With the latest statistics released from the ATO showing that self-managed superannuation fund (SMSF) Trustee’s control nearly one third of the total Superannuation for Australians, the ATO has recently announced changes to the regulations which will see the obligations of these Trustee’s increase.
Health Professionals are among the 900,000 SMSF trustees responsible for the management of $439 billion in superannuation assets.
The Cooper review, an independent review conducted by industry specialists on behalf of the ATO, focused on the education and responsibilities of trustees to ensure the sector is complying with regulations and operating in the best interest of members.
New regulations, which came into effect on 7 August 2012, adopt some of the changes to SMSFs recommended in the Cooper review.
These measures are intended to address potential risks and strengthen the regulatory frameworks surrounding SMSFs.
In an attempt to build a framework around decision making policies, trustees will now be required to consider whether their fund should hold insurance for one or all of its members.
These considerations and subsequent decisions must now be documented, and will form part of the annual review of the investment strategy.
This change in itself isn’t too onerous as many members will already be covered by insurance through their SMSF. There are also tax advantages to owning your insurance through your super fund.
Fund Investment Strategy
Trustees of SMSFs are solely responsible and directly accountable for the management of their members’ benefits. Trustees have a duty to make, carry out and document decisions about investing the assets of the SMSF and to carefully monitor performance. These decisions are formulated in the fund’s Investment Strategy.
As part of the changes, trustees will now be required to review the fund’s Investment Strategy on a regular basis to ensure that it continues to reflect the purpose and circumstances of the fund and its members.
While the new regulations do not define ‘regular basis’, prudence suggests these reviews should occur at least once a financial year, or more often if significant changes occur to the fund or its members.
These updates would be evidenced by documenting any changes or decisions made in the Minutes of Meeting held during each income year.
Reporting Assets at Market Value
Until now, SMSFs have been able to report asset values at either market value or historical cost. For the 2012/2013 year onwards funds no longer have this option and will be required to report assets at market value only.
This measure is designed to provide trustees and members with a more accurate representation of their member’s entitlements and the funds financial position, ensuring decisions are made on current financial information rather than historical data.
Separation of Assets
Trustees are required to keep fund assets separate from any non-superannuation assets held by members or certain affiliates of members. This includes ensuring bank accounts and investments within your SMSF are held in the name of the fund trustee and are kept separate from your personal or practice assets and accounts.
While this has always been an obligation of trustees, it is now an operating standard which enables the ATO to enforce compliance. Where a trustee is found to have intentionally or recklessly contravened this obligation, standard penalties can be up to $11,000.
As the trustee of a SMSF, you are obliged to ensure that you comply with all existing and new regulations.
If you are unsure of your obligations, or require clarification on these new requirements, you should arrange a time to meet with your advisor.