When you become an individual trustee or a director of a corporate trustee for a SMSF, you take on the administrative responsibilities of ensuring your fund complies with the law. These responsibilities include record keeping, arranging an annual return and audit, valuing the fund’s assets and withholding tax (if necessary).
Keeping accurate records
The ATO requires that trustees keep accurate records for prescribed periods. The following records must be kept for a minimum of five years:
- Accounting records that detail the transactions and financial position of the SMSF
- Annual returns and
- Copies of any other returns or statements provided to the ATO or other super funds (eg Rollover Benefits Statement)
These records must be kept for a minimum of 10 years:
- Minutes of trustee meetings
- Trustee declarations
- Members’ written consent to act as trustees and
- Copies of all statement or reports given to members
You are also required to notify the ATO within 28 days if there is any change in the SMSF’s details, including:
- Contact details (contact person and phone number)
- Address and
- Change in the trustees, members, or directors of the corporate trustee
Lodging your annual return
All SMSFs must lodge an annual return with the Australian Tax Office. If you’re not using a tax agent, your lodgement date will be October 31 for existing funds and February 28 for funds that commenced in the preceding financial year. If you use a tax agent, you should contact the agent to find out your submission date. Annual returns prepared by a tax agent are generally due by 15 May.
The annual return comprises the fund’s tax return, information about member balances and contributions, and a financial and compliance audit. The auditor will check that the SMSF’s financial statements and accounts represent an accurate description of the fund’s financial position. With the compliance audit, your auditor will verify that the SMSF has complied with the SIS Act at all times during the year.
Your auditor must be registered with ASIC as an approved SMSF Auditor, and preferably should be appointed by the trustees before the end of the financial year.
Valuing your SMSF’s assets at market value
Your SMSF’s assets must be valued at market value on an annual basis on the fund’s reporting date, which will generally be June 30. This ensures that the members’ benefits as reported in their annual statements reflect all market value movements over the period. It also allows you to monitor and review investment performance and asset allocation, confirm that the fund is not in breach of the ‘in-house asset’ rules, and make sure the fund has sufficient resources for the payment of any benefits.
Determining the market value is straightforward for many assets like listed securities (shares and fixed income securities), managed funds, and term deposits and cash. These assets are valued at their last traded price on the last business day of the financial year. If the asset is a managed fund, the net asset value is as supplied by the manager.
For directly held property and other assets which are not publicly listed, establishing the market value can be more difficult and a qualified valuer would typically be required.
The ATO has published ‘Valuation Guidelines for Self Managed Superannuation Funds’, which provides information on how valuations should be conducted. The ATO does not intend that obtaining a market valuation should be onerous or expensive. However, a qualified independent valuer may be required where the value of the asset represents a significant proportion of the fund’s value, the asset is complex, or the assets are collectables or personal use assets.
If you pay a pension or lump sum benefit to a member under 60 years old, then you’ll need to withhold tax. If the member is over 60 years and the benefit is paid from an untaxed source, you’ll also need to withhold tax. Lump sum death benefits that are paid to non-dependents are also subject to withholding tax.