Self Managed Super Fund (SMSF) administration can take quite a lot of time and requires specialist knowledge of superannuation law!

For this reason, many trustees outsource the administration of their super fund to a specialist administration firm or their local accountant.

Please read on to find out the most important administration tips.

Responsibilities of a trustee

As trustee of the fund you have great control, but also great responsibility. The biggest of these responsibilities in ensuring the fund:

  • Documents all investment decisions.
  • Performs all annual fund administration tasks.
  • Complies with laws and regulations.

Your accountant can perform nearly all of these tasks for you, which will be a great relief for the trustees.

However, the ultimate responsibility rests with you so it is best to understand what is going on.

Administration of Fund Investments

Trustees are advised to retain all documentation including:

  • Dividend notices.
  • Purchase orders.
  • Sale confirmations.
  • Holding balance confirmations.
  • Bank statements.
  • Tax statements.

Additional obligations

A trustee must ensure that all private and sensitive information such as holder identification numbers are kept secure to prevent any possibility of fraud.

Trustees must document their investment purchases and sales. Each of these must be matched off to the fund’s investment strategy which must also be regularly updated.

Annual administration tasks

Each year the SMSF must have financial accounts prepared and audited.

Professional SMSF administrators will be able to prepare these for you, as well as facilitating the audit.

The entire process from may take a few weeks to complete, during which, you will be required to:

  • Provide copies of all original documentation to your fund’s administrator.
  • Address any queries regarding additional undocumented transactions.
  • Review and sign off on the final financial statements and other reports and minutes.

Once the reports are complete the accounts are sent out to be independently audited.

The audit process

This audit ensures compliance with superannuation law and can help you determine that your accounts are financially sound.

With a clear audit and completed accounts your tax agent can now process the income tax return.

This is normally due to be lodged and paid by 15 May of the following financial year. You will also be required pay the annual SMSF administration levy to the ATO.

Compliance with superannuation law

The laws relating to SMSFs are constantly changing – sometimes day to day. This makes it hard for trustees to keep up to date.

For this reason, it is very valuable to have a trusted superannuation adviser who can answer all your questions and warn you of any possible issues.

If the laws change and your trust deed does not reflect these changes, your fund may be non-complying.

Relevant legislation

Your fund will need to comply with a variety of legislation that relates to:

  • Limiting investments in property owned by related parties.
  • Restricting when members can draw money from the fund.
  • Maintaining the sole purpose of the fund to provide retirement benefits.
  • Only allowing eligible trustees and members to act for the fund.
  • Retaining financial records.
  • Complying with the rules of your trust deed.
  • Only borrowing in limited circumstances.

What if I don’t comply?

If you fail to comply, the fund auditor is obliged to report this contravention to the Australian Taxation Office (ATO) which may commence investigations into the fund.

Serious breaches can also lead to fines and penalty tax. Therein lies the importance of addressing questions before they become issues.

Don’t wait until the end of the financial year to solve your tax issues. Speak to us today by using our enquiry form.

We can help you make sure that your funds financial records are up to scratch, so you can avoid any penalties.

What happens if my SMSF breaches a superannuation law?

Enforcement action is a stepped process:

  • Small and minor breaches (e.g. a bank account going into overdraft for a few days) may lead to the ATO requesting your bank statements and issuing a warning not to repeat this.
  • More serious breaches (e.g. a fund asset being in the incorrect name) may lead to the ATO requesting you to transfer the asset to the correct fund name or sell it. Penalties may result.
  • Major breaches (such as a fund member withdrawing funds before their retirement age) may lead to the fund being deemed as non-compliant. The ATO can tax the fund’s net assets at 46.5% effectively halving your super fund overnight.

What should I do if I am late with my SMSF accounts and audit?

You should prepare accounts and have them audited as soon as possible. The longer you wait, the more letters that will come from the ATO and the harsher any enforcement action will be.

The auditor will be required to notify the breach to the ATO, however a voluntary disclosure will reduce fines and penalties. You may find that no penalties apply, once you are completely up to date.

Why use a professional?

Without professional help super fund administration can get exceedingly complicated.

Many suburban accountants offer superannuation administration services. However, the law surrounding superannuation is very complex and changes frequently.

Many suburban accountants simply do not deal with many SMSF administrative matters.

Why speak to us?

By outsourcing your SMSF administration needs to a professional specialist service you can be assured that your administration will be performed efficiently and in accordance with the legislative requirements.

Please enquire online for more information about preferred supplier.

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