Running an SMSF can be complex, but relax, it can be simpler than it sounds. While it is encouraged to take advice from professional advisors to help you run your fund, ultimately you, as an SMSF trustee, are responsible for the success of your SMSF.
So, don’t stress out! We’ve prepared the following checklist to help you tick off your responsibilities and obligations.
As an SMSF trustee, here are the DOs and DON’Ts:
- Make sure that the sole purpose of the SMSF is to set you up for retirement or to provide death benefits
- Create an investment strategy which considers all of the SMSF’s circumstances including investment risk, likely investment returns, liquidity and cash flow requirements, diversification of investments and insurance for members
- Separate the SMSF’s assets and your personal assets, so they’re not mixed
- Comply with the superannuation and taxation laws for all contributions received by the fund and benefits paid to members
- Keep updated SMSF records for the right amount of time and notify the Australian Taxation Office of any important changes to the fund
- Arrange for an independent, ASIC registered approved SMSF auditor to audit the SMSF
- Lodge the SMSF’s annual return with the Australian Taxation Office
- Be aware of the penalties that may result from breaching superannuation or taxation laws
- From 1 July 2018, you must report events that affect a member’s transfer balance.
- Follow the superannuation investment guidelines, so your SMSF investments don’t break any rules, including:
- Don’t use the fund to lend to or provide financial assistance to members or relatives, for example, paying a relative’s school fees from the SMSF’s assets
- Don’t purchase assets from fund members or related parties (except in special circumstances), for example, an SMSF member cannot sell the SMSF a residential property they own
- Don’t borrow money (except in limited circumstances)
- Don’t hold more than 5% of the fund’s investments in “in-house assets”. An in-house asset is a loan to or investment in a related party of the fund or an asset released to a related party. For example, investing in a company controlled by a member of the SMSF would be an in-house asset
- Don’t enter into investments or selling fund assets on a non-arms length basis; for example, the SMSF should not sell an asset to one of its members at a price below its true market value
Yes, this is your future in your hands. You’re in control here. But that means the buck stops with you, too.
So, there’s no smarter place for you to start than getting professional help in setting up and managing your SMSF, as well as creating an investment strategy for the fund’s members.