New Obligations for Trustees of Self Managed Super Funds

Trustees of Self Managed Superannuation Funds (SMSFs) must remain abreast of their current obligations.

New rules took effect from 7 August 2012 and were originally announced as part of the Government’s Strong Super reforms. The measures are intended to address potential risks and also strengthen the regulatory framework in which SMSFs operate. Below is a summary of some of those key changes to be mindful of:

The Key Changes

Investment Strategies

Part of a Trustees obligation to a SMSF involves formulating the investment strategy and investing in accordance with that strategy. It is a legislative requirement for Trustees to regularly review the investment strategy and consider any changing circumstances of the Fund or its members. For instance, a member commencing an income stream (pension) from their Fund would represent a change in circumstances and thus, activate the requirement for a review of the investment strategy.

Insurance

Trustees have an obligation to consider insurance for Fund members as part of the Fund’s investment strategy. In order to comply with this requirement, Trustees must consider the different types and levels of insurance in regard to the members’ needs. Consideration should be made of existing insurance held (inside or outside the Superannuation environment). The minutes of meetings held documenting the considerations taken into account by Trustees can be one method of substantiating insurance of members has been considered.

Separation of your Money and Assets held from the Fund

Trustees have always had the obligation to keep money and other assets of the SMSF separate from those they hold personally. The current legislation means that the requirement has become an operating standard, which provides the ATO with the power to enforce compliance.

To ensure compliance with this standard, Trustee/s should ensure assets held by the SMSF are recorded as owned by Trustee/s of the SMSF.  If a SMSF has individual Trustees, it should be noted that the assets are held by the Trustees in their capacity as Trustees of the SMSF.

Valuation of Fund Assets at Market Value

The Fund’s assets are required to be valued for the purpose of preparing financial accounts and statements. From the 2012/13 financial year, Trustees must value all Fund assets at market value.  This may require independent valuations for some assets.

Further Information

SMSF Trustees are responsible for the compliance issues relating to the Fund.

An experienced SMSF adviser can assist with the above Trustee compliance requirements.