Description of Self Managed Superannuation Funds and Small APRA Funds

Last amended: 10 March 2011

Self managed superannuation funds

The Superannuation Industry (Supervision) Act 1993 defines a self managed superannuation fund (SMSF) as a superannuation fund meeting the following criteria:

• less than five members, and
• all members are trustees, or are directors of the corporate trustee
• no other person is a trustee, or a director of the corporate trustee
• no member is an employee of another member unless the members are related
• no trustee receives remuneration for acting as trustee

Exceptions to trustee requirements for SMSFs

The following exceptions apply to certain SMSFs and trustees:

• If the SMSF has only one member, there may be two trustees or two directors of the corporate trustee provided that either:

• the two trustees or directors are related, or
• the two trustees or directors are not in an employee/employer relationship

• If a member is under a legal disability or is subject to a guardianship order or similar arrangement, their personal legal representative may act on their behalf as trustee or director of the corporate trustee
• If the member is a minor, their parent, guardian or personal legal representative may act on their behalf as trustee or director of the corporate trustee
• If the member is deceased, their personal legal representative may act on their behalf as trustee or director of the corporate trustee until the deceased member's benefits are paid out from the fund

Small Australian Prudential Regulatory Authority (APRA) Funds

A Small APRA Fund (SAF) is a superannuation fund with less than five members that does not meet the criteria for an SMSF. The trustee of an SAF must be a corporate trustee approved by APRA. The trustee may receive remuneration for acting as trustee.

Types of income stream available from SMSFs and SAFs

Prior to 1 January 2006, SMSFs and SAFs were able to provide any type of income stream except for a defined benefit income stream. From 1 January 2006, SMSFs and SAFs may only offer allocated income streams and market linked income streams. However, any lifetime or life expectancy asset test exempt income streams that commenced prior to that date may continue to be paid.