Who and What Is an SMSF Trustee?

Every self-managed super fund (SMSF) must have a trustee.

Trustees are central to how an SMSF operates because they control the fund, manage its assets, and ensure it complies with Australian superannuation law. Understanding the role of an SMSF trustee is essential for anyone considering establishing or managing their own super fund.

What Is a Trustee?

A trustee is the person or company legally responsible for running the SMSF and holding its assets on behalf of the fund’s members. In an SMSF, all members must also be trustees, or directors of a corporate trustee, which ensures that everyone with a stake in the fund has a say in its management.

Types of Trustees in an SMSF

SMSFs can operate under one of two trustee structures. The first is individual trustees, where each member of the fund is appointed as a trustee in their personal capacity.

The second is a corporate trustee, where a company is established to act as the trustee, and each member of the SMSF is a director of that company. Both structures are legal, but they have different administrative, legal, and cost implications.

Duties and Responsibilities

Trustees are responsible for complying with the Superannuation Industry (Supervision) Act 1993 (SIS Act) and associated regulations. Their duties include making investment decisions consistent with the fund’s investment strategy, ensuring contributions and benefits are handled correctly, maintaining accurate records, and lodging annual returns. Trustees must also act in the best interests of all members, not themselves individually.

The Australian Taxation Office (ATO), which regulates SMSFs, takes trustee responsibilities seriously. Failing to comply can result in financial penalties, disqualification as a trustee, or even the fund losing its complying status which carries severe tax consequences.

Corporate Trustees vs Individual Trustees

Choosing between a corporate trustee and individual trustees is an important decision. Corporate trustees often make administration simpler when members join or leave the fund, because only the company’s details, not property titles, need updating. They also provide an additional layer of asset protection, since the company structure limits personal liability. Individual trustees may be cheaper to set up but can lead to more complexity and personal risk over time.

Who and What Is an SMSF Trustee

Property Investment

When an SMSF invests in property, trustees must ensure that the purchase complies with superannuation law and the fund’s investment strategy. For example, the property must be for investment purposes only and cannot be used by members or related parties. If borrowing is involved, trustees must establish a bare trust and ensure the loan complies with limited recourse borrowing arrangement (LRBA) rules.

Summary

Trusteeship in an SMSF is not a formality but a legal responsibility with serious consequences for mistakes. Trustees must understand their obligations, keep up to date with compliance rules, and seek professional advice where needed. The trustee structure chosen can also affect administration, costs, and risk management.

For anyone considering an SMSF, understanding the role of a trustee is one of the most important steps before proceeding.

---

UNDERSTAND THE SMSF JOURNEY

Every SMSF journey is unique. Connect with our team to explore SMSF considerations and understand how different professionals may fit into the process.

EXPLORE YOUR SMSF OPTIONS >

(GENERAL INFORMATION ONLY)

---

DISCLAIMER: This article is provided for general information and educational purposes only. It does not constitute financial, legal, tax, investment, or other professional advice and has been prepared without taking into account your personal objectives, financial situation, or needs. This article may include perspectives from industry contributors. Contributor participation does not imply endorsement, recommendation, or preferred referral status. While reasonable care has been taken in preparing this content, no representation or warranty is made as to its accuracy, completeness, or currency. SMSF Intelligence does not accept liability for any loss or damage arising from reliance on this information or any linked materials. SMSF Intelligence does not provide financial, legal, or tax advice. Before making any decisions, you should consider the appropriateness of the information in light of your circumstances and seek advice from a suitably qualified and licensed professional.