It is important that your SMSF meets ATO definitions, to ensure that you are compliant.
There are 6 pages of detail in the act – the following is paraphrased or abbreviated for simplicity, but for a finer, detailed, legal version, see the full wording and cases decided giving it specific meaning and of course the specific exceptions to the rules.
- It has fewer than 5 members;
- Each individual trustee of the fund is a member of the fund and every member of the fund is a trustee;
- The trustee is a body corporate—each director of the body corporate is a member of the fund and every member is a director of the body corporate;
- No member is an employee of another member of the fund, unless they are relatives;
- No trustee or director receives any remuneration for any duties or services performed
Basic conditions—single member funds – if and only if:
- The trustee of the fund is a body corporate:
- The member is the sole director of the body corporate; or
- The member is one of only 2 directors and the other is a relative; or
- The member is one of only 2 directors and the member is not an employee of the other director;
- If the trustees of the fund are individuals:
- The member is one of only 2 trustees, and the other is a relative ; or
- The member is one of only 2 trustees, and the member is not an employee of the other trustee;
- No trustee or director receives any remuneration for any duties or services performed.
- Relative of an individual means:
- A parent, child, grandparent, grandchild, sibling, aunt, uncle, great‑aunt, great‑uncle, niece, nephew, first cousin or second cousin of the individual or of his or her spouse or former spouse; or
- A spouse or former spouse of the individual, or of an individual referred to above.
- The term employee has definitions.
- Special rules apply for legal personal representatives in cases where death has occurred, or a member is under a legal disability, eg age or jail.