Choosing to run a self-managed super fund (SMSF) grants you greater control over your retirement savings. However, this control comes with significant legal duties under the Superannuation Industry (Supervision) Act 1993 (SISA). The rules governing trustee responsibilities, investments, and reporting are detailed and strict.

 You cannot identify or avoid a breach if you do not know the rules exist. For every trustee, ongoing education is therefore not a choice. It is a fundamental part of effective risk management.

Why Understanding SISA is Critical

A clear understanding of the law is your primary tool for compliance and protection.

• Knowledge enables compliance: Many common breaches stem from simple misunderstandings of core SISA duties. These include the sole purpose test, rules for arm’s length dealings, and in-house asset limits. You must first know the rules to follow them correctly.
• Early identification minimises damage: Recognising potential issues is crucial. Knowing what to look for allows you to seek advice promptly. This proactive approach can prevent small errors, like incorrect benefit payments or non-commercial related party transactions, from becoming serious reportable contraventions.
• Education safeguards member savings: The consequences of a breach are substantial. They can include the loss of valuable tax concessions, financial penalties, and costly remediation. These outcomes directly reduce the retirement savings of all fund members.

The ATO’s Growing Focus on Trustee Education

The ATO is placing a stronger emphasis on trustee knowledge. It recently released a draft Practice Statement (PS LA 2025/D2). This document outlines when the ATO may issue a formal education direction under section 160 of SISA. These directions give the regulator power to require trustees to complete specific training if their knowledge or behaviour poses a compliance risk.

However, waiting for an ATO direction is a poor strategy. Such a directive would only follow an identified breach. The draft statement aims to support compliance, but it is not a substitute for your own proactive learning. Taking voluntary action early is always safer. It is also viewed more favourably by the regulators.

Practical Steps Every Trustee Should Take

You can build your knowledge and demonstrate a commitment to compliance through several key actions.

Use the ATO’s Official Guidance

Begin with the ATO’s dedicated SMSF educational courses. These resources are designed specifically for trustees and cover the entire fund lifecycle:

• Setting up an SMSF
• Running an SMSF
• Winding up an SMS

Complete the ATO’s ‘Knowledge Check’

Each ATO course includes an online knowledge check to test your understanding. Treat this as a starting point, not a final goal. A passing score of 50% is not a guarantee of safety. A more appropriate target is striving for complete comprehension of your core trustee duties to genuinely reduce risk.

Seek Professional Advice Promptly

If your self-assessment reveals any uncertainty, seek qualified advice immediately. Early consultation can transform a potential compliance issue into a simple correction. It can also help mitigate possible penalties or enforcement action.

Document Your Learning Process

Maintain clear records of the training you complete, the professional advice you receive, and the reasoning behind key decisions. Thorough documentation serves as strong evidence of your intent to comply with your legal obligations.

The Final Consideration

Managing an SMSF is a balance of opportunity and responsibility. Learning the SISA rules and the ATO’s expectations is the most effective way to protect your fund. The regulator’s new draft Practice Statement confirms it is prepared to mandate education where knowledge gaps exist.

Build your understanding now using the available resources, test your knowledge thoroughly, document your progress, and consult with our team at Bates Cosgrave. This proactive approach is the surest way to safeguard your retirement outcomes.