SMSF Trustee obligations

SMSF trustee

An SMSF is not for every client, even if they do have a significant amount to invest.

Factors such as their financial literacy, understanding of the legal, taxation and other requirements, available time and general interest are all things to be considered. SMSF trustees need to understand the obligations associated with undertaking the role.

Do you?

Obligations with which SMSF trustees must comply under superannuation and taxation laws include:

Sole purpose test

  • maintaining the fund for the sole purpose of providing retirement benefits to SMSF members, or to their dependants if a member dies before retirement

Don’t set up an SMSF to try to get early access to your super, or to buy a holiday home or artworks to decorate your house. These things are illegal.

  • Keeping the assets separate

The trustee must keep the SMSF money and assets separate at all times. A common issues arise where a SMSF trustee inter-mingles the money and assets of the SMSF with either their personal assets, or those of a related entity such as their business.  These rules are designed to protect the members’ retirement benefits and failure to do so could see the SMSF lose its tax concessions.


The simplest way to ensure you comply with this separation requirement is to have a corporate trustee for your SMSF and have all the SMSF’s bank accounts and investment ownership registrations under the name corporate trustee with reference to the SMSF’s full name (ABC Pty Ltd as trustee for XYZ SMSF).

To discuss other benefits of having a corporate trustee call our office.

  • accepting contributions and paying benefits to members and their beneficiaries in accordance with superannuation and taxation laws and the SMSF trust deed

Know the rules and always check with your boring accountant before you act.

Before you can accept a contribution from a member, you must determine their eligibility to make a contribution. Eligibility generally depends on the member’s age, their employment status and the type of contribution to be made.

Generally, your SMSF can only pay a member’s super benefits when the member reaches their ‘preservation age’ and meets one of the conditions of release, such as retirement. The payment may be an income stream (pension) or a lump sum, depending on the circumstances.

Market value

  • valuing the fund’s assets at market value for the preparation of financial accounts and statements
  • having the financial accounts and statements for the SMSF audited each year by an approved SMSF auditor

There is no need for you to go looking for an SMSF auditor. As a part of our year end package, we have the financial statements audited by an independent auditor.

  • Have an investment strategy

Trustees must develop, implement and regularly review an investment strategy. A written strategy document will make it much easier to demonstrate to your auditor and the ATO that you have considered the relevant investment issues.

When making investment decisions, you must act in accordance with your SMSF’s trust deed, the investment strategy and the provisions of SISA.

  • Comply with other provisions of SISA and ATO guidelines

Consider restrictions on:

  • Borrowing
  • Related party investments and transactions

What happens if you fail in your trustee duties?

As a SMSF trustee, if you fail to act in accordance with the super and tax laws then you risk:

  • Your SMSF becoming non-complying and losing its tax concessions
  • Disqualification, removal or suspension as a trustee of the SMSF
  • Civil or criminal prosecution
  • Financial penalties.

As always, do not hesitate to contact us with any questions or concerns.