Every year, SMSF auditors across Australia work through thousands of fund files. And almost without exception, the first document we reach for isn’t the financial statements or the investment schedule, it’s the ATO Trustee Declaration.
For something that takes a few minutes to complete, this single form carries more weight in an SMSF audit than most trustees realise. Here’s what it is, why auditors treat it as a non-negotiable, and what you need to know to make sure your fund stays on the right side of the ATO.
What Is the ATO Trustee Declaration?
The ATO Trustee Declaration (form NAT 71089) is a legal requirement under section 104A of the Superannuation Industry (Supervision) Act 1993 (SIS Act). Every person who becomes a new SMSF trustee or a new director of a corporate trustee must sign it within 21 days of their appointment. This law has applied for trustees who were appointed from 30 June 2007. By signing the declaration, the trustee formally acknowledges that they have read and understood their key obligations under superannuation law. This includes:
- the fund’s sole purpose test (super must be maintained for the sole purpose of providing retirement benefits, i.e not for present-day personal benefit)
- investment strategy requirements (trustees must prepare, implement, and regularly review a written investment strategy)
- in-house asset rules (strict limits on investing in or lending to related parties)
- separation of assets (fund assets must be kept completely separate from personal and business assets)
- borrowing restrictions (SMSFs can only borrow in very limited, specific circumstances)
- the trustee’s personal liability for breaches of the SIS Act
The completed and signed declaration must be retained with the fund’s records for a minimum of 10 years under Section 104A of the SIS Act. It is always best practice to retain a copy for the life of the fund.
What SMSF Auditors Actually Check
Under the auditing standard ASAE 3100 Compliance Engagements, SMSF auditors must assess whether the fund has complied with the SIS Act and related legislation across the audit period. The trustee declaration is a direct, specific compliance requirement which means auditors can’t skip over it or treat it as an administrative formality.
When we review the trustee declaration, we’re checking several things:
1. Has it been signed at all?
This sounds basic, but missing declarations are more common than you’d think, particularly where a new trustee has been added informally, following a marriage, a death, or a family restructure.
2. Was it signed within 21 days?
A late signature doesn’t make the declaration invalid going forward, but it does represent a contravention of the SIS Act that must be assessed. Depending on the circumstances, this may need to be reported.
3. Was it signed by the right person?
If the fund has a corporate trustee, it’s the directors of that company, not the company itself who must each sign the declaration.
4. Is it retained and accessible?
The declaration must be held as a fund record. If it can’t be produced during audit, it’s treated as if it doesn’t exist. “I know we signed it somewhere” isn’t an audit-ready answer.
Where a contravention is identified, whether a missing declaration, a late signing, or a documentation issue, auditors are required to report this to the ATO via an Auditor Contravention Report (ACR). That report goes directly to the ATO and can trigger further review of the fund.
Why It Matters Beyond the Audit Checkbox
The reason auditors treat the trustee declaration seriously isn’t bureaucratic, it’s because the declaration represents the ATO’s mechanism for ensuring trustees actually understand what they’ve taken on.
Running an SMSF is a significant legal responsibility. Trustees are personally liable for the fund’s compliance. Unlike a retail or industry super fund, there’s no professional fund manager sitting between you and the law you are the trustee, and the obligations are yours.
The ATO’s position is clear: signing the declaration doesn’t just acknowledge a list of rules. It signals that you understood those rules from the day you became a trustee. Sometimes things go wrong, such as an in-house asset breach, a loan to a related party, or investments in a prohibited investment. The ATO can point to the declaration as evidence that you knew the rules and chose not to follow them. That matters significantly when the ATO is considering what action to take.
In other words, the trustee declaration isn’t just a compliance document. It’s a personal acknowledgment of accountability. Compliance with the ATO Trustee Declaration is also a specified provision in the independent auditors report. If the ATO Trustee Declaration is not kept within Section 104A, then the auditor will qualify their opinion on Part B of the auditors report.
What the ATO’s Increasing Scrutiny Means for SMSF Trustees
The ATO has consistently flagged SMSF trustee education and compliance as a priority focus area. In recent years, the regulator has been particularly active in reviewing newly established funds and funds where trustees have changed, specifically because these are the moments when the declaration requirement is most likely to be missed or delayed.
The ATO has also been using data matching more extensively, cross-referencing fund records, ABN registrations, and trustee changes to identify funds where the declaration timeline may not stack up. For funds that are selected for review, a missing or late declaration is often the starting point for a broader compliance examination.
The Technicality that Catches Trustees Out
The ATO Trustee Declaration requirement only came from the 2007 financial year. For funds which were established prior to this date, section 104A did not apply to them. If a fund has decided to appoint new trustees, or change the trustee structure, Section 104A now applies, even for trustees who have carried trustee duties prior to the structural change.
It is common for funds with two members who may have had the passing of one of the members, to set up a corporate trustee as required under section s17A of the SIS Act in order for the SMSF to still meet the definition of a superannuation fund. If these funds were established prior to 30 June 2007, it is likely that the trustees have not retained a copy of the trustee declaration.
As such the fund would have breached section 104A as the fund did not retain a copy of the trustee declaration, when the surviving trustee became the director of the newly appointed corporate trustee.
At Spot On Business Advisory, we work with SMSF trustees and SMSF administrators to ensure their funds are audit-ready and compliant year-round, not just at lodgement time. If you have any enquiries or need any assistance with SMSF audits, Get in touch with us.
This article provides general information only and does not constitute legal or tax advice. SMSF compliance obligations depend on individual circumstances. Please seek professional advice tailored to your situation.
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