Are you meeting your general duties as an SMSF trustee?

(Article courtesy of the Self Managed Super Fund Association)


Your duties and responsibilities of being an SMSF trustee are serious and quite extensive. Whilst establishing an SMSF gives you control of the fund’s investment activities, you must accept that this control also carries substantial obligations to manage your fund in accordance with the law.

The following table (adapted from a report published by ASIC) sets out the duties and obligations of 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
ATO reporting Comply with 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 topic in more detail with regard to your specific circumstances, we recommend you seek specialist SMSF advice. For more comprehensive education, information and resources for your SMSF, visit the Trustee Knowledge Centre

Disclaimer: The information contained in this document is provided for educational purposes only, is general in nature and is prepared without taking into account particular objective, financial circumstances, legal and tax issues and needs. The information provided in this article is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to your individual circumstances. While SMSF Association believes that the information provided in this article is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the Corporations Act 2001.