In this guide
One of the key restrictions applicable to all members of self-managed super funds (SMSFs) is the prohibition on being paid for the services you provide to your fund as a trustee. This is a restriction imposed by legislation and therefore an important issue that SMSF auditors will review in their annual audit process.
What seems to be less widely known is that separate legislation specifically allows remuneration for 'non-trustee' services that are provided to an SMSF by a fund trustee, so long as certain conditions are met.
It is therefore important to identify and understand the difference between trustee and non-trustee services (professional services).
Differentiating between services
When differentiating between trustee services and professional services, we need to look at the capacity in which the services are being provided by the individual.
Trustee services would generally include those imposed under legislation, regulations or even by the funds Trust Deed. For example, carrying out the administration obligations for an SMSF would be seen as a trustee service and therefore the restriction on being paid for these trustee services would apply. Charging your SMSF for these administrative trustee services would be in breach of the trustee remuneration rules.
In contrast, professional services that you carry out for your SMSF are not seen as trustee services. For instance, consider a SMSF where a trustee is a tradesperson who completes extensive renovation work on a rental property that is owned by their SMSF. The trustee would complete that work in a professional capacity, as a professional service to their fund. As these services are carried out in a professional capacity, the restriction on remuneration for trustee services would not be applicable.
Examples of trustee services
The following would be typical examples of trustee services:
- Operating the fund’s bank account by way of accepting contributions and paying fund expenses
- Preparing, implementing and reviewing the SMSF investment strategy
- Paying members’ benefits from the fund
- Maintaining fund records and appropriate documentation
- Arranging for the SMSF financial statements to be prepared
- Arranging the SMSF annual audit
- Responding to queries from professional service providers and/or the ATO.
Examples of professional (non-trustee) services
In most cases, the following would be seen as non-trustee services to the SMSF:
- A service provided where a licence to carry out that service is required, such as a builder’s licence
- A service provided to an SMSF where the service provider is covered under an insurance policy for the work that they are carrying out
- Where the service provider is required to use equipment or assets that they own and use in their regular business operations.
