. To know your general duties as an SMSF trustee is essential.
Even though establishing your own SMSF gives you plenty of control over the fund’s investment decisions and activities, you must accept that the power to make decisions and have total control also carries substantial obligations to manage your SMSF in accordance with the law, both from an ATO perspective along with ASIC as well. There have also ben some recent changes to SMSF.
The following table (adapted from a report published by ASIC) sets out the duties and obligations of all SMSF trustees:
|
Duty |
Description of duty/obligation |
|
Honesty |
To act honestly in all SMSF matters. |
|
Skill |
Exercise skill, care and diligence in managing your SMSF. |
|
Best interests |
Act in the best interests of all SMSF members. |
|
Separation of assets |
Take action to protect SMSF assets and manage them separately from your own personal affairs. |
|
Do not hinder |
Refrain from entering into contracts or behaving in a way that hinders trustees from performing or exercising functions or powers. |
|
Do not illegally access benefits |
Refrain from entering into transactions that circumvent restrictions on payment of benefits, and ensure that SMSF money is only accessed by members when the trust deed or law allows it. |
|
Trust deed |
Comply with your SMSF trust deed and update it as needed. |
|
Responsibility |
Be responsible for, and control the SMSF, even if the trustees outsource the required expertise or one trustee is more actively involved in running the SMSF on a day-to-day basis. |
|
Investment strategy |
Document an investment strategy that considers all circumstances of the fund, and regularly review and update the strategy as the member’s financial situation, needs and objectives require. |
|
Insurance |
Consider insurance for members as part of the SMSF’s investment strategy. |
|
Investment restrictions |
Understand which investments are restricted and that SMSF investments must be made solely to pay retirement benefits to members of the member’s dependents if a member dies. |
|
Contributions |
Accept and document contributions in accordance with the superannuation laws. |
|
Appropriate investments |
Ensure that your SMSF’s money is invested appropriately (even if the trustee outsources the investment to an advice provider). |
|
Accurate records |
Maintain proper and accurate tax and superannuation records (e.g., minutes of all investment decisions) and allow members access to these records. |
|
Legal requirements |
Comply with the superannuation and tax laws (and the Corporations Act for corporate trustees). |
|
Market value |
Value your SMSF assets at market value when preparing financial statements and accounts. |
|
SMSF audit |
Have your SMSF audited annually by an independently approved auditor (which we arrange). |
|
ATO reporting |
Comply with all reporting obligations to the ATO (e.g., lodge tax returns, report any changes to trustees, directors or SMSF members, comply with reporting obligations if paying superannuation benefits, lodge a business activity statement if the SMSF is GST-registered). |
|
Tax and supervisory levy |
Pay the supervisory levy and SMSF income tax liability when due . |
To discuss this in further detail with regard to your specific SMSF, we recommend you reaching out to one of in-house experts, Andrea Sosa or Cassie Li. They can be reached on (03) 9888 3175.