By Renee Ballinger
Establishing a Self-Managed Superannuation Fund (SMSF) and taking control over your superannuation benefits can be an attractive option, as SMSF’s offer their members more control and flexibility than a standard industry or retail fund. However, it is imperative that trustees understand their role, responsibilities and obligations as a SMSF trustee. Ultimately, trustees are responsible for operation of the fund, ensuring the sole purpose test is satisfied and acting in the best interests of all fund members.
The sole purpose of a SMSF must be to provide retirement or death benefits to members of the fund or their beneficiaries. Should this rule not be adhered to, the SMSF may lose its compliance status and the tax concessions that go with being a compliant superannuation fund.
In most cases, there is one trustee that takes on the ‘financial responsibility’ role of managing the fund, however ALL trustees hold the same level of responsibility and can be held accountable for decisions made on behalf of the fund. Therefore it is important for all trustees to have a full understanding of the relevant rules and regulations for a SMSF, as well as where the assets of the fund are invested.
We have seen situations where trustees have invested funds on the advice of friends, family or otherwise unregistered financial advisers, without a complete understanding of where the funds are being invested or the potential risks involved. If it sounds too good to be true, it very well could be!
Lately there has also been an increase in cryptocurrency investments within SMSF’s, which can be allowable, but carry many potential risks. The trustees have a responsibility to ensure that all investments (including cryptocurrency) are allowed by the trust deed and align with the investment strategy of the fund, which considers needs and circumstances of members, risk profile, diversification of assets, liquidity and cashflow requirements and insurance for members. Once an investment is deemed appropriate for all members of the fund, there are annual valuation, reporting and audit rules to be followed for the fund to remain compliant.
It is crucial that SMSF trustees are obtaining their investment advice from licenced, trusted advisers and engage a professional to help understand the many complex rules and responsibilities for a trustee. The experienced team at UHY Haines Norton are here to help, so please don’t hesitate to contact us on 07 4972 1300 or info@uhyhncq.com.au.
