The ability to take control of your retirement has been the driving factor in the continuing growth of Self Managed Super Funds. They are a great way to provide for your retirement, but it is important to understand that with this greater control comes an increased responsibility as a trustee of your fund.
The ultimate responsibility of the fund always rests with the Fund Trustees, regardless of whether professionals such as accountants and financial advisers are engaged to assist you in operating the fund. Therefore, it is very important that you understand what you need to do.
There are a range of duties and responsibilities that come with being a trustee.
These responsibilities include:
- Making sure the Fund’s sole purpose is to pay retirement benefits to members or to beneficiaries in the event of death;
- Accepting contributions and paying benefits as a pension or lump in accordance with superannuation and tax laws;
- Making investment decisions and complying with any restrictions contained within superannuation law and the Fund’s Trust Deed;
- Ensuring an Approved Auditor is appointed for each income year;
- Making sure that the Fund’s administrative tasks are met, such as lodging the SMSF annual return on time and ensuring the fund’s records are kept up-to-date; and
- Reviewing and updating the fund’s trust deed and investment strategy.
All of these responsibilities form part of the ATO Trustee Declaration Form that is required to be signed by all new Trustees of a Self Managed Super Fund and retained on the Fund’s records.
Failure to comply with the duties and responsibilities of a SMSF Trustee can result in the Tax Office (“ATO”) taking actions. These ATO actions include imposing penalties, taking enforceable action against you including disqualification as a trustee and potentially even making your fund non-complying.
SMSF Reporting Obligations
There are mandatory reporting obligations for all Self Managed Super Funds that Trustee must be aware of to both the Regulator (the ATO) and its members. Many of these duties need to be completed for each financial year, by specified due dates with the ATO.
- It is a requirement for all funds to have to lodge an SMSF Annual Return. Contained within the SMSF Annual Return is information relating to the Approved Auditor and completed Audit. An SMSF Annual Return cannot be lodged until an audit report has been issued.
- Additionally all Self Managed Super Funds must prepare financial accounts each year, including the preparation of an Operating Statement and Statement of Financial Position. Upon completion of these statements, the Fund will be required to organise the completion of an Independent Audit to examine the Fund’s financial statements and assess the overall compliance of the fund with the superannuation law.
- All Self Managed Super Funds are required to prepare and maintain records relating to decisions affecting the Fund. These include decisions around buying and selling investments, starting a pension and the appointment of a Fund Auditor.
- SMSF Trustees must maintain copies of financial statements, the SMSF Annual Return and statements lodged with the ATO must be maintained by the fund trustees for a minimum of five (5) years. However, minutes of meetings, changes and appointments of trustees, declarations, and copies of all reports given to members must be kept for at least for ten (10) years.
SMSF Service Providers will help you run your Fund.
Subject to your own level of skills and amount of time you have to devote to running Self Managed Super Fund, trustees can engage a variety of service providers to assist them in their duties and responsibilities. For example, a lawyer will be required to prepare the trust deed for your SMSF, and would also be involved in many instances with the preparation of estate planning documentation including death benefit nominations.
Your Fund will be required each year to engage an Approved Auditor to conduct an Independent Audit.
Most trustees will typically engage an Accountant or specialist administrator to prepare the statutory reporting requirements for your fund including financial statements and SMSF Annual Return. For pension paying funds, an Actuary may be required to be engaged to prepare a certificate of tax exemption.
SMSF Trustees may also consider using a licensed financial adviser to assist in the strategic direction of the fund, the investment strategy and any insurance needs of the members.
Thinking about setting up a Self Managed Super Fund?
The ATO as Regulator of Self Managed Super Funds has several publications available for trustees regarding thinking about, running and setting up a self managed super fund. These are important ‘must read’ documents for all SMSF trustees to ensure that they have an appropriate level of understanding about their roles and responsibilities as a trustee.
Further information on setting up a Self Managed Super Fund and other trustee education articles, booklets, webinars and videos are available free for SMSF Academy Members - read more about SMSF Academy Trustee Membership benefits here.
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