It pays to avoid making mistakes when running your own superannuation fund. The government imposes severe penalties on self-managed super funds (SMSFs) that breach the strict legislation governing SMSFs.

The Australian Taxation Office (ATO) has identified the four most common breaches made by SMSFs and they’re outlined in the table below.

One of the most common breaches relates to in-house assets and the sole purpose test. Every SMSF must comply with the sole purpose test. That means the fund must be run for the sole purpose of providing superannuation benefits for members in retirement (or for member’s dependants if the member dies before retirement).

That means, any asset—for example, artwork or an investment property—purchased by an SMSF cannot be used by any member or his/her family in any way before retirement.

Who can help me meet my SMSF obligations?

It can be challenging to ensure that every aspect relating to the running of your SMSF complies with superannuation law.

If you’d like to speak with us about the ways we can help you manage your fund’s administration and compliance obligations, call (03) 9851 0300 to speak to one of our SMSF specialists.

Article originally published by AMP Ltd.