There are many tasks to keep up with including keeping documents, record minutes and resolutions of meetings about significant decisions and preparing annual tax and regulatory returns NAT 712266, for the SMSF, which are separate from personal returns. It is required that accurate operating statement and statement of financial position be prepared. An independent auditor must be appointed to review the fund is complying, and once a report is given, the income tax and regulatory return can be lodged. A supervisory levy is paid was $180, from 2011, now over $200.
For a minimum of five years, records including accounting records, statements, annual returns must be kept. For a minimum 10 years, keep records such as minutes of meetings, change of trustee, reports to members and trustee consents.
Investment Strategy and Limitations
Section 52 of the SIS act requires a written investment strategy be formulated and given effect. This is to formalise the investment planning and implementation, encouraging a serious and professional approach.
The overall guide is the Sole Purpose Test – that funds are maintained for the sole purpose of providing retirement benefits.
Although the law wants a wide opportunity, some restrictions apply in order to avoid risk, and both the act and the trust deed need to be consulted. Restrictions include general prohibition from acquiring assets from members and related parties, keep assets separate, limited borrowing, personal use of assets, careful use of derivatives and no lending to members.
Compliance, Trustee Responsibilities, Disputes
Trustees must ensure the trust deed is regularly reviewed to accommodate changes in superannuation, taxation and other laws, as well as the circumstances of the members. A breach of the trust deed as considered a breach of the superannuation law.
In all dealings, the Sole Purpose Test is the key requirement – to maintain the fund solely for the core purpose to provide retirement benefits.
Fund members must live in Australia, so be aware that relocation overseas can affect compliance.
Dispute resolution between members and trustees is not available via the Superannuation Complaints Tribunal, so must mediate themselves or resolve via the court system.
Insurance in your SMSF
Consider and seek advice about your insurance needs. What if…? Ensure that your fund applies for cover you need, eg life, total and permanent disability (TPD) and/or disability income insurance (income protection). There can be advantages to hold these in an SMSF – the premiums are deductible for the SMSF. There are other considerations including some circumstances where access to super benefits may be restricted such as disability payments. Tax may also be payable by the SMSF.
Paying Benefits & Income Streams (Pension)
In most circumstances, benefits can be paid to members in lump sum or income stream/pension. Contributions by employers and members and fund earnings are generally classified as “preserved benefits” and cannot be accessed by a member until a condition of release is met. A number of conditions rely on meeting preservation age, which are dates determined by member date of birth.
|Date of Birth from||To||Preservation Age|
|30 June 1960||55|
|1 July 1960||30 June 1961||56|
|1 July 1961||30 June 1962||57|
|1 July 1962||30 June 1963||58|
|1 July 1963||30 June 1964||59|
|1 July 1964||And later||60|
When a member generally meets the age of 60, lump sum and income stream payments are tax free. If a member is under 60 and paid a benefit PAYG tax will need to be paid and reported to the member and ATO on a payment summary. The amount withheld is sent to the ATO annually or quarterly.
Conditions of release include reaching preservation age and formally retiring, reaching 65 YO, restricted access at preservation age via transition to retirement, death, permanent incapacity, terminal illness.
See ATO publications (Nat -)
11032 Running a self-managed super fund
71454 How your self-managed super fund is regulated
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