Return to full SMSF article list
HomeFree weekly newsletterFree newsletter archiveContact usLogin

Self Managed Super Fund (SMSF) Article
What records must be kept?

By Tony Negline.

This article may be out of date.

31st August 2005

Click here to buy - A How To Book of SMSF's by Tony Negline

Keeping records is a very important part of running a superannuation fund.

But as with all administrative issues surrounding superannuation there are formal laws that must be followed.  But equally, and in some cases more importantly, there are practical issues about what records super fund trustees should keep about their fund.

As we shall see a lot of information has to be kept for many years.  What is the best way to store all the paper-work?  Some argue that you are best to scan all paper-work into electronic files and then keep good back-ups of these files.  But even this is not fool-proof because over time the file formating or software are often superseded and old documents can't be read with updated software.  Where should it be stored?  Some super fund administrators will keep documents for you.  Others leave it all up to the trustees.

The Australian Taxation Office has said that it has found poor and inadequate record keeping is a major problem for small super funds and it has asked trustees to give this area detailed attention.

So what does the law require? 

·       The minutes of all trustee meetings must be kept for a minimum of 10 years – a failure to comply with this can see a 50 penalty units being imposed.  Under current laws a penalty unit is $110 for an individual and $550 for a corporation which means that this penalty is $5,500 for a person and $27,500 for a company.  Some SMSF trust deed suppliers also provide a handy collection of sample minutes for the most common issues that should be minuted

Various tax laws also impose their own record keeping requirements.  For example, most tax laws say that records should be kept for at least five years.  These records must be in written English and may be in electronic form as long as ATO staff are able to access the information and can work out a fund's tax liability from those electronic records.

If the ATO audit a super fund then it may request a list of the main financial products that were used by the fund to finance or manage its activities during the income year.  If a fund conducts any transactions overseas with parties related then the ATO may ask for wider range of documentation.

Under current tax law, the ATO has a limited time-frame in which to review and if necessary to amend a super fund's tax liability.  In very general terms this is four years.  Currently the government is reviewing these time-frames and it is intended that the ATO will only have two years to review a taxpayers affairs.  Although the ATO will have a shorter time-frame to check on a taxpayer's affairs, the government does not appear to be reducing the amount of time taxpayers have to retain records.

For Capital Gains Tax purposes there are a lot of record keeping requirements.  At a basic level you must keep records that show every act, transaction, event or circumstance, the day it happened, who did the act and the parties to the transaction and how the act is relevant to working out capital gain or a capital loss.  It does not matter whether the CGT event has already happened or whether it may happen.

Given that many super funds hold assets for very long periods of time, clearly CGT recording keeping will be important.  To potentially reduce the amount of pieces of paper that need to be kept, the ATO suggests the taxpayers keep an asset register which is certified by a registered tax agent.  The asset register will keep all relevant information about all transactions involving a particular asset.  Even if you use an asset register you must keep your CGT paper records for five years.

These are the minimum requirements that the super and tax laws require.  In DIY Super's view, it is better that all superannuants, especially those with a SMSF, keep all documentation forever.

Return to full article list of SMSF articles


Share this article
Click to share this article on Facebook Click to share this article on Twitter

If you would like more SMSF articles like this by email, subscribe! It's free.

[Bold fields are required]

Your details

Your alternate email address is used only if messages to your primary email address are returned to us.


Do you work in the financial services industry?

This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.

Site design by Raycon