Trustee obligations for an SMSF

As an SMSF trustee, you are ultimately responsible for running your SMSF. It is important you understand the duties, responsibilities and obligations of being a trustee. As a trustee of an SMSF, you need to act according to the following:

• your fund’s trust deed
• the provisions of the super laws, including – Superannuation Industry (Supervision) Act 1993 (SISA) – 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 general rules, such as those imposed under other tax and trust laws.

If there is a conflict between the super laws and the trust deed, the law overrides the trust deed. If you fail to perform your duties according to the laws, you may face penalties. If you are a new trustee or newly appointed director of corporate trustees, you need to sign the Trustee declaration within 21 days of your appointment to show that you understand your duties as a trustee of an SMSF.

To download a copy of the Trustee declaration (NAT 71089) click on the link:

Remember, the purpose of setting up your SMSF is to provide for your retirement. It is illegal to set up an SMSF to gain early access to your funds. If benefits are unlawfully released, significant penalties including fines and jail terms of up to five years can apply to you, your fund and the recipient of the early release.

Understand the rules

The rules you need to follow as a trustee of an SMSF, include the following:

• you need to act honestly in all matters concerning your fund
• you need to exercise skill and diligence in managing your fund
• you need to act in the best interest of all members
• keep the money and assets of your fund separate from other money and assets (for example, your personal assets)
• retain control over your fund
• develop and implement an investment strategy
• you can’t enter into contracts or behave in a way that hinders you or other trustees from performing or exercising functions or powers
• allow members access to certain information
• you can’t access or allow others to access funds early.

The SISA contains rules that impose minimum requirements on trustees and are deemed to be included in the trust deed of every regulated fund. These reflect the duties imposed on all trustees under trust law in general.

You can appoint other people to help you or provide services to your fund (for example, an accountant, super fund administrator, tax agent or financial planner). However, the ultimate responsibility and accountability for running the fund in a sensible manner lies with you.

Money belonging to your SMSF can’t be used for personal or business purposes under any circumstances. The SMSF’s assets are not a form of credit or emergency fund when faced with a sudden need and should never be used as such as the penalties applicable can be severe.

If you don’t follow the rules, you risk one or more of the following:

• your SMSF being deemed non-compliant and losing its tax concessions
• getting disqualified as a trustee
• prosecution
• penalties.

If you fail to act according to the trust deed, other members of your fund may take legal action against you.