Choosing to manage a Self-Managed Superannuation Fund (SMSF) gives you greater control over your investments and the flexibility to respond to market changes. However, it also comes with significant governance and compliance responsibilities. As a trustee, it’s essential to focus on the following five key areas:
- Compliance and Governance
As an SMSF trustee, you must ensure the fund adheres to all legal and regulatory requirements. This includes maintaining current trust deeds, meeting the sole purpose test, and implementing an investment strategy that aligns with the fund’s goals. Compliance also involves fulfilling all Australian Taxation Office (ATO) reporting obligations and arranging annual independent audits.
- Investment Strategy and Performance
A well-defined investment strategy is crucial for the success of your SMSF. Regular reviews of this strategy are necessary to ensure it aligns with the fund’s objectives and risk tolerance. Trustees must also ensure investments are appropriately diversified, continuously monitor performance, and remain within the in-house asset limits, generally capped at 5% of total fund assets.
- Contributions and Benefits
Understanding and complying with contribution caps, both concessional and non-concessional, is vital. Trustees must manage contributions strategically, ensure accurate recording and reporting, and be aware of the preservation rules and conditions of release. It’s also essential to administer benefit payments in accordance with the regulations.
- Record Keeping and Reporting
Accurate record-keeping is essential for managing an SMSF. This includes maintaining detailed records of all transactions, documenting investment decisions and trustee meetings, and valuing the fund’s assets regularly. Trustees are responsible for preparing and lodging annual tax returns and member contribution statements, ensuring all relevant documents are retained for the required period, typically 5 to 10 years.
- Separation of Business and SMSF Assets
It is critical to maintain a clear separation between personal, business, and SMSF assets. All transactions involving the SMSF and any related business must be conducted at arm’s length. Special care should be taken when considering the purchase of business property through the SMSF to ensure compliance with regulations.
Seek Professional Advice
Whether you are considering establishing an SMSF or are already managing one, it’s important to seek ongoing professional advice. We can assist with record-keeping, accounting, and tax considerations and connect you with superannuation experts and financial advisers for further guidance on your investment strategy and SMSF management.
Contact us to ensure you are meeting your responsibilities as an SMSF trustee and to discuss how we can support your fund’s success.
