en nothing short of phenomenal. The most recent figures released by the Australian Taxation Office (ATO) show that 35,276 self-managed supe
rannuation funds were created in 2011/12 – the highest recorded figure since these reports began in 2008.
Whilst the ability to take control of your retirement funds has been the driving factor in the growth of SMSFs – this control also leads to significantly greater responsibilities as a Trustee of your own superannuation fund.
Regardless of whether you have outsourced aspects of the administration to your accountant, financial advisor or solicitor, the ultimate responsibility of your self-managed super fund rests with the Trustees. Not fulfilling your role as a Trustee could lead to serious consequences if you breach the rules governing superannuation funds. Therefore, it is important that you fully understand your role and responsibility as a Trustee.
Being a trustee of an SMSF brings with it a range of legislative and regulatory obligations. An SMSF trustee must comply with the requirements of:
Effective from 1 July 2007, all new SMSF trustees and directors of corporate trustees must sign a declaration that aims to ensure that they understand the obligations and responsibilities they are accepting.
The declaration contains key information regarding:
Sole Purpose Test
The Sole Purpose Test refers to the Trustees’ responsibility to ensure the superannuation fund is ONLY maintained for the purpose of providing benefits to the members upon their retirement (or their beneficiaries if a member dies).
General Trustee Duties
As a Trustee you are legally obliged to follow a code of conduct when managing an SMSF. The code of conduct can be summarised as follows:
Trustees are also required to ensure the beneficiaries of the superannuation fund comply with all the rules and regulations relating to SMSFs.
Trustees have the additional responsibility of protecting the assets of an SMSF. This can be achieved by:
Furthermore, Trustees need to demonstrate that they are in a position to properly execute the role of Trustee and manage the assets in the SMSF by:
– The financial situation of the fund
– The investments of the fund
– The members’ benefit entitlements.
Finally, Trustees are required to ensure they manage the investment strategy within the SMSF. This can be achieved by:
Trustees are also limited to the investments they are permitted to make with superannuation monies. These include:
Accepting contributions and paying benefits
Trustees are responsible for controlling the contributions received and the benefits paid to members or their beneficiaries. It is the Trustee’s responsibility to ensure when the conditions specified in the law and the fund trust deed have been met.
Finally, Trustees (under super and tax laws) are required to keep accurate records. These records include:
Trustees are also responsible for ensuring the following functions are performed each year:
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