Self Managed Superannuation Fund - The Trustee Basics
Written on the 11th of July 2012
SELF MANAGED SUPERANNUATION FUND (“SMSF”)
Running a SMSF is very different from belonging to a large fund where someone else looks after your benefits. In a SMSF you are responsible for all of the administration of the fund including all compliance, reporting tax obligations.
1. Role as Trustee
As a trustee of a SMSF you are ultimately responsible for running your fund. You may be able to delegate some of the tasks to service providers but you cannot delegate the responsibility.
It is essential that each trustee understands the duties, responsibilities and obligations of being a trustee. There are significant penalties imposed on trustees who fail to perform their duties.
As a trustee of a SMSF, you must act in accordance with:
2. You must act in accordance with the clauses of your SMSF trust deed
Trustees gain knowledge about the fund by reading the trust deed or rules of the fund. A trustee’s responsibilities as trustee are set out in the trust deed. The SIS Act also expressly states the trustee must comply with all of the trust deed provisions. A trustee cannot delegate its duties, responsibilities and/or obligations.
3 You must act in accordance with the SIS Act and the SIS regulations.
The SIS Act and SIS regulations set out matters that trustee’s must comply with such as:
The trustee has a duty to make, carry out and document decisions about investing the assets of the fund and to carefully monitor their performance. This duty involves formulating and implementing an investment strategy for the benefit of all members.
This important duty is prescribed in the SIS Act as a covenant (an obligation of the trustee) under section 52(g). It is a fundamental duty of the trustee which if your trust deed does not include this fundamental duty the SIS Act deems it to be so included.
The SIS Act sets out what trustees must take into account when formulating an investment strategy.
5 Seek professional advice on an ongoing basis
Because of the responsibility of the trustees of a SMSF for the compliance obligations, the reporting obligations, the administrative obligations and the taxation obligations trustees should seek professional help on ongoing basis even where the trustees have decided to do everything themselves to ensure they are complying with the requirements of the legislation and their trust deed. It’s possible that the professional advisors may fulfil more of a coach or mentoring role rather than getting involved in the nuts and bolts of your SMSF. But regular advice in this very regimented area is essential to ensure you maintain your compliance with your role as trustee.
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