Section 01

Key Numbers at a Glance

The most-referenced figures for FY2025-26. For full detail on contribution caps, bring-forward tiers, and carry-forward rules, see the Contribution Caps Hub.

Item	Amount
Concessional contributions cap	$30,000 per year
Non-concessional contributions cap	$120,000 per year
Non-concessional bring-forward (3-year maximum)	$360,000
General transfer balance cap	$2M
TSB threshold - NCC eligibility cut-off	$2M
TSB threshold - carry-forward CC eligibility	Under $500,000
Superannuation guarantee rate	12%
SMSF supervisory levy	$259 per year
In-house asset limit	5% of fund assets
Maximum SMSF members	6

More detail available: Contribution caps, bring-forward tiers, carry-forward worked examples, and TSB eligibility thresholds are covered in full on the Contribution Caps Hub. Key compliance dates are on the SMSF Compliance Calendar.

Section 02

Trustee Rules

Every SMSF must have trustees who meet the legal requirements under the Superannuation Industry (Supervision) Act 1993 (SIS Act). A trustee can be either individuals or a company acting as a corporate trustee.

TU

Who can be a trustee

Individual trustees: Every member must be a trustee, and every trustee must be a member. A fund with individual trustees requires at least 2 trustees.

Corporate trustee: A company acts as trustee. Every member must be a director of the company, and every director must be a member. Only 1 corporate trustee is required, regardless of how many members the fund has.

Single-member funds: Can have 1 individual trustee who is not a member (typically a relative or another person), or a corporate trustee with 1 or 2 directors.

Maximum members: 6.

DQ

Disqualified persons

A person is disqualified from acting as an SMSF trustee (or director of a corporate trustee) if they:

Have been convicted of an offence involving dishonesty
Are subject to a civil penalty order under the SIS Act
Are insolvent (bankrupt or under a personal insolvency arrangement)
Were a trustee of a fund that received a non-complying notice in the past 10 years
Have been disqualified by the ATO

Source: s120 Superannuation Industry (Supervision) Act 1993.

DC

Trustee declaration

New trustees must sign the ATO trustee declaration (NAT 71089) within 21 days of becoming a trustee or director
Signed declarations must be kept for at least 10 years
The declaration confirms the trustee understands their obligations under superannuation law

CT

Corporate trustee vs individual trustees

Feature	Corporate Trustee	Individual Trustees
Asset titling	Company name - does not change when members join or leave	All trustee names - must be updated with each membership change
Setup cost	Higher (company registration plus ASIC annual review fee)	Lower
Liability	Company is the trustee - some separation from personal assets	Personal liability applies to each trustee
Single member	One director permitted	Requires a second trustee who is not a member
Succession	Simpler - fund continues if a member dies	More complex restructuring required

▲ Why it matters

A corporate trustee is generally considered best practice. Because assets are held in the company name, no re-titling is required when a member joins, leaves, or passes away. Individual trustee structures require every asset title to be updated with each membership change - creating administrative cost and the risk of incorrectly titled assets.

Section 03

Investment Rules

SMSF investments are governed by several fundamental rules under the SIS Act. Breaching these rules can expose trustees to significant penalties and risk non-complying fund status.

SP

Sole purpose test

The fund must be maintained for the sole purpose of providing retirement benefits to members, or death benefits to their dependants. This is the foundational rule all SMSF investments must satisfy.

Any investment that provides a current-day benefit - financial or otherwise - to a member or related party risks breaching this test. Examples include: using fund property for personal enjoyment, purchasing artwork or collectibles stored at a member's home, and loans structured to benefit a related party.

▲ Why it matters

The sole purpose test is the most broadly applied rule in superannuation law. It underpins nearly every other investment restriction. The ATO can apply it to arrangements that are technically legal in structure but benefit a trustee or member today rather than at retirement. There is no bright-line definition - trustees need to assess each investment on its merits.

Source: s62 SIS Act.

IH

In-house asset rule

No more than 5% of the fund's total assets can be in-house assets at the end of a financial year.

In-house assets include: loans to related parties, investments in related trusts, and assets leased to a related party.

Exception: Business real property leased to a related party on arm's length terms is not classified as an in-house asset. See Property Rules below.

Source: Part 8 SIS Act.

AL

Arm's length rule

All investments must be made and maintained on arm's length terms. The price paid for an asset, and the return earned from it, must reflect what two unrelated parties would agree to.

Common risks: acquiring assets below market value, providing loans at below-market rates, and charging below-market rent on a leased asset.

Source: s109 SIS Act.

IS

Investment strategy

Trustees must document a written investment strategy that covers: risk and return objectives, diversification across asset classes, liquidity (the fund's ability to meet obligations as they fall due), and insurance needs of members.

The strategy must be reviewed regularly and updated to reflect the fund's actual investment mix. The ATO has flagged that generic, template strategies are inadequate and may result in a compliance finding during audit.

▲ Why it matters

Failing to maintain a current investment strategy is a breach with a 10-unit administrative penalty (currently $3,300 per trustee). More importantly, a strategy that doesn't reflect the fund's actual holdings gives auditors cause to question whether the fund is being properly managed. Review the strategy at least annually, or whenever the fund's investments change materially.

Source: Regulation 4.09 SIS Regulations.

IN

Insurance inside an SMSF

Trustees must consider the insurance needs of members when preparing or reviewing the investment strategy. This does not mean insurance is compulsory - but the consideration must be documented.

SMSFs can hold the following types of insurance for members:

Life insurance (death cover) - premiums are generally deductible to the fund
Total and permanent disability (TPD) - the policy definition must align with a superannuation condition of release
Income protection - premiums are generally deductible to the fund

Terminal illness and trauma cover can present complications inside an SMSF due to condition of release rules. Consider seeking advice before including these in the fund.

Section 04

Contribution Rules

This section covers the core rules that govern how contributions work inside an SMSF. For cap amounts, bring-forward tiers, carry-forward eligibility, and worked examples, see the Contribution Caps Hub.

CC

Concessional contributions

Before-tax contributions. Includes employer contributions (including SG), salary sacrifice, and personal contributions for which a tax deduction is claimed.

Concessional contributions are taxed at 15% inside the fund (or 30% for higher-income earners subject to Division 293 tax). They count toward the annual concessional cap regardless of source.

If your total super balance was under $500,000 at the prior 30 June, you may be able to carry forward unused concessional cap from FY2018-19 onwards. See the Contribution Caps Hub for current cap amounts and carry-forward rules.

NC

Non-concessional contributions

After-tax personal contributions. No tax deduction is claimed and no tax applies inside the fund on contribution.

Non-concessional contributions are not available if your total super balance reached $2M or more at the prior 30 June. Members under 75 may be able to trigger a bring-forward arrangement, contributing up to 3 years' worth of the cap in a single year - subject to TSB thresholds. Members aged 67 to 74 must also meet the work test to make personal contributions.

See the Contribution Caps Hub for cap amounts, bring-forward tiers, work test rules, and downsizer contribution eligibility.

Exceeding a cap: Excess concessional contributions are included in assessable income and taxed at the member's marginal rate (with a 15% offset). Excess non-concessional contributions attract a choice to withdraw the excess or leave it in the fund and pay a flat tax. Penalties apply in both cases. Always track contributions across all funds, not just the SMSF.

Section 05

Property Rules

SMSFs can invest in property, but the rules differ significantly between residential and business real property. Related party transactions are subject to strict restrictions.

RP

Residential property

SMSFs can invest in residential property, subject to strict restrictions:

Cannot be acquired from a related party (with very limited exceptions)
Cannot be occupied by a member or related party
Cannot be rented to a member or related party
Must be leased to unrelated tenants at market rates

▲ Why it matters

Allowing a family member to live in or use a residential property held by the fund - even temporarily, even rent-free - is likely to breach both the sole purpose test and the in-house asset rules. This is one of the most common compliance failures the ATO identifies in SMSF audits.

BP

Business real property (commercial)

Business real property is property used wholly and exclusively in a business.

An SMSF can: acquire business real property from a related party (including a member), and lease it back to a related party (including the member's own business). Both the acquisition and the rental must be at arm's length and at market rates.

This is a common and legitimate strategy for small business owners wanting their SMSF to own their business premises. Business real property leased to a related party on arm's length terms is not classified as an in-house asset.

LB

Limited Recourse Borrowing Arrangements (LRBA)

An LRBA allows an SMSF to borrow money to acquire a single asset (or a collection of identical assets with the same market value). The borrowed funds are used to purchase the asset, which is held in a separate holding trust (bare trust) until the loan is repaid. The lender's recourse is limited to that asset - it cannot claim other fund assets in a default.

Once the loan is fully repaid, the asset transfers to the SMSF. LRBAs apply to both property and listed securities.

Related party LRBAs: If the lender is a related party, the loan must be on commercial terms consistent with ATO Practical Compliance Guideline PCG 2016/5. The ATO publishes safe harbour interest rates and conditions that must be met.

TSB impact: LRBA balances may be included in a member's total super balance, which can affect contribution eligibility. Consider seeking advice if your fund holds or is considering an LRBA and your balance is approaching relevant thresholds.

Section 06

Pension Rules

Once a member meets a condition of release, they can commence a pension from their SMSF. The tax treatment and withdrawal rules depend on the pension type, the member's age, and the condition of release met.

CR

Conditions of release

Superannuation benefits are preserved until a member meets a condition of release. The most common conditions for SMSF trustees are:

Retirement: Ceasing employment after reaching preservation age (age 60 for those born on or after 1 July 1964) with no intention of returning to work, or ceasing any employment arrangement after turning 60
Turning 65: A full condition of release regardless of employment status
Transition to retirement (TTR): Reaching preservation age (restricted access - no lump sums, maximum 10% drawdown per year)
Terminal medical condition: Two medical certificates confirming a terminal illness likely to result in death within 24 months
Permanent incapacity: Unable to work in any occupation for which the member is qualified
Death: Benefits paid to dependants or the estate
Severe financial hardship or compassionate grounds: Subject to ATO approval, limited amounts only

See the SMSF Glossary for definitions of preservation age and related terms.

AB

Account-based pensions

The most common SMSF pension. A member can commence an account-based pension once they meet a full condition of release - most commonly, retirement or reaching age 65.

Earnings on assets supporting the pension are tax-free (via ECPI - see below)
A minimum amount must be withdrawn each year (based on age)
No maximum drawdown limit other than the account balance
Pension payments are generally tax-free for members aged 60 and over

EC

Exempt current pension income (ECPI)

ECPI is the mechanism that makes investment earnings from pension-phase assets tax-free. It is claimed in the fund's annual return. There are two methods:

Segregated method: Specific assets are identified as supporting pension liabilities. All income and gains from those assets are 100% exempt. Applies where all members are in retirement phase and the fund has a single pool of assets.
Proportional (unsegregated) method: Used where the fund has both accumulation and pension-phase members, or where a member has a defined benefit interest. An actuary calculates the exempt proportion each year.

Funds with members who have balances in both accumulation and pension phase generally cannot use the segregated method. The method used affects how the fund prepares its financial statements and tax return. Consider seeking advice from your SMSF auditor or accountant on which method applies.

MD

Minimum drawdown rates

Calculated as a percentage of the account balance at 1 July each year, or at commencement (pro-rated from the start date if starting mid-year).

Age	Minimum drawdown
Under 65	4%
65-74	5%
75-79	6%
80-84	7%
85-89	9%
90-94	11%
95 and over	14%

▲ Why it matters

Failing to meet the minimum pension drawdown in any year means the fund does not meet the conditions for pension phase tax treatment. The ATO can deem the fund to have been in accumulation for that year - removing the tax-free earnings benefit. This is one of the most costly and common errors in SMSF pension administration.

TR

Transition to retirement (TTR)

Available from preservation age (age 60 for anyone born on or after 1 July 1964). Lets members draw down super while still working.

Minimum: same age-based rates as account-based pensions
Maximum: 10% of account balance per year
Earnings in TTR phase are taxed at 15% (not tax-free)
Lump sum withdrawals are not permitted

Once a member meets a full condition of release (such as retiring after reaching preservation age), the TTR pension can be converted to a retirement phase account-based pension and the 15% earnings tax no longer applies.

TB

Transfer balance cap

The transfer balance cap (TBC) limits how much super can be moved into the tax-free retirement (pension) phase.

General TBC for FY2025-26: $2M
Each individual has a personal TBC based on their history of retirement phase transfers
Exceeding the cap results in an excess transfer balance, which attracts tax on notional earnings above the cap
The general TBC is indexed to CPI in $100,000 increments

The personal TBC is determined by the general cap in place when a member first enters retirement phase. If you commenced a pension before 1 July 2025 when the cap was $1.9M, your personal cap may differ from the current general cap. Consider seeking advice if you are approaching or have exceeded your personal cap.

DB

Death benefits

When a member dies, the fund must pay out their benefit. The benefit can be paid as a lump sum or, in some cases, as a continuing income stream (death benefit pension). The rules differ depending on the recipient and the fund's trust deed.

Binding death benefit nominations (BDBN): A valid BDBN directs the trustee to pay the benefit to the nominated person(s). Without a valid BDBN, the trustee has discretion to determine who receives the benefit. BDBNs must generally be renewed every 3 years unless the trust deed provides for a non-lapsing nomination.

Eligible recipients: Super death benefits can only be paid to dependants (spouse, children, or someone in an interdependency relationship) or to the estate. Adult financially independent children generally cannot receive a super death benefit as a pension - only as a lump sum.

Tax on death benefits: The tax treatment depends on the recipient's relationship to the member, the tax components of the benefit, and the recipient's age. Lump sums to dependants (as defined for tax purposes, including spouses) are generally tax-free.

Estate planning within an SMSF is complex. Trust deed rules, BDBN validity, corporate trustee structures, and the interaction between super and the estate all require careful review. Consider professional advice well before it becomes urgent.

Section 07

Audit & Reporting

Every SMSF has annual audit, lodgement, and reporting obligations. Missing these obligations can result in administrative penalties and ATO attention.

AU

Annual audit

Every SMSF must be audited annually. Key requirements:

Auditor must be a registered SMSF auditor (registered with ASIC)
Auditor must be independent of the fund and its trustees
The audit covers both the financial statements and compliance with superannuation law
The audit must be completed before the fund's annual return is lodged

Provide all supporting documents to the auditor promptly. Delays in producing records are a common cause of late return lodgement - which itself triggers penalties.

AR

SMSF annual return

The SMSF annual return is lodged with the ATO each year. It covers income tax, regulatory compliance, and member reporting.

Lodgement deadlines:

Self-lodging funds: 31 October of the following year
Via a registered tax agent: Extended deadline, typically February or May depending on the agent's lodgement program

▲ Why it matters

Late lodgement of the annual return triggers a failure-to-lodge penalty and can result in the fund's complying status being flagged as "non-complying" on the Super Fund Lookup register - which affects the fund's ability to receive employer contributions. Check the SMSF Compliance Calendar for exact due dates.

TK

Transfer Balance Account Report (TBAR)

Trustees must report certain events that affect a member's transfer balance account. Reportable events include: commencing a retirement phase pension, commuting (stopping) a pension in full or in part, and receiving a death benefit income stream.

Updated from 1 January 2026

All SMSFs must now report quarterly, within 28 days of the end of each quarter. The previous $1M asset threshold has been removed. If no reportable event occurred in a quarter, no lodgement is required. Quarterly deadlines align with the standard quarter end dates (30 September, 31 December, 31 March, 30 June).

Check the SMSF Compliance Calendar for exact TBAR due dates each quarter.

Section 08

Compliance & Penalties

The ATO is the sole regulator of SMSFs. Its compliance powers are significant. Understanding what the ATO can do - and what commonly goes wrong - helps trustees manage risk proactively.

AT

ATO compliance powers

The ATO has a broad range of enforcement tools:

Non-complying declaration: A non-complying fund pays tax at 45% on its taxable income - effectively penalising the entire fund balance
Trustee disqualification: The ATO can disqualify an individual from acting as an SMSF trustee or director of a corporate trustee
Rectification directions: The ATO can direct trustees to take specific steps to fix a breach within a set timeframe
Education directions: The ATO can require trustees to complete an approved course
Administrative penalties: Applied per breach (see below)
Enforceable undertakings: The ATO may accept a formal undertaking from trustees in lieu of other action

AP

Administrative penalties

Administrative penalties apply per breach. For individual trustee structures, penalties apply to each trustee separately. For corporate trustees, the penalty applies to the company - not to each director individually.

Penalty amounts are expressed in penalty units. The current value is $330 per unit (indexed from 7 November 2024).

Breach	Penalty units	Amount per trustee*
Loans to members (s65)	60 units	$19,800
Acquiring assets from related parties (s66)	60 units	$19,800
In-house asset limit exceeded (s75)	60 units	$19,800
Trustee declaration not retained (s104A)	10 units	$3,300
Investment strategy not prepared or maintained	10 units	$3,300
Minutes and records not maintained (s103)	10 units	$3,300

*Based on $330 per penalty unit (indexed 7 November 2024). For individual trustee structures, penalties apply separately to each trustee. For corporate trustees, the penalty applies to the company.

CB

Common breaches

The ATO regularly publishes data on the most common compliance failures in SMSFs:

Lending money to a member or related party (prohibited under s65)
Acquiring residential property from a related party
Allowing a member or related party to use fund property
Exceeding the 5% in-house asset limit
Missing minimum pension drawdowns for the year
Failing to maintain or review the written investment strategy
Not engaging a registered SMSF auditor or failing to complete the audit before lodgement
Late lodgement of the annual return

RF

Rectification and the ATO's approach

When a breach occurs, early and voluntary engagement with the ATO is generally advisable. The ATO has a published compliance approach and frequently works with trustees to rectify issues rather than applying the most severe penalties - particularly for first-time or inadvertent contraventions.

Trustees who self-identify a breach, take steps to fix it promptly, and contact the ATO proactively are generally treated more favourably than those where the breach surfaces during an audit or review.

Consider seeking advice from a licensed SMSF specialist or SMSF auditor if your fund has experienced a potential compliance issue.

SMSF Rules & Limits Reference

Key Numbers at a Glance

Trustee Rules

Who can be a trustee

Disqualified persons

Trustee declaration

Corporate trustee vs individual trustees

Investment Rules

Sole purpose test

In-house asset rule

Arm's length rule

Investment strategy

Insurance inside an SMSF

Contribution Rules

Concessional contributions

Non-concessional contributions

Property Rules

Residential property

Business real property (commercial)

Limited Recourse Borrowing Arrangements (LRBA)

Pension Rules

Conditions of release

Account-based pensions

Exempt current pension income (ECPI)

Minimum drawdown rates

Transition to retirement (TTR)

Transfer balance cap

Death benefits

Audit & Reporting

Annual audit

SMSF annual return

Transfer Balance Account Report (TBAR)

Compliance & Penalties

ATO compliance powers

Administrative penalties

Common breaches

Rectification and the ATO's approach

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