As trustees of self-managed superannuation funds (SMSFs), it's vital to understand your role in maintaining the fund's primary goal - providing benefits to members during their retirement or preservation age, and to their beneficiaries in case of a member's passing. Compliance with the Superannuation Industry (Supervision) Act 1993 and related legislation is paramount, as breaches can result in substantial personal penalties.
Here are 5 essential tips for
effective SMSF management:
1. Don’t Use Your SMSF Money For Personal Reasons
Keep personal and SMSF bank accounts separate to prevent using SMSF funds for personal or business purposes.
Borrowing from an SMSF is strictly prohibited, and it's the most commonly reported breach. While some loans to related parties may be allowable, caution is advised, and they must not exceed 5% of the fund's total assets.
2. Investments Not In The Fund’s Name
Residential properties held by the fund cannot be used by members or their associates, even at market value. Collectibles like artwork, coins, and jewelry must generate market value income and be kept separate from personal use
Register investments in the name of the fund's trustees or corporate trustee to safeguard assets and simplify organization.
3. Stick To The Investment Rules
Investment decisions must align with the fund's strategy, necessitating regular reviews, especially when considering new asset classes.
Adhere to investment rules, especially concerning related parties, to retain tax concessions.
4. Ensure The SMSF Pays At Least The Minimum Pension
Pay at least the minimum pension amount required by law to ensure members receive their entitled benefits and avoid tax complications.
5. Keep The Fund’s Documents
Maintain comprehensive records, including trust deeds, meeting minutes, investment details, and membership information, as accurate documentation is vital for compliance, audit, and dispute resolution.
Maintaining proper and accurate superannuation records is mandatory, including accounting records, financial statements, and tax returns for at least 5 years. Additional documentation, like trustee minutes and member reports, should be kept for a minimum of 10 years.
These combined insights provide a holistic perspective on SMSF management, helping trustees navigate the complex regulatory landscape while optimizing the benefits of self-managed superannuation funds. Remember that staying informed and compliant is fundamental to the fund's success.
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