Staying Compliant from Day One: Avoid These Common SMSF Mistakes

Running your own SMSF gives you more control over your retirement savings, but with that control comes responsibility.

From the moment your fund is set up, there are strict rules to follow. And unfortunately, many of the most common SMSF breaches are avoidable with the right advice and systems in place.

If you’re planning for the year, here are a few key areas to keep an eye on.

1: Investment Rules: Keep It at Arm’s Length

One of the biggest traps for SMSF trustees is breaching the ‘arms-length’ rule.

All transactions, whether it’s buying an asset, renting out a property, or selling shares, must be done on commercial terms. That means:

• You can’t buy assets from a related party (with very limited exceptions)
• You can’t lease residential property to yourself or a family member
• You can’t give yourself favourable terms on rent, interest, or payment timing
• You can’t use SMSF-owned assets for personal enjoyment (e.g. artwork hanging in your house, a boat you use on weekends)

Even well-meaning decisions can land your fund in hot water if they don’t follow the rules.

2: Contributions: Be Careful With the Cap

SMSF contributions are one of the most common audit issues, particularly now that caps are increasing and more people are making additional contributions.

A few things to keep in mind:

• The concessional contributions cap is now $30,000 per person (from 1 July 2024)
• You may be eligible for carry-forward unused caps if your total super balance is under $500,000. This allows you to claim any unused caps for up to 5 years prior.
• The non-concessional cap has increased to $120,000
• You may be able to bring forward up to 3 years of non-concessional contributions, depending on your balance

If you go over the cap even accidentally, you may trigger additional tax and reporting obligations.

We recommend planning contributions early in the year, not just in the final weeks before 30 June.

3: Record-Keeping: Good Admin Prevents Big Problems

Trustees are responsible for keeping complete records of:

• Investment decisions and meeting minutes
• Contributions and rollovers
• Asset purchases, sales, and valuations
• Annual financial statements and tax returns
• Trust deeds and legal documents
• Any changes in trustees or members

Missing or incomplete documentation is a red flag in an audit, even if your fund has otherwise followed the rules.

It’s essential to treat your SMSF as the legal structure it is, rather than a side account.

4: Get Support Before It Becomes a Headache

Sharp Accounting supports SMSF clients with end-to-end compliance, including:

• Contribution tracking
• Documented investment strategy reviews
• Regular reconciliations and transaction reviews
• Preparation of accounts and tax return
• Liaison with auditors
• Alerts for key compliance milestones

We also give you visibility over your fund throughout the year, so you’re not scrambling in May or June.

We also offer a monthly reporting option that gives you complete access to your processed super fund balances on a monthly basis.

Small mistakes can have significant consequences for an SMSF. If you’re unsure whether you’re on track this year, it’s worth checking early, rather than waiting until it’s too late to make adjustments.

Do you need support keeping your SMSF compliant?

Talk to Sharp Accounting today about setting up the right systems, reviewing your strategy, and staying ahead of ATO requirements.