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Individual trustees

Where the trustee of an SMSF is an individual or group of individuals, each individual must: [State trustee acts, SIS s.126K ]:

Where the trustee of an SMSF is an individual or group of individuals, each individual must: [State trustee acts, SIS s.126K]:

  • be at least 18 years of age,

  • not be unfit or incapable of acting (ie not be legally incapacitated), and

  • not be a “disqualified person”.

A “disqualified person” is an individual that [SIS s.120]:

  • has been convicted of an offence involving dishonesty (eg offences for theft, obtaining property by deception, obtaining a financial advantage by deception, general dishonesty, and conspiracy to defraud all involve an element of dishonesty),

  • has been subject to a civil penalty order (a civil penalty order can be made by the Court where they are satisfied that a person has contravened a civil penalty provision of the superannuation law such as the sole purpose test or lending to members – refer to 4. Investment rules for further information),

  • is an undischarged bankrupt, or

  • has been disqualified by the Regulator.

Disqualified persons are prohibited from being an individual trustee of an SMSF. Intentionally acting as an individual trustee whilst disqualified can lead to penalties of 60 penalty units and/or imprisonment for two years [SIS s.126K] (the current value of a penalty unit is detailed in Penalty unit for breaches).

Tip

The fact that it is only convictions for offences involving dishonesty that result in disqualification from eligibility to be an individual trustee/director of a corporate trustee can lead to some interesting results. For example, a 50 year old who was convicted of stealing a car at 19 would be a disqualified person but a murderer would not. Note that convictions for relevant offences committed in foreign countries are also included.

Waiver of disqualified status?

An individual who is a ”disqualified person” because they were convicted of an offence in respect of dishonest conduct may apply to have their disqualified status waived. To be eligible to make an application [SIS s.126B]:

  • their conviction for a dishonest offence must be the sole reason for their disqualified status, and

  • the penalty imposed for their offence must have been a term of imprisonment of less than two years or a fine of less than 120 penalty units.

Applications for the waiver of disqualified status must be made to the Regulator and time frames for the application apply.