Anyone aged 18 or over can be a Trustee of a Self-Managed Superannuation Fund (“SMSF”), as long as they are not a “disqualified person”.
Who is a disqualified person?
The definition of a disqualified person under subsection 120(1) of the Superannuation Industry (Supervision) Act, 1993 (“SISA”) is:
- A person convicted of an offence involving dishonesty (e.g. Stealing);
- A person charged with a civil penalty under the SISA;
- A person who is insolvent under administration, (e.g. Undischarged bankrupt); or
- A person who has been disqualified as a Trustee by the Regulator (i.e. ATO).
Under subsection 120(2) of the SISA, a corporation would not be permitted to act as a Corporate Trustee if:
- A responsible officer of the company is a disqualified person (a responsible officer includes a director, company secretary or executive officer) – Note: Each member must also be a director of the company;
- A receiver, an official manager, an administrator or a provisional liquidator has been appointed to manage the company; or
- Action has commenced to wind up the company.
What If I am under 18?
A child under the age of 18 cannot be a Trustee. They can instead appoint a parent, a legal personal representative, or a guardian to act as a Trustee on their behalf.
Section 17A(3) of the SISA lists the following persons who can potentially act as Trustees of an SMSF:
- A legal personal representative can be a Trustee (or a director of a corporate Trustee) in place of a member who is under a legal disability (eg. An insane person or a minor under 18 years of age), or if the representative holds an Enduring Power of Attorney in respect of the member;
- A parent or guardian can be Trustee in place of a member if the member is a minor (ie. under 18 years) and no legal personal representative has been appointed for that member;
- A legal personal representative can be a Trustee (or a director of a Corporate Trustee) in place of a deceased member, up until the time death benefits are paid from the SMSF;
- The ATO, as the Regulator, can also appoint an Acting Trustee of your SMSF under section 134 of the SISA when it has suspended or removed the Trustee from your SMSF.
The only time that an individual cannot appoint anyone else, such as a legal personal representative, to act on their behalf, is when they themselves are a disqualified person.
Is there anything I can do about my disqualification?
Under section 126B of the SISA, if someone is a disqualified person, they can apply to the ATO for a waiver of their disqualification status. It is advisable that this action is taken as soon as possible, as it is an offence for a disqualified person to act as Trustee of an SMSF. The potential penalty that could be imposed is imprisonment for 2 years (for a criminal offence) or a maximum of $10,200 fine. It is also an offence if the individual does not advise the ATO once they become a disqualified person. The potential penalty is a maximum of $8,500.
When an individual applies for a waiver of their disqualification status, the application must be in writing. However, the individual should only consider applying for a waiver, if the offence leading to them becoming a disqualified person, is not an offence involving serious dishonest conduct.
Under the SISA, an offence involves serious dishonest conduct if the penalty imposed by the Court for the offence is a term of at least 2 years or a fine of at least $20,400.
So unless the final penalty imposed upon a disqualified person is less than $20,400 or 2 years imprisonment, the application for a waiver may not be considered.