Thanks to superannuation choice, as an Australian resident, the government allows you to choose to direct your super guarantee contributions (SGC – employer contributions) and your personal super contributions to an independently managed super fund or your very own Self-Managed Super Fund (SMSF).

SMSFs have the same role as any other super fund; the difference is, generally, members of SMSFs are also the trustees. They control the investment of their contributions, the payment of their benefits and all other reporting obligations.

For your fund to be an SMSF it needs to meet several requirements under the super laws (SIS Act). The requirements may vary depending on whether your fund has one of the following types of structures:

• a company (corporate) trustee
• an individual trustee/s
• a single member.

Individual Trustees (single member)

If your superannuation fund has individual trustees, it is considered an SMSF if all of the following apply:

• it has four or less members
• each member is a trustee
• no member is an employee of another member, unless they are related
• no trustee is paid for his/her duties or services as a trustee.

Company Trustees

If your superannuation fund has a company or corporate trustee, it is considered an SMSF if all of the following apply:

• it has four or less members
• each member is a director of the trustee company(usually by way of shares)
• no member is an employee of another member, unless they are related
• no trustee is paid for their duties or services as a trustee.
• Your super fund’s trust deed
• The Superannuation Industry (Supervision) Act 1993 (SISA)
• The Superannuation Industry (Supervision) Regulations 1994 (SISR)
• The Income Tax Assessment Act 1997 (ITAA 1997)
• The Tax Administration Act 1953 (TAA 1953)
• The Corporations Act 2001
• Other rules that may include provisions under other tax and trust laws in Australia.
•    83 funds were made non compliant
•    505 enforceable undertakings
•    295 trustees disqualified.

As an SMSF trustee, you are ultimately responsible for running your SMSF in a way that benefits the members and abides by the ATO laws. It is paramount that you understand the duties, responsibilities and obligations of being a trustee.

As a trustee of an SMSF, you need to act in accordance with:

When setting up your SMSF trust deed as a new trustee or newly appointed director of a corporate trustee, you must sign the Trustee declaration form within 21 days of your appointment to prove that you have read and understand your duties as a trustee of your SMSF.

The laws are very stringent and should there be a non-complying issue between the super/tax law and the trust deed, it’s the law that wins at the end of the day. Your trust deed needs a legal review to ensure it is compliant. There are many professionals in the market place who can provide you with complying trust deeds to help you avoid this problem. However, should you fail to perform your trustee duties within the realms of the law, you may face severe fines and tax penalties. If you have not done things correctly the ATO can unwind your super fund which could cause significant financial loss to your family super assets.

According to the ATO during the 2011- 2012 financial year, they completed 12,513 SMSF cases with the following outcomes:

Based on these numbers using a professional tax adviser in this case makes a lot of sense.

Given the many areas of responsibility the best way to manage your SMSF may be to have good team advisers behind you to ensure you make the right decisions for a successful SMSF strategy and a safe retirement.

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