Financial Advisor


A self-managed superannuation fund (SMSF) provides members with control over the retirement savings held within their superannuation fund.

You may choose to establish and run an SMSF as an individual, as a couple (yourself and partner), or as a family, although the SMSF can’t have more than four members. SMSFs are generally established by family members who wish to consolidate their family’s superannuation savings.

With an SMSF, you decide how your super fund is managed, and control where your money is invested, within the allowable rules as set out in the governing regulations, the Superannuation Industry Supervision (SIS) Act. This potentially provides you with greater visibility over your retirement savings and can lead to a deeper understanding of how your overall wealth is tracking, giving you more confidence in your investment and lifestyle decisions, and your future financial outcomes

SMSFs are regulated by the Australian Tax Office (ATO), and unless members of the SMSF are relatives, they cannot be employees of other members. It is also a requirement that each member within the fund takes on a trustee role.


The Role of Trustee

A number of strict rules apply regarding who can be a trustee or director of a corporate trustee.

If there is only one member in the fund, that person can act as the sole director or, a second director can be appointed. It is also important to note that generally, it is best to use a company that has no other purpose other than the management of the superannuation fund. If you choose to use a corporate trustee, each member must be a director of that company, and each director must be a member of the SMSF.

If a person is classed as a disqualified person, they cannot act as trustee (or director of a corporate trustee). Therefore, they are unable to be a member of an SMSF.

There are a number of reasons a person can be classed as disqualified, these being:

  • Someone who has ever been convicted or charged with an offence involving dishonesty e.g. theft.
  • Someone who has ever had a civil penalty order under the Superannuation Industry (Supervision) Act 1993 made against them
  • Someone who is insolvent under administration (e.g. they are an undischarged bankrupt)
  • Someone who has been previously disqualified from acting as a trustee

If the company is in liquidation or a responsible officer is a disqualified person, a company cannot act as a trustee.

There are a number of circumstances when a person can be a member of an SMSF, but they may be unable to fulfill the role of a trustee. If this circumstance occurs, it may be possible for another person to act in their place. They could act as either the member’s personal legal representation or, under an Enduring Power of Attorney (EPoA).

These circumstances include:

  • The member wishes to hand over power to their EPoA
  • The member is under the age of 18
  • Death of a member
  • The member is ruled mentally incapable

If these circumstances are to occur, legal advice should be sought to ensure the correct process to appoint a substitute trustee is followed and to ensure the SIS rules are not breached.


Trustee Declaration

All trustees must accept the role in writing and confirm that they are not a disqualified person.

A ‘trustee declaration’ must be completed by all new trustees and directors of trustee companies within the first 21 days of being appointed a trustee. This form is available from the ATO. The ATO does not require this form to be sent back however, it must be retained for at least 10 years and be readily available if requested by the regulator.


Investment Strategy

The Trustees are required to draft and implement an investment strategy for the SMSF. They must also regularly review the Investment Strategy to ensure it continues to meet the fund’s needs and complies with the governing regulations. The investment strategy is a document that outlines the key investment guidelines that will be adopted by trustees when investing the SMSFs assets.

Consideration must be given to the following when preparing an investment strategy:

  • Whether or not the trustees of the SMSF should hold insurance cover for the members of the SMSF
  • The capability to liquidate investments to meet cash flow requirements as they become apparent
  • The capability of the fund to discharge its liabilities as they become apparent (including the ability to pay benefits to members as required)
  • The risks in making, holding, and realising investments and the likely return to be derived, having regard to the fund’s objectives and expected cash flow requirements
  • The configuration of the SMSF’s investments to ensure adequate diversification (as seen to be appropriate)

The investment strategy should be documented in writing and be reviewed regularly, at the very least annually. Investments that do not fit within the strategy should not be retained.


Where to begin:

If you are wanting to gain more control over your Superannuation Fund and would like to discuss the potential benefits of an SMSF to yourself, and/or your family, contact Stephen Gray or our Financial Planning Team at The Hrkac Group on (03) 5221 2355 to book a Financial Planning Consultation to find out if an SMSF could be appropriate for you.


Further Information

Note: The ATO has available a range of publications, videos, and other various information to assist trustees of SMSFs. It is encouraged that trustees access this information, review it and ensure they understand what they are taking on. This additional information can be accessed from the ATO’s website (www.ato.gov.au).

DISCLAIMER The information contained in this newsletter is of a general nature only and may not take into account your particular objectives, financial situation, or needs. Accordingly, the information should not be used, relied upon, or treated as a substitute for personal financial advice. While all care has been taken in the preparation of this information, no warranty is given in respect of the information provided, and accordingly, neither Centrepoint Alliance Limited nor its related bodies corporate, employees or agents shall be liable for any loss (howsoever arising) with respect to decisions or actions taken as a result of you acting upon such information.