This means that the members are not only responsible for making all the investment and operational decisions for their fund, but are also ultimately responsible for ensuring their fund is run and maintained in accordance with a range of strict legal and regulatory requirements.
The SMSF definition:
- has less than 5 members;
- if the fund has individual trustees, each individual trustee must be a member (except for single member funds);
- if the fund has a corporate trustee, each director of the corporate trustee must be a member (except for single member funds);
- no member of the fund is an employee of another member of the fund, unless the members concerned are relatives and
- no trustee or director of the corporate trustee receives any remuneration in respect of duties or services as trustee of the fund.
Single member funds
Under trust law it is not possible for an individual to be both the sole trustee and the sole beneficiary of a trust.
An SMSF with only one member must have one of the following trustee structures:
- a body corporate as the trustee, if the member is the sole director of the body corporate.
- A body corporate as the trustee, if the member is one of only two directors and the member is not an employee of the other director. If the member is an employee of the other director, the two parties must be relatives.
- Two individual trustees, provided the member is one of the trustees and the member is not an employee of the other trustee (unless they are relatives).
