Who Can Be a Trustee or Director of an SMSF?

When it comes to running a Self-Managed Super Fund (SMSF) in Australia, who can actually serve as a trustee or director?

Understanding SMSF Trustee Eligibility and Compliance Requirements in Australia 2025

Establishing a Self-Managed Super Fund (SMSF) requires trustees who meet specific eligibility criteria determined by the Australian Taxation Office (ATO). These requirements ensure trustees administer the fund responsibly and maintain its complying status under the Superannuation Industry (Supervision) Act 1993 (SIS Act).

For SMSF advisors and SMSF trustees, understanding trustee eligibility is a critical piece of compliance and fiduciary duty.

Eligibility Criteria for Individual Trustees

Every trustee must be at least 18 years old and free from legal disabilities, such as mental incapacity, that would prevent them from managing the fund effectively. Moreover, trustees must not be disqualified persons. Disqualification applies to individuals who have been convicted of dishonest offences, are bankrupt or insolvent under administration, or have regulatory bans imposed by the ATO, ASIC, or APRA. It is a criminal offence for a disqualified person to knowingly act as a trustee.

Trust deeds cannot appoint legal personal representatives (LPRs) or others to act on behalf of disqualified persons.

Prospective trustees should also be aware that unresolved tax or superannuation matters, such as unpaid tax debts or unlodged returns, may prevent SMSF registration or cause compliance issues. Therefore, addressing personal tax affairs before appointment is necessary.

SMSF Trustees for Minors, Adults with Legal Disabilities, or Deceased Members

For SMSF members under 18 or those with legal disabilities, the ATO permits a legal personal representative or parent to act as trustee or director, provided the trust deed allows it. This measure also applies to members who have granted an enduring power of attorney or are deceased until the fund’s death benefits are paid. Proper documentation and minutes recording these appointments are important to demonstrate compliance.

Corporate Trustees and Director Eligibility

When using a corporate trustee, members must also be directors of the company. Exceptions exist for single-member funds, allowing either a sole director or two directors who must be relatives or have specific employment relations.

Directors must satisfy the same eligibility criteria as individual trustees, including holding a Director Identification Number (DIN). Companies cannot act as trustees if they are under administration, being wound up, or deregistered by ASIC. They must also ensure no disqualified person serves as a director.

Trustee Consent and Declaration Requirements

All trustees and directors must provide written consent before taking on their roles. This consent should be recorded in the fund records and retained for the duration of the SMSF plus ten years after closure.

Additionally, trustees and directors must sign a trustee declaration within 21 days of appointment, confirming their understanding of their legal obligations and responsibilities. This declaration is essential for ATO audits but does not require submission unless requested. The declaration must be kept on file for as long as the person remains a trustee or director and for ten years thereafter.

Practical Implications

Trustees are responsible for ensuring the SMSF conforms to superannuation laws and regulations at all times. If a trustee or director becomes disqualified after appointment, they must cease acting immediately, and the fund must replace them promptly to maintain compliance.

Professionals advising clients on SMSF loans or arrangements should ensure clients’ trustees meet all eligibility and compliance requirements to support risk management and licensing obligations.

Understanding and applying these eligibility and compliance rules protects SMSF trustees from penalties and the SMSF from losing its complying status, thereby safeguarding members’ retirement savings in accordance with Australian superannuation law.

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DISCLAIMER: This article is provided for general information only. While care has been taken, no guarantee is given as to the accuracy, completeness, or timeliness of the content. It does not constitute financial, accounting, legal, or SMSF advice and does not consider your personal circumstances. You should seek independent, licensed professional advice before making decisions about SMSFs, compliance, or investments. #SMSFTrustee #ATOCompliance #SuperannuationLaw #MortgageBrokerAdvice