The trustees are responsible for ensuring self managed superannuation are conducted in accordance with the superannuation trust deed. The trustees must also observe and adhere to other relevant legislation where applicable. These include acting in good faith for the members of the fund. This requires the SMSF trustee to put the best interest of the members’ ahead of its own interests. Trustees are required to act with prudence, honesty and probity when engaging in the administration, and investment of the fund.
The following general duties of trustees must be observed:
- Observe & adhere to the terms of the superannuation trust deed;
- Draft and follow the investment strategy with prudence;
- Members to be granted access to the fund financial statements and all relevant materials;
- Keep fund investments separate from personal assets; &
- Act with honesty in all financial dealings with the fund’s monies.
The following specific duties of trustees must be exercised:
- Ensure that self managed superannuation are established for the sole purpose of providing retirement benefits. This is known as the Sole Purpose Test. As a guide fund investments should only be entered into on an arm’s length basis;
- Follow the instructions of the Australian Taxation Office or a court to rectify any unintended breaches of compliance. The Superannuation Industry Supervision Act should be observed;
- Lodgement of the tax return and regulatory reports by due dates;
- Appoint an approved fund auditor. This service is part of our organisation’s service offering when we are appointed for the annual compliance and administration function;
- Fair and impartial treatment for all members;
- Must not enter into any borrowing arrangements except when there is a limited recourse borrowing arrangement (LRBA) in place;
- Ensure any in-house assets held are restricted to the prescribed limit of less that 5%;
- Maintain all minutes of meetings and relevant financial transactions for the prescribed minimum period. SATO SMSF Administration provides peace of mind for all clients by performing daily backup of data on our mainframe server. Any information can be recalled expediently and forwarded to clients for retention;
- Must not make investments in or acquire assets from related parties or certain private companies and closely held trusts except as permitted by legislation;
- Furnish financial statements and all relevant reports to members on joining the fund at end of financial year, and when members leave the fund;
- Monitor and accept appropriate contributions into the fund for members where it is permitted. Contribution caps and thresholds are dependent on the members age;
- Draft and monitor investment strategy taking into consideration risk profile, expected returns, liquidity and diversification of asset allocation;
- Must not accept any remuneration for fulfilling the role as trustees &
- Exercise the skill and judgement to another person where a fiduciary duty exists.
Restrictions on becoming trustees
The following persons are prohibited from seeking application to become fund trustees:
- People with criminal conviction;
- People less than 18 years of age; &
- People who have filed for bankruptcy.
Where a corporate trustee is chosen, the trustees must refuse such people from being appointed as directors. Trustees must seek voluntary resignation if any of the abovementioned conditions apply. If trustees do not voluntarily resign, the Australian Taxation Office may suspend or remove that person from their duties.
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