A Self-Managed Super Fund (SMSF) offers individuals more control over their retirement savings, but it comes with significant responsibilities. 

This checklist outlines key considerations and requirements to help ensure compliance and effective fund management.

 

  1. Understanding Responsibilities
    As an SMSF trustee, you’re responsible for complying with superannuation and taxation laws. This includes meeting reporting and auditing obligations, managing investments prudently, and always acting in the best interests of fund members.
  1. Fund Establishment
    Setting up an SMSF requires:
  • Choosing the fund structure (individual or corporate trustee).
  • Creating a trust deed that meets legal standards.
  • Appointing trustees and ensuring all members are also trustees (unless a corporate trustee is used).
  • Registering the fund with the Australian Taxation Office (ATO), obtaining an Australian Business Number (ABN), and a Tax File Number (TFN).
  1. Investment Strategy
    A written investment strategy is essential. It must reflect:
  • Fund members’ needs and circumstances.
  • Risk tolerance and investment objectives.
  • Diversification and liquidity of investments.
  • Ability to pay benefits when due. Regular reviews of this strategy are necessary, especially after significant events or financial changes.
  1. Contributions
    Ensure all contributions are:
  • Within allowable caps to avoid excess tax.
  • Properly allocated to members.
  • Accepted according to age and work status rules. You should understand the types of contributions (e.g., employer, personal, spouse, and government co-contributions) and their tax implications.
  1. Acceptable Investments
    SMSFs can invest in various assets, such as:
  • Shares, managed funds, term deposits.
  • Direct property and collectables (subject to strict rules). However, all investments must be made for the sole purpose of providing retirement benefits. The fund must avoid in-house assets, which include loans to members or relatives, and cannot acquire assets from related parties unless permitted under limited exceptions.
  1. Record Keeping
    Trustees must maintain:
  • Accurate accounting records for at least five years.
  • Minutes of trustee decisions for ten years.
  • Records of changes to trustees and members.
  • Documentation related to the fund’s tax and super obligations. Effective record keeping ensures compliance and simplifies the annual audit.
  1. Compliance Obligations
    SMSFs must:
  • Lodge an annual return with the ATO.
  • Pay an annual supervisory levy.
  • Undergo an independent audit annually. Non-compliance can result in penalties, including fines and disqualification as a trustee.
  1. Pension Payments and Withdrawals
    If members are receiving retirement income streams, payments must comply with:
  • Minimum drawdown rates set by legislation.
  • Age and condition-of-release rules. Lump sum withdrawals and transition-to-retirement strategies must also meet specific criteria and be reported correctly.
  1. Taxation
    SMSFs benefit from concessional tax rates if they are compliant. Key considerations include:
  • Assessable income, including contributions and capital gains.
  • Deductions for expenses directly related to earning income.
  • Segregation of pension assets to potentially reduce tax. Proper tax planning can significantly impact a fund’s efficiency.
  1. Succession Planning
    It’s vital to plan for what happens when a member dies or becomes incapacitated. This includes:
  • Binding death benefit nominations.
  • Reversionary pensions.
  • Legal personal representatives if a trustee is unable to act. Clear documentation can prevent disputes and ensure members’ wishes are honoured.
  1. Ongoing Reviews
    Trustees must regularly review:
  • The investment strategy and fund performance.
  • Compliance with legislative changes.
  • Members’ insurance needs.
  • Estate planning documentation. Engaging with professionals can help identify issues early and keep the fund on track.

Managing an SMSF is complex and requires diligence, but with careful planning and regular oversight, it can be a powerful retirement savings tool. Always seek advice from a trusted Financial Adviser to ensure your SMSF remains compliant and aligned with your goals.

 

 

If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.

This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.

(Feedsy Exclusive)