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Changes for Self Managed Super Funds

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As part of the 2006-07 Federal Budget, the Treasurer announced major reform to the superannuation system and released A Plan to Simplify and Streamline Superannuation. After community consultation, the legislation implementing these changes was introduced into Parliament on 7 December 2006.

The majority of the changes that will impact on self managed superannuation funds (SMSFs) will be effective from 1 July 2007.

Understand your duties as a Trustee

To ensure that new trustees, or directors of corporate trustees, understand their duties as trustee of an SMSF, any trustee, or a director of the corporate trustee appointed after 30 June 2007, must sign a declaration. The declaration must be signed in the approved form, no later than 21 days after becoming a trustee or director.

Although the form is not required to be lodged with the Tax Office, the declaration must be readily available to the Tax Office if required. Failure to produce the signed trustee declaration at the time of a Tax Office audit or review may result in penalties being imposed. The declaration must be retained with the fund's records for a period of at least 10 years.

The trustee declaration will be available for download from the Tax Office web site or by ordering from the Tax Office Publications Ordering Distribution system before 1 July 2007.

What is a self managed super fund ?

Trustees must ensure that their fund stays within the definition of a self managed superannuation fund at all times, unless they decide to become an APRA-regulated fund.

Generally, a superannuation fund is an SMSF (with a few exceptions) if it satisfies the following conditions:

  • It has a trust deed that meets the requirements of the Superannuation Industry (Supervision) Act 1993
  • it has four or fewer members;
  • no member of the fund is an employee of another member of the fund, unless they are related;
  • each member is a trustee, or director of the corporate trustee; and
  • no trustee, or director of a corporate trustee of the fund receives any remuneration for their services as a trustee.
  • There are special rules applicable to single-member funds, our publication ‘Roles and Responsibilities of Trustees’ has further details.

Simplifying the reporting

By merging the ;

  • fund's income tax return
  • regulatory return
  • and member contributions statement

an SMSF will be able to produce a single annual return.

Along with the lodgement of this return, SMSFs will make a single payment for both the supervisory levy and their fund's income tax liability. From the 2007-08 financial year, the supervisory levy will increase from $45 to $150 per year.

SMSFs will use the new combined form for the first time to report for the 2007-08 financial year (generally lodged after 1 July 2008). The existing return forms will be used to report for the 2006-07 financial year.

Penalty regime

From 1 July 2007, expanded administrative penalties may be applied where funds:

  • fail to lodge returns on time
  • provide false or misleading statements, and
  • fail to keep and retain records
  • fail to advise us of a change of trustee, or other changes in the fund.

There will be significantly increased compliance activities to ensure SMSFs comply with their administrative obligations.

Approved forms

The auditor contravention report will become an ‘approved form’. This means that from 1 July 2007 there will be a legislative requirement for auditors to report in the approved form.

Historically, some trustees have advised of changes in membership by writing us a letter. After 1 July 2007, these details must be provided in the approved form. The current change of details form can be used to advise of these details, and may be completed online via the Australian Business Register (ABR) website www.abr.gov.au.

If you have a self managed super fund or are considering establishing one, please contact this office for more information.

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