Each SMSF is run by one or more trustees. You can choose between:
- Individual trustees. If you choose this option, all fund members will be trustees, and all trustees will be fund members. As each fund must have at least two individual trustees, this option is not suitable for single member funds.
- Company trustee. With this option, you appoint a company as trustee, with one or more fund members acting as directors of the company. This structure is often used for single-member funds or funds where a member can’t act as trustee — because they are an overseas resident, for example. It may also be useful for estate planning. However, it does involve extra costs for the set up and administration of the company.
As well as a fund Trust Deed, an SMSF has its own Tax File Number (TFN), Australian Business Number (ABN) and bank account. The members make superannuation contributions to that account, which the trustees then invest on their behalf, following the fund’s documented investment strategy.
Each investment decision needs to be carefully recorded, and there are other reporting and administrative obligations, with penalties for non-compliance. Among other requirements, you need to lodge an annual tax return for your fund and arrange for an annual audit of its financial statements by an approved auditor.
That means you need the time and experience to stay on top of your legislative and reporting obligations — or expert support from a professional administrator.