Self Managed Super Fund

Running a Self Managed Super Fund

Running a Self Managed Super Fund

Self Managed Super Funds have the same role as any other super funds; the difference is, generally, that the members of Self Managed Super Funds are also the trustees. They control the investment of their contributions and the payment of their benefits.

For your fund to be a Self Managed Super Fund it needs to meet several requirements under the super laws.

The requirements are different depending on whether your fund has one of the following:

• A corporate trustee
• Individual trustees
• A single member

If your fund had individual trustees, it's an Self Managed Super Fund is all of the following apply:

• It has four or less members
• Each member is a trustee
• No member is an employee of another member, unless they're related
• No trustee is paid for their duties or services as a trustee

If your fund has a corporate trustee, it's an Self Managed Super Fund if all of the following apply:

• It has four or less members
• Each member of the fund is a director of the company
• Each director of the corporate trustee is a member of the fund
• No member is an employee of another member, unless they're related
• The corporate trustee is not paid for its services as a trustee
• No director of the corporate trustee is paid for their duties or services as director in relation to the fund

Single member funds

It's possible for you to set up your fund with only one member.

If you have a corporate trustee for a single member fund, the member needs to be one of the following:

• The sole director of the trustee company
• One of only two directors, that is either of the following
  • Related to the other director
  • Not an employee of the other director

You can also have two individuals as trustees. One trustee needs to be the member and the other needs to be one of the following:

• A person related to the other member
• Any other person who does not employ them

A trustee or director can't be paid for their services as a trustee or director in relation to the fund.

Your obligations

As a Self Managed Super Fund trustee, you are ultimately responsible for running your Self Managed Super Fund. It is important you understand the duties, responsibilities and obligations of being a trustee.

As a trustee of a Self Managed Super Fund, you need to act according to the following:

• Your fund's trust deed
• The provisions of the super laws, including
  • Superannuation Industry (Supervision) Act 1993 (SISA)
  • Superannuation Industry (Supervision) Regulations 1994 (SISR)
• The Income Tax Assessment Act 1997 (ITAA 1997)
• The Tax Administration Act 1953 (TAA 1953)
• The Corporations Act 2001
  
• Other general rules, such as those imposed under other tax and trust laws

If there is a conflict between the super laws and the trust deed, the law overrides the trust deed. If you fail to perform your duties according to the laws, you may face penalties.

If you are a new trustee or newly appointed director of corporate trustees, you need to sign the Trustee declaration within 21 days of your appointment to show that you understand your duties as a trustee of an Self Managed Super Fund.

Remember, the purpose of setting up your Self Managed Super Fund is to provide for your retirement. It is illegal to set up a Self Managed Super Fund to gain early access to your funds. If benefits are unlawfully released, significant penalties including fines and jail terms of up to five years can apply to you, your fund and the recipient of the early release.

Understand the rules

The rules you need to follow as a trustee of a Self Managed Super Fund, include the following:

• You need to act honestly in all matters concerning your fund
• You need to exercise skill and diligence in managing your fund
• You need to act in the nest interest of all members
• Keep the money and assets of your fund separate from other money and assets (for example, your personal assets)
• Retain control over your fund
• Develop and implement an investment strategy
• You can't enter into contracts or behave in a way that hinders you or other trustees from performing or exercising functions or powers
• Allow members access to certain information
• You can't access or allow others to access funds early.

The SIS Act contains rules that impose minimum requirements on trustees and are deemed to be included in the trust deed of every regulated fund. These reflect the duties imposed on all trustees under trust law in general.

You can appoint other people to help you pr provide services to you fund (for example, an accountant, super fund administrator, tax agent or financial planner). However, the ultimate responsibility and accountability for running the fund in a sensible manner lies with you.

Money belonging to your Self Managed Super Fund can't be used for personal or business purposes under any circumstances. The Self Managed Super Fund's assets are not a form of credit or emergency fund when faced with a sudden need and should never be used as such as the penalties applicable can be severe.

If you don't follow the rules, you risk one or more of the following:

• Your Self Managed Super Fund being deemed non-compliant and losing its tax concessions
• Getting disqualified as a trustee
• Prosecution
• Penalties

If you fail to act according to the trust deed, other members of your fund may take legal action against you.

Rogerson Kenny Business Accountants Melbourne can assist you with your accounting and auditing requirements. If you would like to appoint Rogerson Kenny Business Accountants as your approved auditor, or would like to discuss this topic further, click contact us or call us on (03) 9802 2533.

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