Tidying your paper trail – SMSF trustees take note!

It’s that time of the year again, when trustees of SMSFs need to make sure their fund’s minutes are in order, that an investment strategy and valuations are up to date, that any pension documentation is correct and that they are aware of changes to the contribution rules.

These are some of the important issues trustees of SMSFs need to have paid attention to and checked before submitting their 2013-14 financial information to their accountants, auditors and tax agents in time to be lodged in annual returns to the ATO by mid-May.

Complete Records

To help yourself, and our firm to assist you with SMSF responsibilities, make sure you have complete and ordered records. It’s best for trustees to organise the information they provide our firm, especially because it provides the opportunity to check whether it is correct and complete.

Quite often it is the most basic information that can cause problems for many funds. To avoid this, trustees should try to keep all the information together from the start. It can also be less expensive where an auditor charges on a time basis to hunt down lost information.


As for preliminary work on audits, one issue that is standing out this year is problems experienced by funds that borrowed to invest. If there is one topic trustees should be on the ball about, it is limited-recourse borrowing arrangements. Loan documentation should be particularly examined to ensure minimum repayments have been made; otherwise trustees could be in breach of their borrowing agreement.

Pension Payments

For pension payments, the important thing to have checked is that a minimum amount has been paid from an account-based pension, which depends on the member’s age and their account balance usually at July 1 each financial year.

Where SMSFs do not make this payment the commissioner treats the pension as having ceased and the fund is considered as not having paid the pension at any time during the income year - meaning the usual tax-free status for fund assets supporting pensions will be lost for that financial year.

Additionally, formal requests or applications required for any newly commenced pensions during an income year can’t be made after the income year.

The commissioner has made it very clear in Tax Ruling 2013/15 that the commencement day of a pension cannot be before the member’s request or application is received.

One pension-related issue being scrutinised is ensuring more than one payment has been recorded for new pensions. That’s because the super rules define a pension as being a series of payments. Where a fund may have only made one payment towards the end of the year, trustees should show evidence that more payments have been made in the 2014-15 year to clear up this issue.

Trustee Minutes

Where trustee minutes are concerned, especially where there is a corporate trustee, the Corporations Act requires they keep minutes within one month of meetings or resolutions of directors.

Failure to do this is an offence, so it is important that trustees attend to this documentation at the time relevant to decisions made, rather than when an annual return is being lodged. Super legislation also requires all trustees to keep hold of minutes of meetings records for 10 years.

A very important consideration for new SMSF trustees and trustee directors is that all new individual trustees or directors of a corporate trustee must have signed a trustee declaration, showing that they understand their duties, within 21 days of becoming a trustee or trustee director. Again, there are penalties where the declaration is not made.

Under the super legislation, new trustees or trustee directors must also consent in writing to their appointment before they take up their position. Also if there has been a change in individual trustees or trustee directors, members or the contact details of the fund during the financial year, the ATO must be informed within 28 days. Don’t leave these notifications until return time!


On the issue of contributions, especially by trustees over age 65, they must ensure they have satisfied a work test where they have worked for at least 40 hours during a consecutive 30-day period during the financial year. Funds with members at this age should meet this requirement and ensure it is complied with during the financial year.

Though the government has rectified problems created by excess concessional contributions, and has legislation before parliament addressing the issues with excess non-concessional contributions, SMSF trustees need to be aware they are generally still required to reject any non-concessional contributions which exceed contribution limits. Additionally, it is much easier to deal with excess contribution issues at the time they arise as opposed to when a fund’s return is due.

As far as a fund’s investments strategy is concerned, since August 2013 SMSF trustees have been required to regularly review their strategy at least annually and when there are important changes to the fund.

For instance, if a member has commenced a pension, has left or died, or the trustee has chosen investments during the year which were outside the scope of the existing investment strategy, this needs to have been reviewed and potentially amended to account for these changes.

The fund’s auditor will look to see that this requirement has been met.


On valuations, since the 2012-13 income year, the super legislation requires all SMSFs to use market-value reporting for their financial statements, which should be determined at June 30 for all fund assets.


If your fund has reserves, the trustees will need to have reviewed strategies for managing them. This is particularly important if there have been significant changes where an investment reserve is depleted to top up fund earnings in a particular year.

On more specialised matters such as claiming a co-contribution from the government, an eligible member must have made a non-deductible personal contribution to their fund during the income year.

Where a fund has any expenses paid for from outside super, trustees must have treated those as personal contributions to the fund.

If you need help setting up or managing your self managed super fund, contact us today on 02 9299 7044.

Comments are closed.