You’ve set up your Self Managed Superannuation Fund (SMSF), and now you want to make sure that you are doing everything right.

The legislation governing Self Managed Superannuation Funds is complex, and there are strict penalties involved if you don’t fulfil your obligations correctly. It is important that you understand what the restrictions are and how the penalties could affect you.

Below is a guide to the basic do’s and don’ts of your Fund, to assist you with staying compliant.

Do’s

  • Treat the Fund as being a separate entity;
  • Ensure that all the fund transactions are made on a commercial basis;
  • Ensure that the Fund’s cash is kept in a separate bank account used only for the Fund’s transactions;
  • Expenses are to be paid from the Fund’s bank account;
  • Assets or investments that the Fund purchases are paid for by the Fund;
  • All money received from contributions, interest and dividends must be deposited into the Fund’s bank account.
  • Ensure that you obtain and retain documents to record all of the Fund’s transactions;
  • Ensure that all investments are allowable under the Fund’s investments strategy;
  • Ensure that the Fund’s investments are in the name of the trustee on behalf of the Fund;
  • Ensure that you comply with the trust deed of the Fund at all times;
  • Reconcile the Fund’s assets to the member account balances at least annually;
  • Ensure that all members receive an annual statement of benefits;
  • Ensure that any directions given by members, including death benefit nominations, are maintained and up to date;
  • Ensure that a record is kept of all trustee decisions;
  • Make contributions up to your contribution cap limits;
  • Retain a copy of all Minutes and Resolutions of the Fund for a period of 10 years

Don'ts

  • Allow the fund to borrow from any person;
  • Allow the Fund’s bank account to go into overdraft;
  • Exceed your contributions cap limits;
  • Withdraw funds from your SMSF unless you meet a condition of release;
  • Borrow money from the fund or use the Fund’s money to pay for anyone else’s expenses;
  • Lend, invest or enter into a lease arrangement in respect of more than 5% of the Fund’s assets with a related party;
  • Acquire more than 5% of the Fund’s assets from a related party unless the asset acquired is:
    • Listed securities;
    • Business real property;
    • A farm;
    • A managed fund;
    • A term deposit.
  • Accept contributions in respect of members who are over 65 years of age except mandated employer contributions or if the member meets the work test;
  • Accept contribution in respect of a member who is over 75 years of age except mandated employer contributions.

It is important to ensure that your SMSF is running correctly and remains compliant at all times. If you are in doubt, please call us so that we can discuss your options.

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