Understanding your role and responsibilities with a self managed super fund: Part 4

Complying with the super and tax laws is your responsibility, even if you use a super or tax professional, or a financial planner. So it’s important you understand what you need to do.

As a trustee for a self managed super fund, your duties and responsibilities include:

• making sure the fund’s sole purpose is to pay retirement benefits to members
• accepting contributions and paying benefits (pension and lump sum) according to the super and tax laws
• making investment decisions and complying with any restrictions
• ensuring an approved auditor is appointed for each income year
• completing administrative tasks, such as lodging annual returns and record-keeping
• reviewing and updating the super fund’s trust deed and investment strategy

If there are any changes to your SMSF, you will need to inform the ATO within 28 days. These changes may
include any of the following:

• trustees
• directors of the corporate trustees
• members
• contact details (contact person, phone and fax numbers)
• address (postal, registered or address for service of super fund notices)

To avoid penalties, make sure you understand and comply with your duties and responsibilities under the super and tax laws. If you don’t comply,  the ATO can:

• impose administrative penalties
• make an agreement with you to rectify the problem
• make your super fund non complying (which means your super fund loses its tax concessions)
• disqualify you as a trustee
• prosecute in the most serious of cases.

Investing your fund’s money
Being a trustee of an SMSF gives you more flexibility when it comes to investing your super fund’s money. Unlike some other super funds, you can choose the investments for your fund, so long as you invest according to the following:

• the super fund’s trust deed
• the investment strategy
• the super laws

While the super laws don’t tell you what you can and can’t invest in, they do set out certain investment restrictions you need to comply with.

For example, unless an exception applies, trustees generally can’t:

• lend the fund’s money or provide financial assistance to members and their relatives
• acquire assets from related parties of the fund including – fund members and their associates – all the fund’s standard employer-sponsors and their associates
• borrow money on the super fund’s behalf (certain instalment warrant arrangements are allowed) lend to, invest in or lease to a related party of the fund (including related trusts), more than 5% of the fund’s total assets
• enter into investments on the fund’s behalf that are not made or maintained on an arm’s length (commercial) basis

Appointing an approved auditor
You need to appoint an approved auditor to audit the super fund each year. An approved auditor will:

• examine your fund’s financial statements
• assess your overall compliance with the super laws.

An approved auditor needs to be a registered company auditor or a member of certain professional organisations. They need to follow professional auditing standards that require the audit to be conducted independently. An SMSF professional may help you fi nd an approved auditor. Before the annual audit, you or your SMSF professional needs to prepare information about your accounts and transactions for the previous income year. This information is then sent to the approved auditor. The auditor will provide you with a letter of engagement confi rming they accept the appointment and the scope of the audit. You need to give the auditor any further documentation they request so they can audit your fund.

Once the approved auditor has completed your super fund’s audit, they will provide you with the following:

• an audit report
• a management letter, which summarises the findings of the audit and any action taken or proposed by the trustees

You need to have an auditor’s report before you lodge your fund’s SMSF annual return. The law requires that you appoint your auditor at least 30 days before the annual return is due to be lodged. To ensure you lodge on time, you need to allow enough time for your auditor to conduct the audit.

The auditor will also notify the ATO if one of the following occurs:

• find you’ve breached certain super laws
• have concerns about your fund’s financial position.

Your annual responsibilities
As a trustee there are some things you need to do each year under the super and tax laws. There are also some things you need to do to make sure your super fund complies with the law and it operates effectively.
Use the following checklist each year to make sure you meet your annual responsibilities.