Lisa Philip, national superannuation manager for BDO, said superannuation legislation clearly states that trustees should separate their personal assets and those of their SMSF.
“But we regularly see trustees using their personal money to pay for SMSF expenses, and vice versa,” she said.
“This can have compliance consequences and could result in a qualified audit report, so it is important to ensure that you are using the correct bank account when paying SMSF expenses.”
Ms Philip said another common mistake made by trustees is inadequate record-keeping.
“Proper record keeping is essential for SMSF compliance, and trustees must maintain accurate records of financial transactions, decisions, and all supporting documentation,” she said.
“This is especially important when it comes to any unlisted or unusual investments you are making.
“We can easily find information in relation to listed shares and trusts, and managed funds, however, it’s often very hard to find information on unlisted companies.
“If you are investing in this kind of asset, it’s essential to ensure you are saving all purchase and sale documentation and receiving regular updates from the company.
“If you don’t do this, your administration costs may be increased, as the accountants and auditors need to spend additional time obtaining the supporting information.”
She said managing an SMSF comes with several administrative responsibilities and costs but there are ways to keep those in check.
“Maintaining compliance is essential,” she said.
“Firstly, ensure that you comply with the superannuation rules and regulations when managing your SMSF.
“Non-compliance with the rules can lead to penalties and additional administrative costs. Stay informed and ask your SMSF adviser if you need assistance. Remember that it will cost less to ask the question than it will to fix a problem.”
Being organised and proactive can also prevent costly mistakes and delays, she said.
“Keeping all documentation up-to-date and readily accessible makes a difference when it comes time to prepare your annual compliance work.”
Although the trustee needs to be educated about all things SMSFs, Ms Philip said it’s also a good idea to educate all members of the fund about its objectives, investment strategy, and administrative processes.
“Encouraging members to be financially informed and responsible can reduce the likelihood of errors and misunderstandings,” she added.
She said technology is not something to be fearful of and that she encourages her clients to use readily available tools.
“There are several digital platforms that allow automation of processes that previously needed to be performed manually,” she said.
“A great example is a bank data feed that provides our SMSF platform with a list of daily transactions directly from the bank.
“When I started my career, these transactions all needed to be keyed in manually. The data feeds help reduce the need for extensive manual data entry, ultimately saving time and effort, and regularly reconciling financial transactions and statements allows us to ensure accuracy and identify any discrepancies early on. This prevents costly errors and makes the audit process smoother.”
