6 Ongoing Responsibilities of SMSF Trustees and the 8 Compliance Penalties They Help Avoid

Self-managed superannuation funds (SMSF’s) are anything but self-managed. This concept is quite misleading as a number of service professionals are needed to establish a SMSF and both an Accountant and Licensed SMSF Auditor are required to satisfy ongoing responsibilities.

For more information on costs and the service professionals required to establish a SMSF, download our free report The beginners guide to successful property investing using superannuation funds

Satisfying SMSF obligations as a trustee is a straight forward process, made simpler with the assistance of experienced professionals.

Ongoing responsibilities for SMSF trustees

Being able to use your superannuation funds for borrowing, direct property and control of your retirement savings, comes with responsibilities.  To comply with SMSF regulations, Trustees are required to have tax returns and financial statements of the fund audited annually.

Annual SMSF Trustee Requirements Include:

  1. Annual SMSF income tax return
  2. Annual balance sheets
  3. Profit & loss statements
  4. Member statements
  5. Trustee resolutions & minutes
  6. Annual SMSF audit

SMSF administration and compliance doesn’t need to be an arduous process, though you do need to follow the rules. Ensuring ongoing compliance with the legislation will mean member needs continue to be best served.

Regularly review your Investment Strategy

Investment Strategies are a legislative requirement for SMSF establishment, however Trustees are notrequired to perform ongoing reviews, though it is recommended for the following reasons…

  • Ensuring the needs of the members continue to be served
  • The strategy is modified in response to any change in requirements, such as paying a pension.

Talk to a financial planner if you need help documenting or reviewing an investment strategy.

SMSF Compliance Penalties

If the SMSF auditor discovers that the fund has breached a section of the Superannuation Industry Supervision Act (SISA) the contravention can be reported to the Australian Taxation Office (ATO) in the form of an ‘Auditor Contravention Report’.

Penalties for non-compliance:

  1. Education direction
  2. Enforceable undertaking
  3. Rectification direction
  4. Administrative penalties
  5. Disqualification of trustee
  6. Notice of non-compliance
  7. Civil and criminal penalties
  8. Freezing Fund assets

Note: Where financial penalties are incurred, these must be paid from personal assets not SMSF assets and if borrowing is involved, you may be forced to sell the associated asset.

The best way to avoid penalties is to ensure the Fund is compliant – if a breach is identified, take action early and rectify the breach, doing so can help you avoid more serious outcomes.

If you are new to SMSF, the legislation and compliance requirements can be daunting, simplifying and systemising your requirements as a Trustee is achievable with the right support.

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