Record keeping tips for SMSF trustees

Disclaimer: The below article is for informational purposes only and does not constitute a product recommendation, or taxation or financial advice and should not be relied upon as such. Always check with your financial adviser or accountant to obtain the correct advice for your situation.

As an SMSF trustee, there are a strict set of record keeping guidelines set by the ATO that must be adhered to. Developing a sound system of organising and storing records from establishment will make it easier for your SMSF to keep up with compliance requirements and maintain excellent administrative standards. It also allows you to see an accurate history of your funds, which can help to inform future decisions.

Records that your SMSF should keep

Maintaining good reporting practices as an SMSF trustee includes documenting:

• Registration & ownership documentation

• Minutes of all trustee meetings and decisions

• Investment strategies

• Trustee declarations

• Annual audit reports & records

• Tax returns

• Operating statements

• Bank statements & banking records

• Compliance notices

Minutes of meetings

There are several important areas where detailed record taking is required. As a trustee, arguably the most common area of record keeping relates to the investment decisions that are being made. All decisions need to be documented through the taking ‘minutes’ of any decisions that are being made, and subsequent discussions, including:

• Why a particular investment or set of investments were chosen

• Whether all trustees agreed with the decision

• Signature of all trustees

Minutes need to be held for a minimum of 10 years and are an essential legal precaution that trustees should all take to protect themselves from legal repercussions that may arise with failed investments. If as a trustee, you invest money in an investment that fails, the other SMSF trustees can take legal action against you for lack of diligence. However, if your investment discussions and agreement was recorded in the form of minutes, including the signatures of all trustees, you will have a record of all trustees agreeing to the decision that had previously been made.

Annual SMSF audit

An up to date record of all documents are required to be available to your SMSF auditor at the end of each financial year for the annual return to be prepared. However, it is important that your fund’s records are always organised and available as the ATO may independently request your SMSF to provide them with a current copy of records.

Time frame for keeping records

All SMSF records are required to be held for a certain period of time depending on their importance.

The following records are required to be kept for a minimum of five years (ATO 2019):

• All accounting records, including explanations of transactions and the financial positions of your SMSF

• Annual operating statements outlining your funds financial positions

• Copies of all SMSF annual returns that have previously been lodged

• Copies of any transfer balance account reports

• Copies of any other statements that were required to be officially lodged to the ATO or other super funds.

The following records are needed to be kept for a minimum of ten years (ATO 2019):

• Minutes of all trustee meetings and decisions

• A record of changes in trustees

• Trustee declarations recognising their obligations and responsibilities

• Written consent of members being appointed as trustees

• Copies of all reports provided to trustees

• Reports relating to any contributions, deductions, capital gains and losses

• Documents relating to the storage of collectables and personal use assets

Record your SMSF performance with Sharesight

The above records are a great start, but are you satisfied with how you track your SMSF performance? Sharesight is part of the ‘unbundled’ SMSF solution and is built for the needs of SMSF investors like you, with Sharesight you can:

• Get the true picture of your investment performance, including the impact of brokerage fees, dividends, and capital gains with Sharesight’s annualised performance calculation methodology

• Sharesight automatically tracks your daily price & currency fluctuations, as well as handles corporate actions such as dividends and share splits

• Run powerful tax reports built for Australian investors, including Capital Gains Tax, Unrealised Capital Gains, and Taxable Income

Sign up for a FREE Sharesight account and get started tracking your SMSF investments today.

FURTHER READING

• Record-keeping requirements for SMSFs

• Tips for keeping good records

• How I manage my SMSF with Sharesight

• SMSF unbundling - how much can it save you