SMSF Trustees: Responsibilities You Can’t Ignore

For some people, a Self-Managed Super Fund (SMSF) feels like the ultimate way to take control of retirement savings.

The promise is enticing: flexibility, investment choice, and the idea of building wealth 'your way'.

But what’s often left out of the sales pitch is the reality: when you set up an SMSF, you become a trustee.

That’s a legal role, with obligations that sit firmly on your shoulders—not your accountant’s, not your adviser’s, and not anyone else’s.

And, we have to emphasise, those obligations sit on the shoulders of all trustees...even the ones who aren't entirely across every part of the fund.

That being said - what are the duties and responsibilities of an SMSF trustee?

Honesty, Care, Skill, and Diligence

The first duty of a trustee is deceptively simple:

you must act with honesty, care, skill, and diligence.

That means understanding what’s required of you and being capable of carrying it out. It also means taking responsibility even if you outsource the administration to someone else. At the end of the day, the Australian Tax Office (ATO) holds you accountable.

As independent financial adviser Nathan Fradley says in this episode, if you don’t have time to complete the ATO’s free trustee course, it’s worth asking whether you really have the time or appetite to run an SMSF at all.

The Sole Purpose Test

Another key trustee responsibility is ensuring that the fund complies with what's called the 'Sole Purpose Test'.

Superannuation exists for just one reason: to provide for retirement, or death benefits if someone passes away early.

That’s it.

Members (and, by extension, trustees) cannot personally benefit from any of the assets within the fund beyond this test.

It doesn’t matter how tempting it is—you can’t live in a property owned by your SMSF, display its artwork in your home, or drive its vintage car.

Every asset must be kept at arm’s length, managed as if it belonged to someone else entirely. Even maintaining or repairing a property is fraught with risks and potential problems.

Records, Returns, and Risks

Another responsibility is meeting the ongoing management obligations. In a way, running an SMSF is like running a small business - you must:

• Keep accurate minutes and records of every decision.

• Prepare annual financial statements and asset valuations.

• Lodge tax returns on time to avoid losing “complying” status.

• Engage an independent auditor each year.

Failing in any of these areas can mean penalties - serious penalties.

Investment Strategy and Reviews

Trustees also need a documented investment strategy, reviewed every year.

This isn’t a box-ticking exercise—it’s your roadmap for how the fund should be invested, including risk tolerance, diversification, and liquidity to pay pensions or fees. Ignoring it is both a compliance risk and a missed opportunity.

Don't settle for the pro forma, templated ones that are floating around - best practice is to have this tailored for the needs and circumstances of the members of the fund. Even if those needs might be vastly different (such as the goals of a retiree parent and their early 20s child who's also a member).

And it should also include consideration around the insurance needs of the members!

Final Thoughts

An SMSF isn’t automatically a bad idea. But it is complex.

If you want one, you need to treat it with the seriousness it deserves. For many people, the protections and simplicity of an industry fund are a better fit. For others, an SMSF can be worth it—if they’re prepared to put in the time and diligence.

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