The evidence of sound general compliance practices should provide enough proof that SMSF trustees have satisfied their duty to act in the best financial interest of the fund’s members under the Your Future, Your Super legislation, a technical specialist has said.
“The explanatory statement [contained in the legislation] and the ATO both say, while it applies to an SMSF, [the fund] is most likely to be adhering to the best financial interest duty due to the relationship between the members and the trustees. The bottom line here is you generally find you’re not going to rip yourself off,” Accurium head of education Mark Ellem told delegates at a recent technical webinar.
“So importantly as long as you’re complying with the sole purpose test, the investment strategy, the other rules regarding in-house assets, not providing loans or financial benefits to members, as long as you’re adhering to those [obligations] … and you’ve got documentation to substantiate that you’re complying with [those rules], particularly the sole purpose test … then generally you’ll be showing that you’ve met the best financial interest duty.”
According to Ellem, if the trustees are not complying with these fundamental requirements, they will more than likely be in breach of several other Superannuation Industry (Supervision) Act obligations, as well as the best financial interest duty.
He stressed the legislation specifically states the onus to prove the best financial interest duty has been met is entirely on trustees.
With regard to more specific circumstances, he again suggested trustees use the explanatory statement as a guide to what is potentially required.
“It gives the one example of an SMSF that’s subscribing to an industry publication. What the explanatory statement says is the trustees need to consider if [the subscription] is in the best financial interest duty of the members. [So] what financial benefit [it will] give to the [members],” he said.
