SMSF trustee responsibilities explained

A self-managed super fund, or SMSF, is a super fund that you run yourself. Because you run it, you are a trustee, and being a trustee comes with real legal responsibilities. This article explains what those responsibilities are, without the jargon.

You are in charge, and you are responsible

In a big super fund, a professional company makes all the decisions. In an SMSF, you do. That freedom is the main reason people set one up, but it comes with a catch: you are personally responsible for running the fund within the law, even if you pay an accountant or adviser to help. You cannot hand the responsibility to someone else. If something goes wrong, the regulator holds you, the trustee, accountable.

Run the fund only for retirement

The single most important rule is that the fund exists to provide retirement benefits to its members, and nothing else. You cannot use the fund’s money or assets to benefit yourself today. That means no living in a property the fund owns, no using fund assets personally, and no dipping into the fund before you are legally allowed to. This is called the sole purpose test, and breaking it is one of the most serious things a trustee can do.

Keep the fund’s money separate from your own

The fund’s money and assets must be kept completely separate from your personal money. Every asset the fund owns must be held in the fund’s name, and the fund’s bank account is not your bank account. Mixing the two is a common and avoidable mistake.

Have an investment strategy and follow it

You must put together a written plan for how the fund invests, called an investment strategy. It needs to consider things like risk, diversification, how easily investments can be turned into cash, and whether the members need insurance. You then have to actually invest in line with that plan, and review it regularly.

Value the fund’s assets every year

At the end of each financial year, you must work out what the fund’s assets are worth at market value, based on real evidence, not a guess. For some assets, like shares, this is easy. For others, like property, you may need proper evidence such as recent sales or a valuation.

Keep good records

You must keep proper records of the fund’s transactions, decisions and accounts. Some records need to be kept for five years and some for ten. Good records are not just a legal requirement; they make the annual audit faster and cheaper.

Get the fund audited every year

Every year, before you lodge the fund’s annual return, an independent approved auditor must audit the fund. You must appoint that auditor in good time and give them everything they need. This is not optional, and the fund cannot lodge its return until the audit is done.

Lodge returns and pay the levy on time

The fund has to lodge an annual return and pay an annual levy each year. Lodging late can cause problems, including with the fund’s status, so the deadlines matter.

Get help, but stay across it

Most trustees use an accountant or administrator, and that is sensible. But using help does not remove your responsibility. You should understand what is happening in your fund and why, sign things knowing what they are, and ask questions when something is unclear.

The bottom line

Being an SMSF trustee gives you control over your retirement savings, but the law expects you to run the fund properly: only for retirement, with the fund’s money kept separate from yours, with a real investment strategy, accurate annual valuations, good records, and an independent audit every year. Take those duties seriously and an SMSF can work well for you.

---

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.