Core duties
- Sole purpose test: the fund must be run to provide retirement benefits, not current-day benefits to members or relatives.
- Investment strategy: a written strategy considering risk, return, diversification, liquidity and insurance, reviewed regularly.
- Keep assets separate from personal and business assets, in the fund’s name.
- Arm’s length dealings and no lending to members.
- Records: minutes, financial statements and returns, kept for the required periods.
- Annual audit and return, lodged with the ATO.
Within 21 days of becoming a trustee
New trustees must sign the ATO trustee declaration within 21 days.
If things go wrong
The ATO can issue penalties, disqualify trustees, or make the fund non-complying. Getting the structure and process right at the start is cheaper than fixing it later. See SMSF advice.
Quick answers
What is the SMSF sole purpose test?
The fund must be maintained only to provide retirement (and related death) benefits to members.
Sources
General advice warning. This article is general information only and does not take into account your objectives, financial situation or needs. Rules and thresholds change; check the sources above. Consider the relevant PDS and our Financial Services Guide and seek personal advice before acting. FinForce is authorised under Financial Force Pty Ltd AFSL 238337. Shay has been authorised since 18 October 2011.