Trustees may be responsible for prudently managing their self-managed super fund, but it has long been recognised that an SMSF trustee can’t be paid by their fund for performing these management duties.
Having said that, there are a number of relatively common situations where a trustee may seek to perform additional duties for their SMSF – typically professional services such as accounting work – which raises the question as to whether this could give rise to some form of remuneration.
This ability for trustees to be reasonably remunerated by their SMSF for these services has generally been accepted as the norm.
Now, a recent Tax Laws Amendment Bill, introduced into parliament on the 23 November 2011, seeks to enshrine into the law some clear guidelines that will need to be met before trustees are allowed remuneration for providing professional services. If this legislation is passed, the new rules will require that, in order for a trustee to be remunerated for professional services:
- A trustee is appropriately qualified and holds all necessary licenses to perform the particular service;
- The services to be performed by the trustee for the SMSF are services that the trustee provides to the broader public as a part of their business; and
- The remuneration they receive from their SMSF for performing these services is no more favourable than if they were performing the same services for an unrelated party.
While this law isn’t likely to represent a significant change for many trustees, it does provide confirmation of a longstanding view, and a greater degree of certainty for professionals with their own SMSF. In essence, it means that a trustee who isn’t appropriately qualified, or who doesn’t run a business providing similar professional services, won’t be able to receive any sort of payment from their fund for this service.
Take for example a public practice accountant who has their own SMSF. Assuming they are appropriately qualified and that they run an accounting business (independently of their SMSF), they could comfortably provide accounting services to their SMSF and be remunerated for this service to the extent that the remuneration amount is the same as that which would be charged to an arm’s length client.
On the other hand, there are many other trustees who may currently provide a variety of services to their SMSF. This could include property investment or development services, rent collection, or even fund administration services. However, unless they meet the above requirements, they will be in breach of super law if they are remunerated by their SMSF.
So while providing services to your SMSF may seem like the right thing to do – and there is nothing to stop you from doing it – care should be taken before drawing that cheque.
Andrew Bloore is the chief executive of SuperIQ.
Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.