Common Questions

What is a Self Managed Superannuation Fund?

A self managed superannuation fund is a form of trust. It has trustees and beneficiaries. Beneficiaries are members and their dependants.

The legal definition of a self managed fund is set out in the Superannuation Industry (Supervision) Act. Essentially, it requires the fund to have less than 5 members and that all members must be trustees.

Who can be a Trustee?

Supercorp recommends a corporate trustee, with fund members as directors. Whether there is one, two, three or four members, each member is a director and vice versa.

Although individual trustees are allowed, if there is only one member of the fund, that same person cannot be the sole trustee but must be one of two trustees. That means finding someone to be the second trustee. The second trustee can be anyone other than the employer of the member (but note that this has a very wide meaning). A relative, your accountant, solicitor or financial planner can be the second trustee.

Trustees and directors of trustee companies must be at least 18 and never have had a conviction for dishonest behavior. Also, they cannot be a bankrupt or subject to a Part X arrangement, nor can they have received a civil penalty under the Superannuation Industry (Supervision) Act.

What Happens at Retirement

Once you have retired and satisfied the requirements to access your super benefits, there are a variety of benefit payment options. These include lump sums, pensions or a combination of the two. It is also possible to leave an account to accumulate until the member decides to draw a benefit. There is no age limit. Subject to certain conditions, pensions can also be changed after being started. It is also possible to start a “transition to retirement” pension after preservation age has been reached. There are many factors that will influence which benefit type will suit each member. As the retirement date approaches, specialist advice should be sought. We can assist as fund administrator but the input of your accountant and a financial planner would also be very useful.

Is it Really "DIY" Super?

It has been common in recent years to refer to self managed super funds as “DIY funds”. However, that reference implies that the trustees can do it all themselves. That is simply not true. What most trustees want to do is control the investments themselves, in terms of selecting the type of investments and often the individual investments of the fund. Super funds are not purchased “off the shelf”, nor can most people hope to administer their own fund. Administration involves many tasks, including membership recordkeeping and calculations, accounting, trustee minutes, ATO lodgments (tax return, contribution details, etc) as well as ensuring that the fund complies with all the legislation.

What are the Basic DOs and DON'Ts?

  • DO ask for advice before arranging ANY investments.
  • DO keep a simple cashbook if possible.
  • DO request bank statements on a monthly basis, as at the first day of the month.
  • DO keep all investment certificates, statements, contract notes, dividend slips etc. in an orderly fashion so they can be easily identified for each financial year. It is best to keep all details of each investment separately.
  • DO become familiar with your funds Trust Deed, as all investments and trustee actions need to be within the requirements set out in that Deed.
  • DON’T allow the bank account to be overdrawn - that is borrowing outside the current borrowing rules. Borrowing is also prohibited via an associated unit trust.
  • DON’T lend super fund money to a member, their business or their family, even with mortgage security.
  • DON’T allow the super fund to buy any assets from a member, their family or any associated entity (companies and trusts).
  • DON’T admit any new members without first checking with us (new members must immediately become trustees).
  • DON’T allow the fund to have more than 4 members, unless you know the full ramifications, including extra costs and SIS compliance complications.

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