Self Managed Superannuation- Obligations of Trustees - Update
- Arnold Shields
- Feb 6, 2012
- 2 min read
Updated: Jun 6
A recent decision by the Administrative Appeals Tribunal (AAT) has significant implications for anyone involved in a Self Managed Super Fund (SMSF), particularly couples who continue to co-manage their fund after separating or divorcing.
In this case, a husband and wife, after 12 years of marriage, divorced but continued operating their SMSF with both remaining as trustees. The wife allowed her former husband to manage her financial affairs, including acting as her tax agent and handling SMSF administration.
Unbeknownst to her, the husband unlawfully withdrew approximately $3.4 million from the SMSF and transferred it to an overseas bank account. These actions were in breach of the Superannuation Industry (Supervision) Act, which strictly limits when and how members can access their retirement savings.
Tax Commissioner Issues $2.9 Million in Assessments
Despite claiming no knowledge of the withdrawals, the wife, still listed as a co-trustee, was held jointly responsible. The ATO issued a default assessment for $1.5 million in tax plus penalties totalling $1.4 million.
She argued that she shouldn’t be liable because she was unaware of the breaches. However, the AAT disagreed. The tribunal concluded that regardless of her knowledge or intent, she remained legally accountable as a trustee.
“Any appearance of unfairness to her as an individual should not obscure the nature of the fund itself, the role of trustees or the regulatory regime within which they function.” — AAT Decision
What This Means for SMSF Trustees
This case reinforces a clear principle: trustees of SMSFs cannot delegate responsibility or claim ignorance. Whether you're actively managing the fund or trusting someone else to handle it, you are still legally responsible for its compliance.
Key takeaways for SMSF trustees:
You must remain actively involved in fund oversight—even after a divorce.
Delegating duties does not remove your legal obligations.
Ignorance is not a defence. You must be aware of all transactions within the fund.
Penalties for non-compliance are severe and personal.
Need SMSF Advice or a Trustee Review?
At Dolman Bateman, we assist individuals, couples, and trustees to structure, manage and review their SMSFs to stay compliant and avoid devastating tax penalties. If you’ve recently separated or you're unsure about your current SMSF responsibilities, now is the time to review your fund's governance and your role as a trustee.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
