What are the rules I need to follow to be a responsible SMSF trustee?

Some of the rules you must adhere to as a trustee of a Self-Managed super fund (SMSF), include, but are not limited to, the following:

• you need to always act in the best interest of the members
• be responsible for preparation of the investment strategy and implementing it accordingly
• you need to make sure  thatyou follow the sole purpose test to provide retirement benefits to your SMSF members
• ensure you always keep your personal money and assets separate from those of the super fund assets
• update the trust deed should the trustee/s charge
• make investment decisions that fall within the super laws (SIS Act)
• pay member benefits and accept member contributions (such as SGC and Salary Sacrifice) as per super and taxation law
• be responsible for all administration tasks (including outsourcing) including compliance, tax reporting, member statements and annual returns
• ensure that member benefits are not accessed before illegally such as before retirement age or valid reason within the super law.
• ensure that there is an independent audit of the fund each year by an approved auditor

The Australian super system is regulated by three important government powers:

• The (ATO) Australian Taxation Office which will help you in meeting your tax obligations each year and take care of the administration of the relevant superannuation laws in relation to SMSFs
• Secondly, (ASIC) or the Australian Securities & Investments Commission oversees the whole financial services sector and is there to protect you as a consumer against fraud and scams
• Lastly, the (APRA) Australian Prudential Regulation Authority- is the regulator of large super funds that do not fall under the definition of a SMSF

Again it’s the SIS Act which determines the compulsory requirements that need to be included in your trust deed of your SMSF. This outlines the duties of the trustees in accordance the super laws. (See a sample of a SMSF trust deed here).

Assets and money held in your SMSF are not allowed to be used for business or personal reasons! . There may be circumstances where you are given access earlier, but these are very limited and tightly regulated, see below for more on this. It is very important to remember that your assets inside your SMSF do not form a part of your personal cash or credit should you suddenly need money for an emergency. The ATO has clearly explained that there are severe penalties if you access your super money without passing a certain condition of release and this can have a negative impact on your Self-Managed super fund. It’s important to note that there are some circumstances where you can use your SMSF’s capital to purchase your business premises or commercial property, you can read more about this here.

As with any other super fund, you can only access member benefits when you reach your preservation age. Your preservation age will depend on your date of birth.  The table below provides an overview:

According to the ATO it is illegal to set up your SMSF in order to gain early access to your superannuation benefits. A smart investor knows that Superannuation should be a long term strategy, breaking the rules is not worth it, there are significant fines and penalties including jail terms of up to five years in some cases. More importantly, you could impact the member benefits and it’s the members that need this money most for their retirement, not the government.

Early access to your super may apply in other very limited situations – such as:

• you are experiencing severe financial hardship, including receiving commonwealth benefits
• due to compassionate grounds, subject to very strict criteria
• due to the diagnosis of a serious medical or terminal condition
• due to either permanent or temporary disablement, or incapacity.