Obligations of self-managed superannuation

While there are many benefits in self-managed superannuation funds, by law there exists a number of important obligations including personal responsibility, administrative obligations, investment/market risks and compliance reporting.

Responsibility

The trustees are ultimately responsible for all aspects of the management of the fund. Penalties for non-compliance can be significant and in severe cases can include tax penalties, fines and even possible imprisonment. You should note that administrative penalties apply to SMSF’s for failure to lodge documents on time and making misleading statements in documents.

Administrative obligations

For a fund to comply with its reporting obligations, record keeping and management of actions must be up-to-date. This necessarily involves a degree of time and effort either performed by the trustee(s) or a nominated fund administrative services provider.

Investment/market risks

All investments made by the trustees on behalf of the fund contain an element of risk. Investment returns are influenced by a variety of factors both on a local and global scale. These include for example, economic conditions, interest rate changes, exchange rates, liquidity of the assets, government policy, technology factors as well as market sentiment and business decisions.

Large superannuation funds employ expert advice and people with strong experience to consider these factors in determining the future investment purchases and asset disposals over the coming periods. In contrast, the trustee(s) of a self managed superannuation fund may not have the same level of expertise in market knowledge, nor time to consider changes to investment conditions.

Furthermore, the trustee(s) of a self managed superannuation fund may have made investment decisions which place a substantial spread of the fund’s assets in classes of investment that may be more vulnerable to certain changes in investment conditions such as property or shares. In contrast, certain types of larger investment funds may have a greater spread of investments that reduce their risk to exposure to one particular class of investment.

By diversifying the fund’s investments and investing for an appropriate time frame, the trustees may be able to reduce this particular risk. Professional and qualified financial advice should be sought before making any financial decision.

Legislative change

The fund may be affected by changes in Australian superannuation laws from time to time.

Annual Compliance Requirements

Your SMSF must attend to certain annual reporting requirements each and every year. These include:

  • Preparation of an annual Balance Sheet
  • Preparation of an annual Profit & Loss Statement
  • Preparation of annual Member Statements
  • Preparation of annual Trustee Resolutions & Minutes
  • Preparation of an annual Income Tax Return
  • Preparation of an annual Audit
  • Lodgement of the annual Income Tax Return

The above annual compliance requirements are ALL the compliance requirements that a SMSF must attend to annually. Importantly SUPERNATION attends to ALL the above annual compliance requirements for your SMSF. You do not need to arrange for another accountant to prepare the above annual documentation as they are all completed by SUPERNATION. Similarly all the above documentation is covered by our annual fee. The process to prepare the annual compliance documentation for your SMSF is detailed as follows:

Step 1: ElectronIc Data Received by SUPERNATION

When you become a client of SUPERNATION, a Macquarie Cash Management Account is established for your SMSF which will act as the Transaction Account for your SMSF. The Cash Management Account allows SUPERNATION to electronically access the transactions made by your SMSF in order to attend to the SMSF Annual Compliance Requirements. SUPERNATION has absolutely no access to your Account or Share Trading Platform and cannot transact or login to these Accounts.

Step 2: ElectronIc Data Reviewed at Financial Year End

The Electronic Data received by SUPERNATION is reviewed to determine what data we have and what data is additionally required to prepare the annual compliance documentation for your SMSF. In some cases the data will be available but additional information will be required. For example when a Contribution is made to your ANZ V2 Plus Account we can view that the Contribution has been made. Typically the Member making the Contribution will be detailed on the ANZ V2 Plus Bank Statement. However to the extent that the narration on the Bank Statement is insufficient, SUPERNATION may require additional details confirming on whose behalf the contributions have been made and the contribution type.

Step 3: Annual Checklist emailed to all clients in July

In July each Financial Year, an Annual Checklist is emailed to you detailing the information we have for your SMSF and also advising what additional information is required from you. As detailed above most of the data is available as it has been received electronically. The Annual Checklist will guide you through additional information you need to provide. For example you may need to confirm on whose behalf contributions have been made and the contribution type as detailed above. Additionally you may need to provide details of Investments made by the SMSF which we cannot identify. For example if you make a Term Deposit with a Bank directly or a Property purchase, we will not have this information available. We will need documentation evidencing these types of external Investments at financial year end and will guide you on the documentation and information we require.

Step 4: Checklist Information returned to SUPERNATION

Once you have reviewed the Annual Checklist, you will need to collate the additional information and documentation requested (if any). Once collated the information will need to be submitted to SUPERNATION. The Annual Checklist will usually specify a due date to submit the information which is usually September or October following the end of the financial year. It is noted that in the first year your SMSF is setup the SMSF must lodge its Tax Return by February 28 following the end of the Financial Year. In the second year and future years the SMSF must lodge its Tax Return by May 15 following the end of the Financial Year. Accordingly by requesting that the Annual Checklist is provided to our office by September or October, this gives us sufficient time to prepare and lodge the annual compliance documentation by the due date.

Step 5: Compliance Documentation Prepared and available for you to Review and Sign

On receipt of the Annual Checklist Information from you, SUPERNATION will attend to the annual compliance documentation as detailed in Step 1 above. On completion you will be notified via email that the annual compliance documentation is ready for review and signing from the client portal. Once you are satisfied that the documentation is correct, you simply have to sign and upload, email or mail the documentation to our office. If you have any queries about the documentation it is preferred that you email your queries through to our office and the accountant who prepared the documentation will respond to your queries as soon as possible. It is preferred that you do not call SUPERNATION with any queries as it is more efficient for the accountant to review your query and respond with an appropriate answer by email. Importantly a copy of the annual compliance documentation will be available to download or print for your records.

Step 6: Tax Return Lodged with ATO

On receipt of the signed documentation from you, the Tax Return is lodged with the ATO. It is noted that in the first year your SMSF is setup, the SMSF must lodge its Tax Return by February 28 following the end of the Financial Year. In the second year and future years the SMSF must lodge its Tax Return by May 15 following the end of the Financial Year.

Step 7: Tax Liability Paid by you (or Tax Refund Issued)

When the Tax Return has been completed at financial year end, SUPERNATION will send to you the Tax Return to you for review and sign as detailed above. The Tax Return will also indicate the Tax Liability due and payable and the due date. In the first year your SMSF is setup the SMSF must pay its tax liability by February 28 following the end of the Financial Year. In the second year and future years the SMSF must pay its tax liability by May 15 following the end of the Financial Year. The tax liability must be paid from the ANZ V2 Plus Account established for your SMSF. SUPERNATION will provide you with the relevant BPAY details to arrange payment of the tax liability conveniently from your ANZ V2 Plus Account. Alternatively where your SMSF is entitled to a Tax Refund the Refund will generally be issued 2-4 weeks after lodgement of the Tax Return. The ATO will in turn issue a cheque for the Tax Refund which you will need to deposit into your ANZ V2 Plus Account. At this time the Annual Compliance Process will be completed.