Your key responsibilities as an SMSF trustee

When you run a self-managed super fund, you are the trustee. That means you — not an adviser, accountant or administrator — are legally responsible for the fund. You can hire help, but you can’t hand over the responsibility.

In this lesson we cover who can be a trustee, the promises you make when you sign up and the records you need to keep.

SMSF trustee holding the key to responsibility, with a declaration, scales and records

1.1 Who is the trustee?

Every member of an SMSF must also be a trustee (or a director of the company that acts as trustee). There are two ways to set this up:

Individual trustees Corporate trustee
Who is trustee Each member personally A company — each member is a director
Members 2 to 6 (a one-member fund needs a second trustee) 1 to 6
Main benefit Cheaper to set up Easier to manage changes, clearer separation of assets
Who can’t be a trustee?

A disqualified person — for example someone who is an undischarged bankrupt, or has been convicted of an offence involving dishonesty. If you become disqualified you must stop acting as trustee straight away.

1.2 Sign the ATO Trustee Declaration

Within 21 days of becoming a trustee or director, you must sign the ATO’s Trustee Declaration. It confirms you understand your duties. Keep the signed copy — the ATO and your auditor can ask to see it.

1.3 The five promises every trustee makes

Super law sets out duties (called covenants) that every trustee must follow. In plain English:

  1. Act honestly in everything you do for the fund.
  2. Act in the best interests of all members — not your own business, family or friends.
  3. Keep the fund’s money and assets separate from your own (more on this in Lesson 3).
  4. Have an investment strategy and invest in line with it.
  5. Don’t let anyone else control the fund or take part in decisions they aren’t entitled to make.

1.4 Keep good records

Record Keep for at least
Financial statements, annual returns, bank statements, tax records 5 years
Trustee minutes and decisions 10 years
Signed trustee declarations and records of changes of trustee 10 years

Simple habit: whenever the trustees make a decision (buy an investment, change the strategy, pay a benefit) — write a short minute, date it and file it.

1.5 Common contraventions — and what they cost

Trustee worried about ATO penalties beside a trustee calmly keeping records

Each year your auditor checks whether the fund broke any rules. Serious or repeated breaches must be reported to the ATO. The breaches the ATO sees most often are:

  1. Loans or financial help to members or relatives — e.g. “borrowing” from the fund to cover a personal bill.
  2. Not keeping fund assets separate — fund money in a personal account, or assets not in the fund’s name.
  3. In-house assets over 5% — too much invested in, or lent to, related parties.
  4. Sole purpose breaches — personal use of fund assets, such as a holiday home or artwork.
  5. Illegal early access — taking money out before a member has met a condition of release.
  6. Late lodgement — annual return or audit not done on time.

The ATO can apply an administrative penalty to each trustee for many breaches. From 1 July 2026 one penalty unit = $364. Some examples:

Breach Penalty units Maximum per trustee
Lending to members or relatives (s65) 60 $21,840
Illegal borrowing, including SMSF loans (LRBAs) that break the rules (s67) 60 $21,840
Not fixing in-house assets over 5% (s84) 60 $21,840
Breaching operating standards, e.g. not keeping assets separate or no investment strategy (s34) 20 $7,280
Not keeping minutes and records (s103) 10 $3,640
Not signing the Trustee Declaration (s104A) 10 $3,640
Not preparing accounts and statements (s35B) 10 $3,640
Paid from your own pocket

Administrative penalties must be paid by the trustees personally — never from fund money. With individual trustees, each trustee can be penalised, so a two-trustee fund can face double. With a corporate trustee, the directors are jointly liable for one penalty — one of the reasons many people choose a corporate trustee.

The ATO can also issue a rectification direction (fix the breach), an education direction (complete an approved course), freeze fund assets, disqualify a trustee, or make the fund non-complying — which can mean tax at 45% on the fund’s assets and income. Owning up early and fixing the problem usually leads to a much better outcome.

Key takeaways

  • Every member is a trustee — and the responsibility can’t be outsourced.
  • Sign the ATO Trustee Declaration within 21 days.
  • Act honestly, for members, keep assets separate, follow your strategy.
  • Keep records for 5 years (financials) and 10 years (minutes and declarations).
  • Penalties are up to $21,840 per trustee per breach — and paid personally.
Want the full picture?

This free course covers the essentials. The full SMSF Trustee Education Course ($11) goes deeper across 10 lessons — setup steps, trustee structures, contribution caps, pensions and winding up a fund.

See the full course

General information only — not personal financial, tax or legal advice. Rules referenced are current as at October 2026. Check the ATO website or speak to a licensed adviser before acting.

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