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Running, or considering setting up, a self-managed super fund (SMSF) gives you greater control over your retirement savings, but it also carries significant legal responsibilities. Trustees are personally accountable for complying with the Superannuation Industry (Supervision) Act 1993 (SISA), which sets out the rules covering trustee duties, investments, borrowing, benefit payments, and recordkeeping.
Put simply, you can’t identify or avoid breaches you don’t know exist. For SMSF trustees, education is not optional. It is a core part of managing risk and protecting retirement outcomes.
Understanding SISA: The Foundation of SMSF Compliance
Many of the most common SMSF breaches don’t arise from deliberate wrongdoing. Instead, they often stem from a lack of understanding of the rules or from assumptions that certain actions are allowed when they are not.
You can’t comply with what you don’t know
Many trustees fall foul of the rules because they misunderstand basic SISA obligations such as the sole purpose test, arm’s length dealings, or in-house asset limits. Without a clear understanding of these duties, it can be difficult to identify a breach until after it has occurred.
Early awareness limits damage
Knowing what to look for, such as incorrect benefit payments, related party transactions that are not on commercial terms, or incomplete records, allows trustees to seek advice early. This can prevent relatively small issues from becoming reportable contraventions.
Education protects members’ outcomes
The consequences of a breach can include penalties, remediation costs, and in serious cases, loss of concessional tax treatment. Ultimately, these outcomes reduce members’ retirement savings. Ongoing trustee education is one of the most effective ways to reduce this risk.
For many trustees, this learning process sits alongside broader SMSF strategy and governance discussions, often supported through professional advice as part of an ongoing advisory relationship.
The ATO’s Increasing Focus on Trustee Education
The ATO has recently released a draft Practice Statement, PS LA 2025/D2, which outlines when it may issue an education direction under section 160 of SISA.
An education direction allows the ATO to require trustees, or directors of corporate trustees, to complete specific education where a trustee’s knowledge or behaviour poses a risk to compliance. The draft statement explains the ATO’s approach and the types of circumstances that may lead to an education direction being issued.
Importantly, trustees should not wait for an ATO directive before becoming educated. An education direction means a breach has already occurred. While the draft Practice Statement is intended to support compliance and public confidence, it is not a substitute for proactive trustee learning.
From a regulatory perspective, trustees who act early and voluntarily to improve their understanding are generally viewed more favourably than those who only respond after intervention.
Steps SMSF Trustees Can Take Now
Trustee education does not need to be complex, but it does need to be deliberate. There are several practical steps trustees can take to reduce compliance risk.
1. Use the ATO’s official SMSF guidance
The ATO provides free SMSF courses covering the full lifecycle of a fund. These courses are designed for trustees and prospective trustees and provide a solid foundation, particularly for those new to SMSFs.
2. Complete the ATO’s knowledge check
Each ATO course includes an online knowledge check designed to test trustee understanding. While this can be a useful starting point, trustees should be cautious about relying on a minimum pass mark. Achieving 50 percent does not necessarily indicate a low level of risk. A deeper understanding of core obligations offers far greater protection.
3. Seek timely professional advice
If your reading or a knowledge check highlights uncertainty, it is important to seek advice early. Timely, qualified advice can often turn a potential contravention into a routine fix and may reduce the likelihood of penalties or further ATO action.
4. Document learning and decision-making
Trustees should keep records of training completed, advice received, and the reasoning behind investment or benefit payment decisions. Strong documentation is persuasive evidence of a trustee’s intent to comply and can be critical if a fund is reviewed.
Good recordkeeping also supports broader planning discussions around fund structure, investment strategy, and long-term objectives.
A Practical Approach to SMSF Compliance
SMSF trustees hold both opportunity and responsibility. Understanding the SISA rules and the ATO’s expectations is one of the most practical ways to prevent costly mistakes.
The ATO’s draft Practice Statement highlights that the regulator is prepared to use education directions where trustee knowledge gaps pose a compliance risk. However, waiting for regulatory intervention is not the safest approach.
By building your knowledge, using the ATO’s resources, documenting your decisions, and seeking professional advice early, you place your fund in a stronger position to protect both compliance and long-term retirement outcomes.
If you’re unsure whether your SMSF is meeting its obligations, or want confidence that your decisions align with the SISA rules, it’s worth getting advice early. Contact Trekk Advisory to review your SMSF structure, compliance position, and trustee responsibilities with clarity and confidence before small issues become costly problems.
