If you are a new trustee (or director of a corporate trustee) of a self-managed super fund (SMSF), you must complete and sign a Trustee declaration (NAT 71089) to show you understand your duties and responsibilities under super laws.
You must also complete the declaration if you are a legal personal representative who has been appointed as trustee (or director of a corporate trustee) on behalf of a:
- member who is under a legal disability (usually a member under 18 years old)
- member for whom you hold an enduring power of attorney
- deceased member.
You are responsible for managing the fund
Becoming a trustee of an SMSF is an important decision that carries certain duties and responsibilities, with your primary concern being managing the fund in a way that benefits members for their retirement. You must also ensure fund assets are held in trust and invested on behalf of the members.
You are responsible for ensuring your fund is properly managed and complies with all rules (including super laws and the fund trust deed). These rules apply to you in your capacity as a trustee of the fund. You will also need to make important decisions that may affect the retirement savings of fund members.
All trustees are equally responsible for managing the fund and making sure it complies with the law. This is the case even if:
- one trustee (or director) is more actively involved in the day-to-day running of the fund than the others
- you use a professional to do certain tasks on your behalf - for example, an accountant, lawyer, investment adviser, super fund administrator or tax agent.
All trustees are responsible and accountable for running the fund and making decisions. You must always put your obligations and responsibilities as a trustee of the fund before your wishes as a member. Whenever a conflict occurs between your wishes as a member and your legal responsibilities as a trustee, you must comply with your trustee obligations.
If, for example, a breakdown of a relationship between members occurs, you must continue to act in the best interest of all members at all times and in accordance with super laws and the trust deed of your fund.
If you use a professional to help you manage your fund, it is important you select one that is right for you and your circumstances. It is essential that any financial, investment and legal advice you receive comes from a qualified professional, as your decisions will have an impact on the retirement income of fund members.
You must separately manage the affairs of the fund and your own personal or business affairs. This means you must keep fund assets (including money) separate from your personal and business assets and ensure they are used solely for fund purposes.
You must not allow members' benefits (money or other assets) to be accessed earlier than is legally permitted. As a general rule, a member's benefits must be preserved in the fund until they reach their preservation age (currently 55 years old for members born before 1 July 1960, increasing to 60 years old for those born after 30 June 1964) or until they retire after reaching preservation age.
A member's benefits can only be accessed before the member reaches their preservation age in very limited circumstances - for example:
- in cases of severe financial hardship (subject to specific criteria being met)
- on tightly restricted compassionate grounds
- on diagnosis of a terminal medical condition
- in the event of temporary or permanent incapacity.
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It is illegal to set up an SMSF to gain early access to your super savings. If benefits are unlawfully released, significant penalties, including fines and jail terms of up to five years, can apply to you. Significant adverse taxation consequences may also arise for your fund and the recipient of the super benefits.
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You must understand your duties and responsibilities
Your trustee duties and responsibilities include:
- making sure the purpose of the fund is to provide retirement benefits for members
- preparing an investment strategy and making investment decisions
- accepting contributions and paying benefits (income streams and lump sums) in accordance with super laws and the fund trust deed
- advising us of any changes in trustees, directors or members within 28 days of the change occurring
- ensuring an approved auditor is appointed for each income year
- undertaking administrative tasks such as lodging annual returns and record-keeping.
You must also ensure the fund trust deed and investment strategy are regularly reviewed and updated in accordance with the law and the needs of the members.
Over time your circumstances may change, possibly in a way that affects your ability to effectively manage the fund and undertake your obligations as trustee. Throughout the fund's life cycle, you must consider the individual circumstances of each member and the general condition of the fund. You need to continually reassess whether an SMSF is still the appropriate option for your retirement savings.
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To avoid penalties, make sure you understand and comply with your duties and responsibilities under super laws.
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Super laws allow for financial assistance to be granted to Australian Prudential Regulation Authority (APRA) regulated funds that suffer losses as a result of fraudulent conduct or theft. Under existing super laws, there is no government or industry compensation available for members of SMSFs, as they operate outside the regulation of APRA.
If you want your super to be covered by the financial assistance program, you can choose to either:
- join an APRA-regulated fund
- appoint a registrable super entity licensee as trustee (that is, become a small APRA fund).
You do have certain rights and options available if your fund suffers a financial loss due to fraudulent conduct or theft. Legal options are available under corporations law if you received advice or services from an Australian financial services licensee who was involved in the fraudulent conduct or theft. You may also approach the Financial Ombudsman Service (FOS) if the adviser involved in the fraudulent conduct is a member of FOS.
For more information about your role and responsibilities as a trustee, refer to Running a self-managed super fund (NAT 11032)
To obtain a copy of our publications or for more information:
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Australian Taxation Office
PO Box 3100
PENRITH NSW 2740
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- internet relay users, connect to the NRS on National Relay Service at www.relayservice.com.au and ask for the ATO number you need.
Last Modified: Wednesday, 12 June 2013