Ensuring your fund meets SMSF Definitions (Compliance Reporting S17A)

By December 10, 2015 Auditing, SMSF No Comments
SMSF Compliance Boxes

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.

Additional definitions

  • 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.
SMSF Compliance Boxes