SMSF issues overblown
One of the constant criticisms of self-managed super funds (SMSFs) is the number of gaps that persist in the sector's overall framework and yet according to Chris Malkin, Principal and Head of Superannuation Audit and Consulting for WHK, the issue is being built up as far more of a concern than is warranted.
Speaking specifically to the prevalence of dominant trustees and ensuring appropriate insurance cover, Malkin said there were obviously clear advantages to obtaining insurance through superannuation.
"Insurance from any superannuation fund, be it self-managed or otherwise, is obviously very good because the life component of its premium is tax deductable to the fund," he said.
However, according to Malkin, a trustee's decision as to whether or not to leverage that insurance advantage did not imply any particular gap.
"Personally, I don't think there are any gaps," he said. "Because I don't think it should be compulsory to have insurance through any superannuation fund, even though it's certainly advantageous to do so."
And as for a perceived prevalence of dominant trustees in self-managed super, Malkin said the legislated responsibilities of being a trustee and, more importantly, education around that should void any such issue.
"As far as trustee arrangements and trustee responsibilities are concerned, the law simply says that what's expected of a trustee of a super fund is that which would normally be expected of a reasonable person in exercising their duties towards that fund," he said. "And I don't think you need any more education on that than what is available at the moment."
"The ATO (Australian Taxation Office) has got some great publications to educate trustees, but one of the really good things about self-managed super funds and the legislation that surrounds them is the fact that you can't escape the requirement to be skilled in running your own affairs."
According to Malkin, fund trustees should know that if they're getting a tax concession to put money into their own superannuation fund, there is no such thing as a free drink.
"(A), you can't get the money before you're entitled to it and (B), whilst the money is in the fund, you've got to look after it in certain ways that are befitting the tax concessions that you're getting," he said. "And one of those ways is ensuring that you're educated enough to know what you're doing."
"You've got to realise that if you sign your life away as being a trustee of anything, you've got a whole lot of responsibilities that you need to be aware of."
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