SMSF in focus

Auditing and tax documents

Understanding Your SMSF Responsibilities


As a trustee of an SMSF, you have certain legal obligations you must uphold throughout the life of the fund.

The Superannuation Industry Supervision Act (SISA) has a number of rules that are imposed on trustees of all regulated super funds in Australia.

They require you to:

  • Always act honestly
  • Exercise the same degree of care, skill and diligence as an ordinary prudent person in managing your SMSF
  • Act in the best interest of your SMSF’s beneficiaries
  • Keep the SMSF assets and money separate from other money and assets, such as business and personal money and assets
  • Retain control over your SMSF
  • Develop and implement your SMSF’s investment strategy, taking into account the whole circumstances of the fund
  • Develop and implement a strategy that manages your SMSF’s reserve
  • Do not enter into contracts or behave in a way that hinders trustees from properly performing their duties or powers
  • Allow beneficiaries access to certain information about the SMSF.

If you breach these rules and a person suffers loss or damages due to that breach, anyone involved can be held liable for those losses or damages, including the trustee and their professional adviser. TRUSTEE OBLIGATIONS In addition to SISA regulations, there are a number of other responsibilities under common law.

These include:

  • Adhering to and carrying out the terms of the trust deed  Securing the legal title to trust property
  • Maintaining trust funds in accordance with the trust deed and relevant laws
  • Acting impartially and in the best interests of all trust beneficiaries  Maintaining proper records and reporting to beneficiaries and other entities when required
  • Paying benefits to beneficiaries when required in accordance with the trust deed and relevant laws
  • Exercising reasonable care in the operation of the trust
  • Completing and lodging any required returns for the trust
  • Valuing the trust’s assets at market value for the purpose of preparing financial accounts and statements
  • Considering insurance for members as part of the SMSF investment strategy
  • Regularly reviewing the SMSF’s investment strategy.

The sole purpose test The sole purpose test is one of the most important responsibilities for an SMSF trustee and ensures that the fund is maintained for the sole purpose of providing retirement benefits to members once they stop working, after they reach 65, or to their dependents in the event of their death.

The sole purpose test also allows you to maintain an SMSF for an ancillary purpose, such as providing benefits to members if they need to cease work due to physical or mental illness, financial hardship, redundancy or compassionate grounds. If your SMSF is maintained for any other purpose, it is in breach of the sole purpose test and you may be subject to civil or criminal charges, as well as losing your super fund status and any tax concessions.


You are required to maintain accurate documentation of your SMSF and provide this to the Australian Tax Office (ATO) and other regulatory bodies as required.

This not only includes annual reporting, but also details on any decisions made by members. You must inform the ATO within 28 days if there are any changes to your trustees, directors, contact details or the financial situation of your SMSF.

Talk to your SF Wealth financial adviser if this occurs and we can update your ATO records electronically on your behalf. Valuing assets To prepare financial records and accurately report on members’ benefits, you must value all assets in your SMSF on an annual basis. The value recorded needs to be market value, which means the amount that a willing buyer could be reasonably expected to pay for the asset from a willing seller.

This price implies that:

  • the buyer and seller dealt with each other at arm’s length in relation to the sale;
  • the sale occurred after proper marketing of the asset;
  • and the buyer and the seller acted knowledgeably and prudentially in relation to the sale.


It’s important to maintain stringent records of the decisions made by members that affect your SMSF. These include records of new members, trustee changes, investments and pension payments. You must keep financial statements, accounting records and SMSF Annual Returns for five years, while meeting minutes, changes and appointments of trustees and reports provided to members must be kept for 10 years.

SMSF Annual Return The SMSF Annual Return is a compilation of your SMSF tax return, member contribution statement and a signed independent audit that states your SMSF is compliant with all relevant laws and regulations. It needs to be prepared and lodged with the ATO each year by the due date. Lodgment dates vary between SMSFs, so it’s best to check with your SF Wealth financial adviser who can tell you when your SMSF Annual Return is due. Operating statement Each financial year, an annual operating statement and a statement of financial position needs to be prepared for your SMSF. They need to be signed by at least two trustees, or the sole trustee of a single member fund.

These statements will be audited and included in the SMSF Annual Return, as well as held on file for a minimum of five years. Annual tax return Your accountant should prepare an annual tax return for your SMSF, to calculate your fund’s taxable income and claim any deductions or offsets available. Trustees should retain all records, documents, certificates and receipts that may be needed to prepare the tax return at the end of the financial year. Member contribution statement Member contribution statements are used to report on the total amount and type of contributions received by members in a financial year. This helps the ATO calculate each member’s contribution cap, eligibility for tax deductions, government co-contributions and how much of their contributions can be split with their spouse.


Every SMSF is required to appoint an approved auditor to complete a financial and compliance audit of the fund each financial year.

They are required to carry out their audit in accordance with best practice standards outlined in the Australian Auditing Standards.

These include:

  • Maintaining proper records in relation to the audit
  • Bringing any concerns about a fund’s financial position to the attention of the trustees and the ATO
  • Always reporting any breaches of SIS legislation to the trustees and to the ATO where required
  • Providing trustees with a summary of the auditor’s findings
  • Providing an audit report in the approved form, which the trustees can then lodge with their SMSF Annual Return Although you can choose to appoint accountants, investment experts and financial advisers to help you
  • set up and manage your SMSF, it’s important to note that the responsibility of fulfilling your legal and regulatory obligations lies with you as a trustee.

For more information about how we can help you streamline the administrative and reporting requirements of your SMSF, talk to your SF Wealth financial planner. This information is general in nature and does not take into consideration your personal circumstances. Talk to your SF Wealth financial adviser for SMSF advice that’s right for you.

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