SMSF record-keeping requirements

How self-managed super fund (SMSF) trustees can meet their responsibility to keep accurate tax and super records.

Why keep records?

Superannuation law requires trustees to keep extensive records including financial and trustee records. Poor record keeping can make it difficult to demonstrate the fund has met its legal requirements. Having a system for organising records will also make it easier for you, and SMSF professionals to:

• complete the fund’s audit each year
• lodge the SMSF annual return.

Keeping records may help reduce audit and administration costs for your fund and to meet other trustee responsibilities, such as making sound investment decisions.

You should keep accurate, organised and up-to-date records in case the ATO asks to see them or if they’re required by the courts or other government departments.

Financial records to keep for 5 years

You must keep the following records for a minimum of 5 years:

• accurate and accessible accounting records that explain the transactions and financial position of your SMSF
• annual operating statements and annual statements of your SMSF’s financial position
• documentation showing decisions made about what benefit payment type was paid (pension, lump sum or a combination of both) and the account the payment was withdrawn from
• copies of all SMSF annual returns lodged as well as any documents used to help prepare the annual return such as evidence explaining
  • your fund’s deductions, capital gains and losses
  • how your fund’s income has been generated
  • how you calculated your fund’s income tax liability
• copies of transfer balance account reports lodged
• copies of any other statements you are required to lodge with the ATO or provide to other super funds
• documentation providing evidence that any early access of super met a condition of release.

Records relating to early access to super

In very limited circumstances a member may be eligible for early access to super.

Trustees must:

• ensure the member applying for early access of their super meets all the requirements for the particular condition of release
• keep records and proof that the member met all requirements of the condition of release – you need to provide this to your auditor as evidence that the member did not illegally access their super
• ensure all trustees agree that a condition of release has been met and record this in the trustee meeting minutes.

If the member does not meet all the requirements of a condition of release, they may face heavy penalties for illegally accessing their super. The SMSF trustee may also face penalties for illegally releasing a member’s super.

Trustee records to keep for 10 years

You must keep the following records for a minimum of 10 years:

• the fund’s trust deed
• minutes of trustee meetings and decisions
• details of the SMSF’s investment strategy and its regular reviews, including the consideration of insurance for members of the fund
• records of all changes of SMSF members and trustees
• trustee declarations recognising the obligations and responsibilities for any trustee, or director of a corporate trustee, appointed after 30 June 2007
• members’ written consent to be appointed as trustees
• copies of all reports given to members
• documented decisions about storage of collectables and personal use assets.

Take minutes of all investment decisions

You must take minutes of all investment decisions, including:

• why a particular investment was chosen
• whether all trustees agreed with the decision.

This is because if you, as one of the SMSF trustees, invest the SMSF’s money in an investment that fails, the other trustees could take action against you for failing to be diligent in your duties.

However, if your investment decision is recorded in meeting minutes signed by the other trustees, you will have a record to show they agreed with your actions.

How to keep your records

Your fund’s records must be kept in English. Electronic records must be capable of verification by the ATO and be in a format the ATO can access and understand.

You may want to create separate files for your SMSF’s more permanent records, and for records that relate to a specific financial year. If your SMSF regularly holds trustee meetings, you could create a separate folder for them, and sort them by date.

Signature requirements for financial statements

Under super laws, before finalising their annual audit, trustees must sign their SMSF’s:

• operating statement
• statement of financial position.

Depending on the structure of the fund, these statements must be signed by a certain number of trustees or directors of the corporate trustee.

From 1 July 2021

If the SMSF has a corporate trustee structure with:

• one or 2 directors, signatures are required from all directors
• 3 or more directors, signatures are required from at least half of the directors.

If the SMSF has an individual trustee structure with:

• 2 trustees, signatures are required from both trustees
• 3 or more trustees, signatures are required from at least half of the trustees.

Before 1 July 2021

If the SMSF had a corporate trustee with one director, that director was required to sign. If there were multiple directors, at least 2 of the directors were required to sign.

If the SMSF had individual trustees, signatures were required from at least 2 of the trustees.

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Source: ATO

Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/newsroom/smallbusiness/ . Important: 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, we do 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, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.