Powered by MOMENTUM MEDIA
subscribe to our newsletter sign up

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

How to become an SMSF trustee

How to become an SMSF trustee

Some people prefer to handle their own retirement savings by becoming trustees of a self-managed super fund (SMSF). Serving as an SMSF trustee is a huge responsibility because they have a lot of duties to perform and must always be informed of changes in super and tax laws. Since they have a legal obligation to uphold all the objectives of their trust fund, trustees could face steep punishment for breaching regulations.

Here’s a quick guide on how to become an SMSF trustee in spite of the responsibilities and risks.

Confirm your eligibility

Ensure that the Australian Taxation Office (ATO) commissioner does not find a reason for disqualification by meeting these eligibility requirements:

  • Must be at least 18 years old (a legal representative may act on behalf of minors)
  • Are not legally disabled (i.e., mentally incapacitated)
  • Have not been convicted of offences relating to dishonesty
  • Have not been penalised under super laws
  • Have not been disqualified by regulators (e.g., ATO) or the court
  • Are not insolvent under administration (not under financial distress such as bankruptcy)

The SMSF is managed for the retirement benefits of its members. This means all trustees should have assets within the fund.

Advertisement
Advertisement

Get appointed as a trustee

There are actually two ways to become an SMSF trustee: the first option is to join an existing SMSF as a trustee and the second is to establish an SMSF.

Joining an existing SMSF
Appointed trustees to existing SMSFs only need to sign the trust declaration and other existing legal documents pertaining to the fund within 21 days of appointment.

After signing legal documents, the SMSF needs to confirm the new trustee’s appointment by informing appropriate regulators and amending their fund’s documents. This may be costly for SMSFs, depending on its structure, so ensure proper understanding of the fund’s objectives.

Registering a new SMSF
Decide what kind of trust to create. The number of people involved in the SMSF depends on its structure—especially if it is a single-member fund—so knowing the differences between an individual and corporate trustee is important.

Know, understand and perform responsibilities

All trustees are equally responsible for managing the SMSF. Make sure to contribute to the management of the fund.

Any error or shortcoming by one trustee can affect all other members or even the whole fund. Regulatory bodies do not accept excuses such as “but that wasn’t my mistake”.

Prepare for the worst

SMSFs are meant to financially secure its members’ throughout their retirement, but unexpected events such as terminal illness and sudden death can happen.

Trustees are responsible for ensuring that the deceased member’s nominated beneficiaries will receive the appropriate benefits as outlined by Super and tax laws and the trust deed. It’s also important to prepare for what could happen to the fund if any change in membership occurs.

 

This information has been sourced from the Australian Taxation Office.

How to become an SMSF trustee
How to become an SMSF trustee
nestegg logo
subscribe to our newsletter sign up
FROM THE WEB
Recommended by Spike Native Network
Dr Terry Dwyer, Dwye... - She is quite right of course. Returns to both capital and labour incomes are much reduced by taxation and it has increased enormously since the.......
Anonymous - A Bad call by the RBA. Lower interest will not stimulate the economy any more at 1.25% than at 1.5%, which was already too low. The imminent election.......
Shelly H - Im with ING, have a Mortgage Simplier Account and they haven't dropped my interest rate. Where is this information coming from......or is it for new customers only!!....
Anonymous - agree entirely and would add that putting the money into super locks it away and gives the government control over you and your money. The 'blue sky'.......