SMSF trustee declaration: a quick guide

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 7 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.

© Copyright Trish Power 2009-2014

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Comments

  1. Thomas says:

    Dear Trish,

    I have great problem regarding Allocation Pension account in SMSF. I am a self funded retiree, over 65 years old. I have set up my first SMSF 2 years ago and each year the pension is paid out from an Allocation Pension account.

    I am thinking to put more money into the SMSF and willing to work for 40 hours to pass the work test .
    Can I then put in more money in the SMSF allocation pension account or have to create another allocation pension account?

  2. Mike Ktori says:

    Hello Trish, Our SMSF is in its tenth year and we are now both enjoying pension mode. I would now quite like to prepare our tax returns myself. It doesn’t look overly difficult to me, after all, I manage the records and summarise them for the accountant each year. We have three distinct income streams being: rental income, term deposit income and share dividends/imputation credits. How would you advise me in this endeavour and where could I find some instruction? Thanks

  3. Hans Beeltje says:

    Hi Trish, I am really enjoying your DIY Super for Dummies, it is most helpful. One thing puzzles me, you state that when investing with a Instalment Warrant, we should have a DRS in place. We are looking at using a Limited Recourse Loan to buy property, is a DRS required here? I could find nothing specifically in the ATO Act or ATO circulars that refers to this.
    Many thanks,
    Hans Beeltje

    • Hi Hans
      Many thanks for your email and kind feedback on my book. Briefly, instalment warrants are considered derivatives, and hence require a DRS. The Government has introduced regulations that define the limited recourse loan arrangements and related structure as a derivative. I will be providing a fuller response in the September newsletter, or if the rules are still not certain by then, in the October newsletter.
      Regards
      Trish

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