In light of the substantial changes within the superannuation
sector, self-managed superannuation fund (SMSF)
trustees should review their existing arrangements to ensure they
fully comply with
existing and proposed amendments to the Superannuation
Industry (Supervision) Act 1993 and the Superannuation
Industry (Supervision) Regulations 1994 (SIS
legislation) from 1 July 2013.
In particular, SMSF trustees should:
Rectify any outstanding compliance issues by 30
Under the new administrative penalty regime, each individual
trustee may have to pay the penalty amount whereas only the company
must pay the penalty for a corporate trustee. For example, if the
trustees failed to ensure accounts are prepared for a financial
year, then 10 penalty units and $1,700 is imposed on each
individual trustee. If the fund has a corporate trustee, the
penalty (10 penalty units and $1700) is imposed upon the body
New SIS regulation 4.09A requires
SMSF trustees to keep money and other assets of the fund separate
to personal assets. Along with other benefits of having a
corporate trustee (such as advantages on the death of a member),
SMSF trustees should seriously consider a sole purpose trustee
company to comply with the SIS regulation and to avoid the risk of
significant administrative penalties being imposed for inadvertent
Consider enduring powers of attorney
Apart from ensuring your affairs are looked after if you cannot
act, this simple document can avoid compliance issues for the fund
and avoid unfixable problems if a member loses capacity.
Review and update your trust deed to account for any
If you are considering borrowing, binding nominations,
commencing a pension, taking insurance or undertaking any major
strategy for your SMSF, you should consider whether your trust deed
needs updating to allow for the transaction.
Review and update your investment strategy
SIS regulation 4.09 requires the trustee to regularly review the
investment strategy. The investment strategy must now also consider
insurance for one or more members of the fund, along with the usual
considerations such as risk, composition of investments, liquidity
of investments and ability to discharge liabilities.
You should also update your investment strategy if you are
considering undertaking any new investment activities for the next
Ensure that all assets are valued at market
For the 2012-13 financial year and onwards, assets must be
valued at market value when preparing the annual accounts and
statements. SMSF trustees should ensure that all relevant factors
and considerations are taken into account when valuing the asset,
including acting in good faith and having a rational and reasonable
process. Trustees must be able to explain the value to a third
party or will breach SIS regulation 8.02B.
Ensure that you have made your minimum pension
Ensure any related party transactions comply with the
proposed rules regarding acquisitions and disposals
From 1 July 2013, there are restrictions on acquiring or
disposing of assets from related parties.
In particular, it is highly likely that listed securities must be
acquired or disposed of 'on market' and trustees will no
longer be able to prepare off market transfers (except in relation
to a change in trustee).
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The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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