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SMSF Trustee:

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An SMSF can be a single member fund or have two to four members, and can have individuals as trustees or a corporate trustee.  Superannuation Law dictates that each member is an individual trustee or a director of the corporate trustee, no member is an employee of another member unless they are relatives, and trustee remuneration is prohibited subject to certain exceptions.  If you are a trustee of a SMSF, there are certain duties and obligations that you must comply with which may be complex, onerous and varied. Consultation with an experienced Superannuation and Taxation Lawyer can assist you with acting in the capacity of SMSF Trustee.

Firstly, a SMSF Trustee has certain duties derived from the general trust law, statutory provisions — principally the SISA, the Corporations Act 2001, the Taxation Administration Act 1953 (TAA), the Trustee Act of a state or territory, and other tax and general laws, as such the Bankruptcy Act 1966 (Cth), and the fund trust deed or governing rules.  Governing rules are any rules contained in a trust instrument, other document or legislation, or combination of them, or any unwritten rules, governing the establishment or operation of the fund.

If a trustee fails to act in accordance with the duties, the consequences which ensue will depend on the particular duty that is breached. For example, if the duties are those under statute, ASIC may institute action against the trustee (and other persons responsible) and a fine or term of imprisonment may be imposed by the court upon conviction. In addition, if the provision breached is a regulatory provision, the fund may be determined by the ATO to be a non-complying fund and lose its concessional tax status. Similarly, various forms of penalties may be imposed for offences against other laws, such as the bankruptcy or income tax laws.

On the other hand, if the trustee contravenes a SISA provision that is not an offence or penalty provision or fails to act in accordance with the trust deed, civil liability action for a breach of trust may be brought against the trustee by the affected parties or members for any loss suffered as a consequence of the breach.

The trustees of an SMSF must, therefore, be familiar with their common law or statutory duties and, when in doubt, should not hesitate to seek professional legal advice from a qualified Superannuation and Taxation Lawyer. Any provision in the fund’s trust deed that prevents the trustees from seeking advice in relation to performance of their duties or powers, or from being indemnified out of the fund’s assets in respect of the costs of obtaining such advice, is void.

The operations of a trustee revolve around four main areas. These are (1) acceptance of contributions (2) investment of funds (3) preservation, portability and payment (whether in a lump sum or as an income stream) of benefits (4) maintenance of records and accounts, and reporting. The fund’s trust deed, the general trust law and other statutory requirements must also be considered. It is possible, for example, for a fund’s trust deed to provide more onerous or restrictive rules than the SIS legislation. Thorough and detailed legal advice from a Taxation and Superannuation Lawyer may be immensely invaluable in advising your of your obligations and duties to fulfill as a Trustee of a superannuation fund.

The operations of a Trustee requires the exercise of high level decision-making and activities which include formulating and reviewing the fund’s investment strategy, managing reserves, and determining how assets are to be used to fund member benefit, the trustee is responsible for the central management and control of a fund ensuring that it is compliant with taxation and superannuation law.

For compliance purposes, a superannuation trustee (or a person authorised by the trustee such as the fund auditor, tax agent) may seek specific advice from the ATO regarding the application of certain regulatory requirements to the fund’s particular circumstances.

Holistic Financial and Legal advice may be immensely useful and beneficial if you are acting or plan to act as a SMSF trustee. If you would like further information or wish to discuss your SMSF matter with us please do not hesitate to contact us by telephone on (02) 9233 4048 or by email to info@navado.com.au and arrange an appointment. 

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