Personal financial management is an important aspect of everyone’s lives, with the ultimate goal being a fulfilling retirement. In Australia, self-managed superannuation funds (SMSF) stand out as a great way to ensure a proper retirement.
These funds give you full control over your retirement savings so that you can manage things in the best way possible. But the catch is that you will need someone to sign an SMSF trustee declaration to make the most of your investments.
There is a wide range of SMSF trustee duties, but their primary job is to manage your funds to get maximum returns. If you are also confused about these, make sure to read this post to the end for a better idea.
But First, What is an SMSF Trustee Declaration All About?
SMSF trustee declaration is a legal document that every fund director or trustee must sign. Per the self-managed super fund rules, the trustee must sign the declaration within 21 days of their appointment. This serves as evidence that the trustee is aware of all their legal obligations.
This mandated ATO trustee declaration is a must for every new SMSF. Appointing a new trustee for an existing fund also makes it important to sign the declaration. This is different from a trust deed, which mainly deals with the rules for setting and managing an SMSF.
Why is the SMSF Trustee Declaration Important?
The SMSF trustee declaration is a must for managing the funds properly and adhering to all the relevant legalities. This is imperative for safeguarding the member’s interests, ensuring compliance, and reducing the chances of fraud. Signing this declaration ensures that you comply with all the relevant obligations with respect to the legal provisions.
This means you will need to satisfy the sole purpose test, prepare and review the SMSF investment strategy and act in the member’s best interest. Other than that, this also ensures that you don’t mix your personal assets with the fund and benefit from the relevant payment standards. You can even further optimise these technicalities by hiring Expert SMSF Specialist Advisors.
What Are the Basic Requirements for Becoming an SMSF Trustee?
Not everyone can sign a trustee declaration form for SMSF, as there are many prerequisites to take care of. These requirements will depend on whether the trustee is an individual or a company. That said, here are the requirements for individual trustees:
- Does not have any mental disability
- Must be over the legal age of 18
- Must not have been convicted of any offence related to dishonesty
- Are not an undischarged bankrupt
- Must not have received any civil penalty under ATO SMSF guidelines
- Have not faced disqualification by any regulatory body dealing with superannuation, such as the Australian Taxation Office (ATO).
Just as there are prerequisites for the individual as an SMSF trustee, the same logic applies to companies. So, if you are choosing a company as your trustee, make sure they meet the following SMSF setup requirements:
- The company has not faced any deregistration by the Australian Securities and Investments Commission (ASIC)
- The company has not had a provisional administrator or a receiver appointment to manage its operations.
- The company does not have any responsible officer or director who is a disqualified individual.
Important Guidelines for Completing the SMSF Trustee Declaration
With a better idea of SMSF trustee responsibilities and eligibility criteria, it is time to take a look and understand all the relevant guidelines. Here are the guidelines that will help you complete the declaration properly:
1. Understanding All the Relevant Terms
Before proceeding, you must first understand all the relevant terms in the ATO SMSF trustee declaration. You cannot walk your way around these necessary responsibilities and obligations as a trustee or director.
You must make it a point to keep yourself informed about all the important rates that affect the superannuation. Also, ensure you have a clear idea of how these ATO SMSF compliance rules affect the fund you are dealing with. In case you need any clarification about anything, always make sure to discuss it with experts.
2. Always Meet the Necessary Timeframe
One of the basic requirements for a new SMSF trustee declaration form is meeting the necessary timeframe. You must sign the declaration within 21 days of your appointment as a trustee, and this is not negotiable. As you reach the end of the financial year, adhering to this timeframe is essential for ensuring proper and effective compliance.
3. Provide All Accurate Information
It should not come as a surprise, but offering all accurate information is a must for SMSF trustees. This is a mandatory SMSF trust deed requirement, where your information has to be precise and reliable.
Depending on the changing circumstances, you can still change the information if and when needed. However, the catch is that you must report these changes to the Australian Taxation Office (ATO) within 28 days without failure.
4. Avoid Common Mistakes When Completing the Declaration
One of the most important aspects of the SMSF trustee responsibilities is avoiding common mistakes with the deed. This does not mean much, but all you need to do is ensure you don’t misunderstand the terms or provide inaccurate information.
Other than that, make sure that you submit all the relevant documentation within the given time frame by the ATO. It is important that you have a proper understanding of these pitfalls and do your best to avoid them.
5. Maintain Proper Records and Store Them Properly
The final thing you should do is ensure that you maintain and store all proper records related to the fund. The SMSF trustee rules mandate that you store the trustee declaration for the entirety of the fund’s operational life and ten years after its conclusion.
In case you fail to adhere to these rules, you might have to make up for them with relevant penalties. If needed, you can leverage the services of an SMSF accountant Perth to help better manage these technicalities.
Read more: 5 Essential Tools for SMSF Trustees and SMSFs
Conclusion
The SMSF trustee declaration is a very important legal document, and it is important to take things seriously here. So make sure you get the most out of this information and clear any confusion about the declaration. In case you have any doubts, feel free to seek SMSF compliance advice Perth from experts.