Note: In late 2012, the Australian Tax Office undertook a review of the SMSF trustee declaration, and released a revised declaration and revised the accompanying key messages. All SMSF trustees should take a few moments to revisit the declaration, in particular, the 3 main changes to the document.
When setting up your SMSF, you must sign a SMSF trustee declaration that confirms you understand the responsibilities and duties involved in running a SMSF. In late 2012, the ATO made 3 significant changes to the SMSF trustee declaration, reflecting significant changes in the super laws affecting SMSFs (more on these changes later in the article).
If you have set up a DIY super fund in the past 5 years or so, then you would be familiar with the SMSF trustee declaration. Since July 2007, a new trustee of a new SMSF, or a new trustee of an existing SMSF, must sign a trustee declaration within 21 days of becoming an SMSF trustee.
The declaration is a curious document because its purpose is simply to confirm that you understand your responsibilities as fund trustee (including your role as a director of a corporate trustee if your SMSF has a corporate trustee). As trustee, you’re still subject to these responsibilities even when you don’t sign the document. If you don’t sign the trustee declaration, however, you may be subject to penalties. More seriously, if your fund breaks the super rules, you (or your fund) can be subject to very serious penalties.
TIP: If you commenced your SMSF trusteeship before July 2007, then you won’t have signed such a declaration, but that doesn’t mean you shouldn’t be aware of what’s contained in such a document. The SMSF declaration is a very handy reminder of your responsibilities as a SMSF trustee, and I suggest that every trustee should obtain a copy (see end of article for ATO link to SMSF declaration).
Important changes to SMSF trustee declaration
In late 2012, the ATO made 3 significant changes to the SMSF trustee declaration, reflecting important changes to the super laws affecting SMSFs, namely, the following requirements were added to the 2012 version of the SMSF trustee declaration:
- Investment strategy: A SMSF trustee must regularly review the SMSF’s investment strategy
- Insurance: A SMSF trustee must consider whether the SMSF should hold insurance cover for members
- Government financial assistance: A SMSF trustee must also make a specific declaration that he/she is aware that they do not have access to the government’s financial assistance program, in the event of a financial loss due to fraudulent conduct or theft
Before you sign the trustee declaration, you must read the ATO fact sheet ‘Self-managed super funds — key messages for trustees’ (NAT 71128). The fact sheet states that you’re responsible for managing your fund, and that you must understand your trustee duties and responsibilities, which include:
- Ensuring your SMSF is maintained for the purpose of providing retirement benefits, which is more commonly known as meeting the sole purpose test.
- Drafting the fund’s investment strategy, regularly reviewing that strategy, and making investment decisions.
- Accepting contributions and paying benefits.
- Appointing an approved auditor for each income year.
- Lodging annual returns with the ATO and keeping fund records.
- Keeping your personal or business assets separate from your super fund’s assets
Note: You must also sign a SMSF declaration if you are a legal personal representative who has been appointed as a SMSF trustee (or director of a corporate SMSF trustee) on behalf of the following types of SMSF members:
- SMSF member who is under 18 years of age (or is under another type of legal disability)
- SMSF member for whom you hold an enduring power of attorney
- Deceased SMSF member
How to sign the SMSF declaration…
When signing the SMSF trustee declaration, you must ensure you insert the full name of your fund at the beginning of the declaration. You must then sign and date the declaration on page 2 of the form, and ensure you have a witness to your signature who also signs and dates the form. Your witness must be aged 18 years or over.
You can download a copy of the SMSF trustee declaration from the ATO website (publication number: NAT 71089) or click here to access the SMSF declaration on the ATO website . You can also download a copy of the ATO fact sheet ‘Self-managed super funds – key messages for trustees (NAT 71128) from the ATO website, or by clicking here.