OUR LOCATION
A self-managed super fund can be a cost-effective and effective way to grow your wealth prior to retirement but if you decide to proceed with this strategy, there are some legal requirements you need to be aware of.
Your SMSF must also be maintained for the sole purpose of providing retirement benefits to its members.
Some of the other legal requirements relate to record keeping. Here’s what you need to keep track of in order to ensure your SMSF is compliant with regulations:
Financial transactions and statements
You need a record of the transactions you make within your self-managed super fund, firstly so you can keep an eye on how your investments are performing and also for legal reasons.
For accuracy, keep separate accounting records for each member of your fund and clearly record activity related to them.
Remember to keep track of the type of contributions you make as well as any rollovers your fund receives. This way the taxable and tax-free components of any benefits can easily be worked out by your accountant.
Changes
You must notify the ATO within 28 days if there are changes to your fund, and also keep a record of the changes. An example of a change could be the appointment of a new trustee.
Your investment strategy
It’s good practice to regularly review your investment strategy but this is also a legal requirement. When you have a meeting with your fund manager, track the meeting minutes so you can share records of which decisions you made and why.
Crypto transactions
Cryptocurrency is approved for SMSF use by the ATO. Before you jump into this strategy, you need to confirm that your use of crypto is allowed under the fund’s trust deed and is invested in accordance with your fund’s investment strategy. It also has to comply with SISA and SISR regulatory requirements concerning investment restrictions.
As shared by SMSF Advisor, data shows a steady increase in cryptocurrency assets held by SMSFs. As of the September quarter 2021, some $228 million was invested in the asset class, up from $212 million in the June quarter.
With crypto being more and more accepted as an investment strategy, it is also important to keep track of where your cryptocurrency is. Speak to your SMSF fund manager about the best way to make records and whether you should be making a log of every transaction.
How long to keep records for
Financial accounts and statements, SMSF annual returns and statements provided to the ATO must be kept for at least five years.
Some other records, such as trustee documents and forms, must be held onto for ten years. Your accountant can help you make sure you hold onto the right information for the appropriate period of time.
Other SMSF regulations
Your SMSF cannot:
- Lend money to a member of the SMSF or a relative of a member of the SMSF
- Acquire assets from trustees of the SMSF, their relatives or related entities (exceptions may apply)
- Pay any member preserved benefits, unless the member satisfies a condition of release
- Borrow money, outside of specified exceptions
If you fail to stay on top of your record-keeping duties, you may end up in trouble with the Australian Tax Office. Each trustee can be personally liable for each breach, so it makes sense to follow the rules.
Outside of the legal requirements, good record keeping of your SMSF funds makes sense to allow your accountant to quickly prepare statements at tax time. It will make life easier and less stressful because you will have better transparency around your investments and if you do end up being audited you will easily be able to share evidence of your activities.
Need help to keep track of your SMSF? Speak to Crest Accountants today.
Disclaimer: The information contained in this news post is general in nature and is intended to provide a general summary only and should not be relied on as a substitute for professional advice. Whilst the information is considered to be true and correct at the date of publication, changes in circumstances after the time of publication may impact upon the accuracy of the information.
