Self-managed super funds are regulated by the ATO and have specific eligibility criteria that members and trustees must follow. While anyone 18 years old or over can be a trustee or director of an SMSF, they mustn’t be under a legal disability such as mental incapacity, or a disqualified person.
The ATO can render an SMSF trustee as a disqualified person if they see it is necessary, particularly for illegal early access breaches. There are other ways a person may become disqualified and some may not even realise they have been. Continuing to act as an SMSF trustee or director of the corporate trustee while disqualified is an offence, and further penalties may apply.
A person is disqualified if they:
- Have been convicted of an offence involving dishonesty.
- Are or have been subject to a civil penalty order under the super laws.
- Are insolvent under administration (including being an undischarged bankrupt).
- Have been disqualified by a court or regulator (for example, by the ATO or APRA).
The ATO has a disqualified trustees register to see if an individual has previously been disqualified. The register provides information and easy search options to help determine whether a potential trustee has been disqualified. It is updated quarterly and includes all individuals who have been disqualified since 2012, the year that the information was first published electronically.
When a person has been disqualified, the two main options are to roll over the disqualified person’s member benefits to a large (APRA) superannuation fund, such as an industry or public offer fund, or convert the SMSF into a Small APRA Fund (SAF) by appointing an APRA approved trustee.
Trustees or directors of a corporate trustee are responsible for running the fund and making decisions that affect the retirement interests of each fund member, including themselves. Therefore, it would be wise for members to remain aware of which trustees are or may be disqualified and how a trustee may become disqualified.