Self-managed super funds (SMSFs) are becoming increasingly popular among Australians as a way to save for retirement. However, the responsibility of managing an SMSF falls on the shoulders of the trustees. In this article, we'll discuss the role of SMSF trustees and what they need to know to ensure their SMSF is compliant and successful.
What is an SMSF trustee?
An SMSF trustee is the person or group of people who are responsible for managing and making decisions about the fund. Trustees have a legal responsibility to ensure that the fund is operated in the best interests of the members and in compliance with the Superannuation Industry (Supervision) Act 1993 and the regulations.
It's important to note that being a trustee is not a passive role. Trustees are required to actively manage the fund and make decisions about investments, contributions, and payments. They are also responsible for ensuring that the fund is audited annually and that all required tax and compliance forms are lodged on time.
Who can be a trustee?
A trustee can be an individual or a corporate trustee. If an individual is the trustee, they must be over 18 years of age and not disqualified from acting as a trustee. A corporate trustee must be a company that is specifically registered as an SMSF trustee.
It's also possible for a group of individuals to act as trustees together, such as a group of friends or family members. In this case, each person is considered a trustee and is jointly and severally liable for the actions of the fund.
Responsibilities of Trustees
The responsibilities of SMSF trustees include:
Complying with laws and regulations: Trustees must ensure that the fund is operated in compliance with the Superannuation Industry (Supervision) Act 1993 and the regulations. This includes keeping accurate records, lodging tax returns, and having the fund audited annually.
Managing the Fund's assets: Trustees are responsible for making decisions about the fund's investments, contributions, and payments. They must ensure that the fund's assets are invested in a way that is consistent with the fund's investment strategy and in the best interests of the members.
Acting in the best interests of members: Trustees must ensure that the fund is operated in the best interests of the members. This includes ensuring that the fund's assets are sufficient to provide for the members' retirement and that benefits are paid to members in accordance with the fund's trust deed.
Providing information to members: Trustees must provide members with information about the fund, including the annual financial statements and the annual return.
Maintaining proper records: Trustees must keep accurate records of all transactions and decisions made on behalf of the fund. This includes keeping records of contributions, investments, and payments.
Trustees have a lot of responsibilities to manage and it can be a daunting task. It's important that trustees understand their responsibilities and seek professional advice if needed.
The Importance of Professional Advice
SMSF trustees have a legal responsibility to ensure that the fund is operated in compliance with the laws and regulations. It's important for trustees to understand their responsibilities and seek professional advice if needed. A professional advisor can assist with understanding the laws and regulations, managing the fund's assets, and ensuring that the fund is operated in the best interests of the members.
Trustees should also consider seeking professional advice when making investment decisions. A financial advisor can assist with developing an investment strategy that is consistent with the fund's objectives and in the best interests of the members. The advisor can help trustees to consider different investment options, such as stocks, bonds, property, and alternative investments, and provide guidance on how to diversify the portfolio to minimize risk. They can also help trustees to understand the tax implications of different investments and how to optimize returns.
In addition, professional advisors can assist trustees with compliance and regulatory matters. They can review the fund's trust deed, ensure that the fund is in compliance with the laws and regulations, and advise trustees on their responsibilities and obligations. This can help to minimize the risk of penalties and fines and ensure that the fund is operating in the best interests of the members.
The Importance of Education
SMSF trustees must have a basic understanding of the laws and regulations that govern SMSFs, and how to manage the fund's assets and investments. It's important for trustees to educate themselves and stay up-to-date with any changes to the laws and regulations.
There are many resources available to assist trustees with their education, such as online courses, seminars, and workshops. Trustees can also consult with professional advisors, such as accountants, financial planners, and lawyers, to gain a deeper understanding of the laws and regulations and how to manage the fund's assets and investments.
Conclusion
In conclusion, the role of SMSF trustees is crucial for the success of an SMSF. Trustees are responsible for ensuring that the fund is operated in compliance with the laws and regulations, managing the fund's assets, acting in the best interests of members, providing information to members, and maintaining proper records. It is a legal responsibility and can be a daunting task, but with the right knowledge, education, and professional advice, trustees can ensure that their SMSF is compliant and successful. It's important for trustees to understand their responsibilities, take them seriously, educate themselves and seek professional advice when needed. By following these guidelines, trustees can ensure that their SMSF is on the right track to providing for their retirement and taking control of their financial future.