Running a self-managed super fund (an SMSF) has never been more digitally connected. Bank feeds flow directly into accounting software, transactions reconcile automatically and reports can be generated at the push of a button. It’s tempting to assume that the fund’s record-keeping is therefore sorted. Unfortunately, this is one of the more common misconceptions in SMSF administration, and it’s one that can create real problems at audit time.
Why bank feeds alone fall short
A bank feed is a stream of transaction data. It tells you that money moved, but it doesn’t explain why. Under superannuation law, SMSFs are required to maintain records that accurately reflect the financial position of the fund and demonstrate that trustee decisions and actions comply with superannuation law. That evidence sits well beyond the bank statement.
Your auditor isn’t simply checking that deposits and withdrawals reconcile. They’re forming a view on whether the fund has complied with tax and super laws. Gaps in supporting documentation can trigger audit queries even when every cent is accounted for in the feed.
What must be kept for at least five years
The ATO’s five-year record list includes copies of any other statements you’re required to lodge with the ATO or provide to other super funds, accounting records that explain the fund’s transactions and financial position, annual operating statements and statements of financial position, documents showing the type of benefit payment made and the account it was paid from, copies of all SMSF annual returns lodged along with supporting evidence for deductions, capital gains and losses, income and tax calculations, copies of transfer balance account reports, and evidence that any early access of super met a condition of release.
What must be kept for at least 10 years
The longer retention period applies to governance records. These include: minutes of trustee meetings and decisions, including investment strategy reviews and decisions to start or commute a pension; records of all changes of trustees and directors of any corporate trustee; signed trustee declarations for each trustee or director appointed after 30 June 2007; written consents from members appointed as trustees or as directors of a corporate trustee; and copies of all reports given to members.
Trustees must retain minutes of trustee/director meetings or decision records where fund matters are considered, and should document investment decisions, including why the investment was chosen and whether trustees agreed. If your investment decision is recorded in meeting minutes signed by the other trustees, you will have a record to show they agreed with your actions.
Format and storage
SMSF accounting records must be kept in Australia and in written English, or in a form readily accessible and convertible into written English. Electronic records must be verifiable by the ATO and in a format the ATO can access and understand. Many trustees find it practical to separate permanent fund records from those tied to a particular financial year.
Valuations and investment evidence
Bank feeds can’t be used as evidence of asset valuations. For property, unlisted investments, collectables and other non-cash assets, trustees need separate documentary support for the market value used in the annual accounts. Auditors will ask to see this evidence each year.
Speak with your adviser
Software and automated feeds are useful tools, but they don’t replace the trustee’s documentation obligations. If you are unsure whether your fund’s records would stand up to audit scrutiny, please contact our office to discuss a review of your SMSF record-keeping practices.