SMSF mistakes to avoid

It pays to avoid making mistakes when running your own superannuation fund. The government imposes severe penalties on self managed super funds (SMSFs) that breach the strict legislation governing SMSFs.

The Australian Taxation Office (ATO) has identified the four most common breaches made by SMSFs and they’re outlined in the table below.

Type of legislative breach As a % of number of breaches
Breach relating to financial assistance provided to a member 21.3%
Breach relating to in-house assets (sole-purpose test) 18.7%
Breach relating to administration obligations 11.3%
Administration separation of assets 12.8%

Source: Australian Taxation Office (—Types of contraventions reported to the ATO, December 2013.

One of the most common breaches relates to in-house assets and the sole purpose test. Every SMSF must comply with the sole purpose test. That means the fund must be run for the sole purpose of providing superannuation benefits for members in retirement (or for member’s dependants if the member dies before retirement).

That means, any asset—for example, artwork or an investment property—purchased by an SMSF cannot be used by any member or his/her family in any way before retirement.

Who can help me meet my SMSF obligations?

It can be challenging to ensure that every aspect relating to the running of your SMSF complies with superannuation law.

If you’d like to speak with us about the ways we can help you manage your fund’s administration and compliance obligations, call 131 267 Monday to Friday from 8am to 8pm and Saturday and Sunday between 9am and 5pm AEST.

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© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.