SMSF Education: Essential for Trustees
Running, or deciding to set up, a self-managed super fund (SMSF) gives you control, but it also brings legal responsibilities. The Superannuation Industry (Supervision) Act 1993 (SISA) contains detailed rules on trustee duties, investments, borrowing, payments, and record keeping. Simply put, you cannot identify or avoid breaches you don’t know exist. For trustees, education is not optional, it is essential for risk management.
Why Understanding SISA Matters
- You can’t comply with what you don’t know: Many common breaches arise from misunderstanding basic SISA duties, such as the sole purpose test, arm’s length dealings, or in-house asset limits. Awareness of the rules is the first step to spotting problems early.
- Early identification reduces harm: Knowing what to look for—incorrect benefit payments, related-party transactions not on commercial terms, or incomplete records—lets you seek advice before small errors become reportable contraventions.
- Education protects members: Breaches can result in loss of tax concessions, penalties, and remediation costs, all of which reduce retirement savings for members.
The ATO’s Focus on Education
The ATO recently published a draft Practice Statement (PS LA 2025/D2) explaining when it might issue an education direction under section 160 of SISA. These directions give the ATO the power to require trustees (or directors of corporate trustees) to complete specified education when their knowledge or behaviour poses a risk to compliance. The draft statement outlines the approach and circumstances that may trigger an education direction.
However, trustees should not wait for an ATO directive—by that point, rules have already been breached. Acting early and voluntarily is both safer and viewed more favourably by regulators.
Practical Steps Trustees Can Consider
1. Use the ATO’s Official SMSF Guidance
Start with the ATO’s SMSF courses covering the full lifecycle of a fund:
2. Complete the ATO’s Knowledge Check
The ATO provides an online knowledge check for each course to test trustee understanding. While a 50% pass mark is the minimum, trustees should aim for a higher standard—ideally full comprehension—to reduce risk.
3. Seek Timely Professional Advice
If the knowledge check or your reading raises uncertainty, contact professionals early. Prompt advice can often turn a potential contravention into a routine fix and may mitigate penalties or enforcement action.
4. Document Your Learning and Decisions
Keep records of completed training, professional advice, and reasons for investment or payment decisions. These records are strong evidence of your intent to comply.
SMSF trustees hold both opportunity and responsibility. Learning the SISA rules and the ATO’s expectations is the most practical way to prevent costly mistakes. Build your knowledge, use ATO resources, complete the knowledge check, document your learning, and seek professional guidance early. This proactive approach better protects your fund and your members’ retirement outcomes.
Want more information?
To discuss how this may impact your circumstances contact PPT on (03) 5331 3711.
DISCLAIMER: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
