Are you meeting your SMSF governance requirements?

A self-managed superannuation fund (SMSF) gives you control over your superannuation investments, but are you fully aware of your governance responsibilities? The members of the SMSF jointly control the fund but must follow strict rules in order to enjoy the considerable tax benefits of a complying fund.

Compliance and governance

You will need to understand and fulfill your responsibilities as trustees, for example by ensuring that the fund meets the sole purpose test and maintains up-to-date trust deeds and an investment strategy.

You must also comply with all ATO administrative and reporting requirements and arrange annual independent audits. 

Investment strategy and performance

You must develop and regularly review a comprehensive investment strategy for the fund and ensure your investments align with the fund's objectives and risk profile. You will also need to diversify your investments appropriately and monitor and evaluate investment performance. You must comply with the in-house asset limits (generally 5% of total fund assets). In-house assets are investments, loans or leases to fund members or related parties.

Contributions and Benefits

It is important to understand and adhere to contribution caps (both concessional and non-concessional) and manage the timing and amount of contributions. You also need to ensure that all contributions are properly recorded and reported; that you understand the preservation rules and conditions of release, and that you manage benefit payments in compliance with the regulations.

Record Keeping and Reporting

It is important to maintain accurate and detailed records of all transactions and keep minutes of all investment decisions and trustee meetings. You will need to prepare and lodge annual tax returns and member contributions statements and value the funds assets regularly. All relevant documents must be kept for the required period (usually 5-10 years).

A key part of your responsibilities is to maintain clear separation between personal, business and SMSF assets. All transactions between the business and SMSF must be made at arm's length. Seek professional advice when considering using the SMSF to purchase business property. There are strict rules.

Talk to us about your SMSF concerns

If you are thinking of setting up an SMSF, or are already managing one, it is best to get regular professional advice. The tax benefits of a complying SMSF can be huge but the penalties for non-compliance can be equally huge. The rules are extensive and complex. Please seek advice.