SMSF compliance
SMSF compliance: trustee duties, ATO status and how to fix breaches
Self-Managed Super Funds are regulated by the ATO under the SIS Act 1993. Every trustee carries personal responsibility for compliance — get it right and the fund pays 15% on earnings (0% in pension phase); get it wrong and the ATO can tax the entire fund at 45% and disqualify trustees for life. Here's what compliance actually requires, how to read your fund's ATO status, and what to do if something goes wrong.
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How SMSF compliance works
The ATO is the regulator of SMSFs (APRA regulates large funds). Each year your fund must be independently audited by an ASIC-registered SMSF auditor and lodge an SMSF Annual Return. The auditor checks the fund against both the financial standards and the SIS Act compliance rules. Anything material is reported to the ATO on an Auditor Contravention Report (ACR).
The ATO publishes every fund's compliance status on Super Fund Lookup. 'Complying' is what your fund needs to receive rollovers and SuperStream employer contributions. 'Regulation Details Removed' is the warning state — other funds will refuse to roll money in until it's restored. 'Non-complying' is the worst outcome and triggers the 45% tax.
The good news: most breaches are honest mistakes — a personal expense paid from the fund account, a member loan, a property used by family. Voluntarily disclosed and quickly fixed, the ATO almost always responds with education and rectification rather than non-complying status. The expensive outcomes come from hiding the breach or repeating it.
- Annual independent SMSF audit by a registered auditor (mandatory)
- SMSF Annual Return lodged with the ATO each year
- Trustee declarations signed within 21 days of becoming a trustee
- Investment Strategy documented and reviewed at least annually
- All fund assets held separately and titled to the trustee
- No loans or financial assistance to members or relatives — ever
- Related-party transactions at arm's-length market value only
Frequently asked questions
Check your SMSF's compliance status
Search by ABN, the corporate trustee's ACN, or fund name. We'll open the official ATO record on Super Fund Lookup — the register every other super fund checks before processing a rollover.
The seven core trustee duties
Every SMSF trustee signs an ATO Trustee Declaration acknowledging these — they're personal obligations, not the administrator's.
s62 SIS Act
Sole purpose test
Run the fund for the sole purpose of providing retirement benefits — no current-day enjoyment of fund assets.
s52B
Keep assets separate
Fund money and assets must be held in the name of the trustee 'as trustee for' the fund, never mixed with personal or business accounts.
Reg 4.09
Investment Strategy
Formulate, review at least annually, and document risk, return, diversification, liquidity, and member insurance considerations.
s65
No loans to members
The fund cannot lend or provide financial assistance to a member or a member's relative — ever. Strict-liability breach.
s66
No related-party acquisitions
Don't acquire assets from related parties, except listed shares, business real property and a few narrow exceptions, always at market value.
s35C / Part 8
Records & audit
Keep accounting records (5 yrs), trustee minutes (10 yrs), and appoint an approved SMSF auditor before each annual return.
What non-compliance actually costs
The headline number is the 45% non-complying tax, but the ATO has a graduated toolkit and uses the lower rungs most often.
| ATO response | Impact |
|---|---|
| Non-complying status | 45% tax on the fund's taxable income AND on the market value of fund assets (less undeducted contributions) in the year of non-compliance. |
| Administrative penalties (Pt 8 SIS Act) | Up to $19,800 per trustee per breach in 2025–26 — and with individual trustees, each trustee is penalised separately. |
| Enforceable undertaking | A written commitment to rectify; failure to comply can escalate to disqualification. |
| Education direction | Mandatory ATO-approved trustee education course at trustee's own cost. |
| Trustee disqualification | Permanent — disqualified persons cannot ever again be an SMSF trustee or company director of one. |
How to fix a breach
Speed and voluntary disclosure are the two factors that most reduce ATO penalties. Follow these five steps in order.
- 1
Stop the breach immediately
Repay the loan, unwind the related-party transaction, transfer the asset out at market value, or close the personal-use arrangement.
- 2
Tell your administrator and auditor
The auditor needs to know before they sign off — voluntary disclosure heavily reduces ATO penalties.
- 3
Lodge a voluntary disclosure with the ATO
Submit the SMSF Early Engagement and Voluntary Disclosure form before the auditor lodges their Auditor Contravention Report.
- 4
Document a rectification plan
Written plan signed by trustees showing what was done, by when, and what controls now prevent recurrence.
- 5
Complete any directed education
If the ATO issues an education direction, complete an approved course and provide proof to the ATO within 21 days.
Worried about a possible breach? Talk to an easySMSF specialist →