Record-keeping basics for a compliant SMSF

Record-keeping is not the exciting part of running an SMSF, but it is one of the most important. Good records keep you on the right side of the rules, make your annual audit faster and cheaper, and protect you if a question ever comes up. This article explains what to keep and for how long.

Why records matter

The auditor and the regulator can only see what you can show them. If the fund did everything right but cannot prove it, you can still end up with a problem. Records are the proof. They show that an asset belongs to the fund, that a decision was made properly, that a payment was allowed, and that the fund’s value is what you say it is.

What to keep

You do not need to be an accountant to keep good records. The main things to hold onto are these.

The fund’s accounts and financial statements for each year, and the records behind them.

Bank statements for every account in the fund’s name, and statements for any investments.

Evidence of what the fund owns and what it is worth, such as holding statements for shares, title documents for property, and valuation evidence for harder-to-value assets.

The trust deed, which is the rulebook for your fund, and any updates to it.

Your written investment strategy and evidence that you have reviewed it.

Records of decisions the trustees make, often kept as short minutes. If you decide to buy a property, change the investment strategy, or start a pension, write down that you decided it and when.

Records of money coming in, such as contributions, and money going out, such as benefit payments and pensions.

Any agreements with people connected to you, such as a lease if the fund rents a property to a relative’s business, with evidence the terms are normal commercial ones.

The signed trustee declaration that each trustee completes when they join.

The audit report each year.

How long to keep them

There are two main timeframes. Some records, such as the fund’s accounts and the annual return records, must be kept for at least five years. Other records, particularly those about decisions and the fund’s ongoing position, such as trustee minutes and records about members, must be kept for at least ten years. When in doubt, keeping a record longer is never a problem; throwing it away too early can be.

Keep fund records separate

Just as the fund’s money must be separate from yours, the fund’s records should be kept separately and clearly, not mixed in with your personal paperwork. This makes the audit easier and avoids confusion about what belongs to the fund.

Good records make the audit cheaper

There is a direct payoff. When your records are complete and organised, the auditor can do the work quickly, asks fewer questions, and is less likely to qualify the report. When records are missing or messy, the audit takes longer, costs more, and is more likely to turn up a problem, sometimes only because the evidence cannot be found rather than because anything was actually wrong.

The bottom line

Keep the fund’s accounts, bank and investment statements, ownership and valuation evidence, the trust deed, the investment strategy, decision records, and contribution and payment records. Hold them for five or ten years depending on the type, keep them separate from your personal paperwork, and your fund will be easier to audit and easier to defend if a question ever arises.

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This article is general information for trustees and members. It is not financial, legal or tax advice about your particular situation. Consider getting advice from a licensed professional before making decisions about your fund.