SMSF Trustees

The Role of a SMSF trustee

The trustee is ultimately responsible for administering the fund and ensuring that the fund follows the proper rules and procedures.

Your SMSF is an important part of your retirement. You, with your personal responsibility as trustee or director of the trustee, should view this role seriously and understand your duties, responsibilities and obligations.

Trustee rules

A SMSF trustee is required to abide by the rules and laws governing the superannuation fund. These include:

  • The trust deed for the SMSF: this details what the fund can and cannot do. Even if something is permitted by the tax law, if the deed does not allow it then it cannot legally be done.
  • The Superannuation Industry (Supervision) Act 1993: this act contains all the technical rules. It is law and as such is legally binding. Trustees should refer to this for all guidance on pensions, related parties, borrowing and more.
    The Income Tax Assessment Act 1997: this act contains all the tax laws. It spells out what is and is not taxable. It also has a section specifically for superannuation.

What happens when a SMSF changes its trustee?

Nothing should happen. If done properly, the new trustee company will simply replace the old trustee company with no tax implications.

However the fund must ensure that the old and new trustees are eligible to act as trustee.

The names of all investments should then be updated for the new trustee name and the trust deed should be updated or amended as required.

If you change individual trustees it can get more complicated. If a member no longer wishes to be trustee they often need to have their benefits transferred to another super fund and leave their SMSF.

The removal or addition of the trustee will also result in a change of membership of the fund.

Therefore, you will be required to complete change of membership documents, as well as change of trustee documentation. These documents must comply with the trust deed and legislation.

What happens to the SMSF if the trustee or director dies?

If the SMSF trustee is a company, the trustee or investor names do not usually have to change.

If there is another director who is already a member then the trustee can continue.

On the death of the deceased director, their estate takes over their share.

However, if there are no other members then the trustee is likely to resign once all the super money is distributed.

For more information or advice on self managed super funds, please enquire online today and one of our expert SMSF financial advisers will contact you to discuss your situation.

What if there is more than one trustee?

If the trustee is one of many individual trustees then the only real issue is that all names have to be updated.

This sounds simple, but imagine a fund with many properties, shares and bank accounts:

  • The state land office will need to be informed of the name change and this will take a bit of explaining.
  • The share broker will need to update the records of who owns each and every share and may require you to set up a new holder identification number.
  • The bank will be confused about how to process the change but will eventually update their records.

This is why it may be beneficial to have a corporate trustee that can always act as trustee. All change to its directors are kept at the company level and away from the day-to-day administration of the fund.

Can anyone be a SMSF trustee?

According to the rules, you can have either individual trustees or corporate trustees.

If the trustees are individuals, all trustees must be members and vice versa.

Where a fund has a corporate trustee similar rules apply, however all members of the fund must be directors of the trustee company.

This means that anyone who cannot be a company director because they are banned by ASIC, will be excluded from setting up a self-managed super fund with corporate trustees.

Get help with your SMSF!

Thinking of setting up a Self Managed Super Fund? Enquire online to find out the trustee obligations that apply to your fund.

We are the experts in helping individuals set up a SMSF, forumlate a trust deed and take the necessary steps towards compliance. Speak to us today!

Note: this website is for informational purposes only and should not be substituted for professional financial or taxation advice.