Self-managed superannuation funds (SMSFs) are being opened by more and more Australians. SMSF Administration Services relate to the administration and reporting requirements of an SMSF. However, it’s important that you understand the work you’re taking on. SMSFs require a significant amount of administration. There is a long list of compliance requirements that may attract large penalties if they’re not met.
There’s help if this sounds like too much to handle. Professional administration services may provide important support with superannuation law. Here’s what you might expect.
Key takeaways
What are SMSF administration services?
SMSF administration services are administrative in nature and do not constitute financial advice. An administration service supports SMSF trustees with compliance requirements and reporting. For financial or credit advice, we may refer you to an authorised representative of Lifespan Financial Planning Pty Ltd (AFSL 229892). For credit assistance, FAA Group may work with you under its Australian Credit Licence (ACL 388789).
Why is proper administration so important?
Non-compliance penalties for SMSF trustees
Our intention isn’t to scare you. We want you to be clear-eyed about the importance of accurate compliance. Here are potential consequences for failing to remain legally compliant with superannuation law.
SMSFs are regulated by legislation such as the Superannuation Industry (Supervision) Act 1993, also known as the SIS Act. There are many common contravention issues that SMSFs face, such as:
- Making loans to members or related parties. Section 65 of the SIS Act restricts SMSFs from providing loans or financial assistance to members or related parties.
- Too many in-house assets. In-house assets may not exceed 5% of the total value of the fund. This is covered in Section 83 of the SIS Act.
- Non-compliant release of funds. There are strict rules around when a fund member may access their superannuation. If you haven’t met the conditions of release set out in Section 31 of the SIS Act, you will be held liable.
- Not following the investment strategy. SMSFs must follow an investment strategy that meets the needs and risk tolerances of the members. Deviating from this strategy may lead to penalties.
Enforceable undertaking
A trustee may undertake to correct any SMSF contraventions. The undertaking must be sent to the Australian Taxation Office (ATO) in writing, which will decide whether to accept. An undertaking must include:
- Cease any action that led to the contravention.
- What actions will be taken to correct the contravention.
- How and when the ATO will be notified of the issue being rectified.
- How the trustees will ensure the contravention doesn’t happen again.
Administrative penalty
Trustees may face a fine for non-compliance. A trustee’s liability may depend on the fund’s trustee structure. There are two structures available:
- Individual trustees. In this structure, the full penalty is applied to each trustee.
- Corporate trustee. If the fund has a corporate trustee, the penalty is divided between the corporate trustee directors.
Fines are comprised of a certain number of penalty units. As of 7 November 2024, 1 penalty unit = $330. The more severe the contravention, the more units are applied. For example, failing to keep minutes of meetings attracts 10 penalty units, or a $3300 fine. Failure to meet in-house asset requirements attracts 60 penalty units, or a $19,800 fine. Penalties can’t be paid out of the fund’s asset pool.
Increased income tax implications
If you access your super without meeting the conditions of release, the amount accessed forms part of your assessable income. This means you may have to pay more tax on top of any other penalties, such as a fine.
Notice of non-compliance
In serious cases, a fund may be issued a notice of non-compliance by the ATO. This can have major implications for the fund, including:
- Having its concessional tax rate replaced with the highest marginal tax rate, which is currently 45%.
- The fund’s assessable income may increase in the year it’s non-complying.
- The fund may be listed as non-complying on Super Fund Lookup. This can mean the fund may not receive rollovers, and employer contributions aren’t considered superannuation guarantee payments.
Trustee disqualification
In some cases, a trustee may be permanently disqualified from membership in an SMSF. This decision is based on:
- The severity of the contravention.
- The number of contraventions that have happened.
- The likelihood that non-compliance will continue.
Freezing the SMSF’s assets
If the ATO believes that the actions of a trustee or third party will negatively affect the interests of the beneficiaries, the fund may be frozen. This means that the fund may not acquire or dispose of assets, or deal with them in any way.
Comprehensive services for SMSF administration
How our SMSF accountants support trustees? Considering what it takes to deal with the ATO, it’s potentially quite a lot. Here are some of the major administrative duties we support.
SMSF setup
- Choosing a trustee structure.
- Establishing a trust.
- Obtaining a trust deed.
- Creating an ABN if you’re using a corporate trustee.
- Opening a bank account for the fund.
Annual tax obligations
- Organising your annual tax return.
- Valuing the fund’s assets.
- Preparing financial statements.
- Paying the ATO levy.
Maintain compliance
- Appointing an independent auditor.
- Organising an annual audit.
- Monitoring in-house asset limits.
- Responding to ATO queries.
- Assisting with administrative checks to help ensure benefit payments align with conditions of release.
Reporting
- Reporting trustee or fund member changes to the ATO.
- Maintaining financial records.
- Reporting member contributions and account balances.
Why choose FAA for SMSF admin services?
Our experience and knowledge allow us to support a wide range of clients with SMSF accounting and compliance requirements.
Here are some reasons why clients choose to work with us.
- SMSF software. Our online platform provides document storage for record-keeping. Alert automations are designed to highlight potential contribution cap issues or compliance risks based on available data. Our technology integrations allow for easier reporting and compliance.
- Expertise. We’ve handled SMSF administration for more than 30 years. We are continually reviewing changes to super legislation and taxation rules. Our qualified accountants are dedicated to ongoing professional education.
- Comprehensive services. We provide full administration and audit coordination. Our team manages compliance and taxation considerations.
- Responsiveness. We endeavour to provide quick turnaround for tax return lodgements and other reporting requirements. We maintain prompt communication for any queries from clients or regulatory bodies.
- Transparent pricing. We provide clear pricing and detailed cost breakdowns so clients understand fees upfront. You’ll receive accurate quotes and a complete breakdown of all expenses.
- Local presence. Our Maroochydore office keeps us close to our Sunshine Coast clients. We’re available for in-person meetings as well as by email or phone.
We value our client relationships
Disclaimer: These testimonials are personal opinions. They may not reflect the experience of all clients. Testimonials are not a guarantee of any outcome. Past performance is not a reliable indicator of future results.
Thanks again to you (Teigan), Peter and the FAA team for achieving our first purchase through our SMSF.
– Brenton
We appreciate what you do for us. If you’d like to share your experience, we’d appreciate your feedback.
Conclusion
SMSF management can be complex. SMSF administration services relate to supporting compliance and reporting requirements. Individuals considering an SMSF may seek administrative assistance to help manage ongoing fund obligations.
Would you like support with SMSF administration and compliance?
Contact us today for an initial consultation to discuss your SMSF administrative requirements. This consultation is general in nature and does not include tailored financial or credit advice.
