The last thing you want to happen is for your self-managed super fund (SMSF) to break the law, so it is important to understand the strict superannuation rules that govern your fund.

SMSFs are regulated by the Australian Taxation Office (ATO) and it does a good job of making sure you stay compliant. There are a number of things that can happen to your fund if you break the rules, one of the most common being a tax penalty, but you may also be slapped with a fine or your fund may become non-compliant and lose its tax status, resulting in tax as high as around 45%.

Here are some of the rules you should stay on top of:

• Make sure your SMSF fits the super rule’s definition of an SMSF.
• Your fund needs to have an appropriate trust deed.
• You meet the ‘sole purpose test’, that is, your fund exists for the sole purpose of providing for your retirement.
• Your SMSF is an ‘Australian Superannuation Fund’, so watch out if you’re spending a lot of time overseas.
• Your SMSF complies with the super laws.
• There is no more than 5% in ‘in-house assets’.
• You abide by investment restrictions.

You can find more detailed information in our online resource centre.

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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. Anyone should, before acting, consider the appropriateness of the information in regards to their objectives, financial situation and needs and, if necessary, seek professional advice.