Self Managed Super Fund (SMSF) Trustee Rules & Responsibilities

This guide is part of our Comprehensive Guide To SMSFs. We’d recommend checking out the full guide in order to get a better understanding of SMSFs.

What are the rules I need to follow to be a responsible SMSF trustee?

Some of the rules you must adhere to as a trustee of a self managed super fund (SMSF), include but are not limited to the following :

  • you need to always act in the best interest of the members
  • be responsible for preparation of the investment strategy and implementing it accordingly
  • you need to make sure the you follow the sole purpose test to provide retirement benefits to your SMSF members
  • ensure you always keep your personal money and assets seperate from those of the super fund assets
  • update the trust deed should the trustee/s change
  • make investment decisions that fall within the super laws (SIS Act)
  • pay member benefits and accept member contributions (such as SGC and Salary Sacrifice) as per super and taxation law
  • be responsible for all administration tasks (including outsourcing) including compliance, tax reporting, member statements and annual returns
  • ensure that member benefits are not accessed before illegally such as before retirement age or valid reason within the super law. (See conditions of release here.)
  • ensure that there is an independant audit of the fund each year by an approved auditor

Regulation of SMSF's, who overlooks it all?

The Australian super system is regulated by three important government powers:

  • The (ATO) Australian Taxation Office help you in meeting your tax obligations each year and take care of the administration of the relevant superannuation laws in relation to SMSFs
  • Secondly (ASIC) or the Australian Securities & Investments Commission oversee the whole financial servcies sector and are there to protect you as a consumer against fraud and scams
  • Lastly the (APRA) Australian Prudential Regulation Authority- is the regulator of large super funds that do not fall under the definition of a SMSF

Again its the SIS Act that determines the compulsory requirements that need to be included in your trust deed of your SMSF. This outlines the duties of the trustees in accordance the super laws. (See a sample of a SMSF trust deed here).

Getting professional advice for setup up an SMSF and your ongoing obligations

Just like completing your tax return you are ultimately reponsible for running your DIY super fund correctly.  To make running an SMSF easier you can hire people to help you service the responsibilities of your fund, so it doesn't all have to be "Self Managed" by you. For instance many SMSF owners often have a financial adviser (licenced to give advice on superannuation), an accountant (licenced to setup the structure and provide administration/reporting services but not give super & investment advice) or tax agent. The super rules are constantly changing and can be complex so get a good team of professionals to support your decisons when it comes to running your own SMSF.

You can get further assistance or have your question answered by a smsf professional by using our free enquiry form here.

What you can’t do with your money in your SMSF

Assets and money held in your SMSF are not allowed to be used for business or personal reasons full stop. There may be circumstances where you can get access earlier but these are very limited and tightly regulated, see below for more on this. Its very important to remember the your assets inside your SMSF do not form a part of your personal cash or credit should you suddenly need money for an emergency. The ATO has clearly explained that there are severe penalties if you access your super money without passing a certain condition of release and this can have a negative impact on your self managed super fund. Its important to note that there are some circumstances where you can use your SMSF's capital to purchase your business premises or commercial properties, you can read more about this here.

When can you access your superannuation benefits?

Like any other super fund you can only access member benefits when you reach your preservation age. Your preservation age will depend on your date of birth, the table below provides an overview:

Date of birth

Preservation age

Before 1 July 1960

55

1 July 1960 - 30 June 1961

56

1 July 1961 - 30 June 1962

57

1 July 1962 - 30 June 1963

58

1 July 1963 - 30 June 1964

59

After 30 June 1964

60

According to the ATO it is illegal to set up your SMSF in order to gain early access to your superannuation benefits. A smart investor knows that Superannuation should be a long term strategy, breaking the rules is not worth it, there are significant fines and penalties including jail terms of up to five years in some cases. More importantly you could impact the member benefits and its the members that need this money most for retirement, not the government.

Early access to your super may apply in other very limited situations - such as:

  • you are experiencing severe financial hardship, including receiving commonwealth benefits
  • due to compassionate grounds subject to very strict criteria
  • due to the diagnosis of a serious medical or terminal condition
  • due to either permanent or temporary disablement or incapacity.

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  •     you are experiencing severe financial hardship, including receiving commonwealth benefits
  •     due to compassionate grounds subject to very strict criteria
  •     due to the diagnosis of a serious medical or terminal condition
  •     due to either permanent or temporary disablement or incapacity.

According to the ATO it is illegal to set up your SMSF in order to gain early access to your superannuation benefits. A smart investor knows that Superannuation should be a long term strategy, breaking the rules is not worth it, there are significant fines and penalties including jail terms of up to five years in some cases. More importantly you could impact the member benefits and its the members that need this money most for retirement, not the government.