Depending upon whether a SMSF fund is meant for an individual or a corporate entity, the fund owner becomes a trustee or the director of a company (to which the trust belongs).
Irrespective, it is entirely the onus of the trustee or the company’s director to adhere to the trust deed and the rules of the SMSF. The essential idea for forming a SMSF remains the same- provision of retirement benefits to the members.
Be prepared for ATO’s auditing
The recent spate of ATO contravention reports and the fact that the ATO has been harsh on the auditors for neglecting their duties imply that trustees have got to be right on their toes. From the perspective of auditing, it is important to keep an eye on many facets. To begin, accountants are a vital cog in the wheel of SMSF operation. Not only do these professionals keep your books, they also keep you abreast of your financial position (annually). As an important aside, they also perform services pertaining to taxation.
Fund admin and solicitor
Just like accountants, fund administrators and solicitors come in handy. The former helps in the daily management of your accounts and administrative obligations. The latter takes care of your trust deed and necessary compliance.
Ensure that your SMSF is compliant with ATO’s directive or else you will run the risk of taxes being levied at the highest marginal rate. To come back to the trust deed, it is a legal paperwork which sets guidelines and regulations in regards to how you establish and operate your SMSF. Who may be the members of the fund? How may the benefits be paid? And so on…..
A dilemma for trustees
Recently there has been quite an uproar about how the ATO has been ambiguous about registering a SMSF. Trustees have complained that they are not receiving ABN unless they have an ATO registration to show whereas banks are not allowing them to open a bank account for their SMSF unless they have an ABN for their Super fund. Of course, the ATO needs to furnish clearer directive on their website but this said, once it does so, it will be the task of the trustees to get this part straight.
Declared investment strategy
And yes, there have been many cases in the past where SMSF trustees have been fined for buying a property through their SMSF. Obviously, you can do so but the purchase must be in sync with your declared investment strategy. So this is one more aspect you need to be careful about.