Commissioner's foreword
Self-managed super funds (SMSFs) can be a great way to provide for your retirement. Now that you have decided to establish your own fund, it is important you are aware of your responsibilities and obligations as a trustee.
The Australian Taxation Office (ATO), as regulator of SMSFs, is responsible for helping to protect the retirement income system by ensuring that SMSFs follow the rules outlined in the super and tax legislation.
In recognition of this, our compliance program around SMSFs has increased substantially over recent years and will be maintained and enhanced in years ahead.
We maintain a strong focus on education to encourage voluntary compliance in the market. We now have a suite of publications that you can use according to where you are in managing your fund. Our free electronic newsletter SMSF News is an ideal way to keep in touch with what is happening.
Remember, if you need help with your fund, you can contact us for specific advice about how the super laws apply to your situation or seek professional advice.
Chris Jordan
Commissioner of Taxation
Like other super funds, SMSFs are a way of saving for your retirement. Generally, the main difference between an SMSF and other types of funds is that members of an SMSF are the trustees. This means the members of the SMSF run it for their own benefit.
SMSFs are not suitable for everyone, and you should think carefully before deciding to set one up. It is a major financial decision and you need to have the time and skills to do it. There may be other, better options for your super savings. If you are considering an SMSF for your super savings, the publication Thinking about self-managed super (NAT 72579) provides you with some practical information. Licensed financial advisers, tax agents and accountants can also help you understand what is involved.
If you decide that an SMSF is the appropriate vehicle for your super savings, you need to ensure the fund is set up and maintained correctly so that it is eligible for tax concessions, can pay benefits and is as easy as possible to administer. This publication provides some basic information on this and the steps you need to follow to set up the fund correctly.
Once your SMSF is established you, as trustee, control the investment of the contributions and fund earnings. Your SMSF must have a trust deed which forms part of the governing rules for operating the fund. You must also prepare and implement an investment strategy and ensure that it is reviewed regularly. There are rules and regulations that you must follow to ensure the fund's assets are protected to provide benefits in retirement.
While contributions are being made to the fund it is considered to be in the accumulation phase. Running a self-managed super fund (NAT 11032) explains the responsibilities and obligations of trustees operating an SMSF.
When one or more members retire, you as trustee need to understand and follow the requirements of the law and regulations governing the payment of benefits. The payment standards contained in the legislation and regulations, the sole purpose test and the preservation rules ensure that money in the fund is paid to members in the appropriate manner. Paying benefits from a self-managed super fund (NAT 74124) is designed to assist trustees who are required to make payments out of their SMSF. It also provides information for funds that have members in both the accumulation and retirement phase. It is important to note that the rules and regulations that apply to funds in the accumulation phase continue when one or more members retire; however additional rules apply to the retirement phase.
You should continually reassess the circumstances of the fund and each individual member to determine whether an SMSF is still the most appropriate option for your retirement savings. In some cases, you may find that you no longer have the capacity to deal with the complexity or the time required to manage your SMSF. You may decide that it is not cost-effective to continue to run your own fund. Depending on the circumstances, it may be necessary to transfer member benefits to another complying super fund.
Other reasons why you might wind up your SMSF include when all members have left the SMSF (for example, they have rolled over their benefits to another fund or have died) or all the benefits have been paid out. Winding up a Self-managed super fund (NAT 8107) details the process you need to follow to wind up your fund.
Sections within Self-managed super and you
Last Modified: Wednesday, 22 May 2013