The key to specialising in self-managed superannuation funds (SMSFs) is to understand how legislation interacts and how the various regulators of the superannuation industry interpret the law. While there are many pieces of Commonwealth and state legislation that are relevant to superannuation, two Acts and their associated Regulations, are critical to the ongoing management and taxation of superannuation funds, and by extension SMSFs. The Superannuation Industry (Supervision) Act 1993 (Cth) and Superannuation Industry (Supervision) Regulations 1994 (Cth) were introduced for the prudential management and supervision of superannuation funds, and the Income Tax Assessment Act 1997 (Cth) and Income Tax Assessment Regulations 1997 (Cth) provide the associated tax concessions for those supervised funds, where entitled.

To fully appreciate the interaction between these two key pieces of legislation, it is beneficial to understand the Australian superannuation and retirement system and the pathway to the current situation.

Australia’s superannuation (retirement income) system has a three-pillar approach:

• government-funded means-tested age pension
• compulsory savings via employer award and superannuation guarantee (SG) contributions
• voluntary savings via superannuation and other sources.

SMSFs are only one of a number of superannuation fund structures available for individuals to accumulate their retirement benefits.
This topic sets the scene for the regulation of SMSFs by providing a summary of the key historical events associated with our superannuation system as well as identifying the purpose of superannuation. It also introduces the key concepts behind the definition of an SMSF that will be explored further throughout this subject.

LEARNING OUTCOMES

On completing this topic, you will be able to:

– Confirm the key pieces of legislation that govern the regulation of SMSFs
– Explain the significant events that have occurred in the history of superannuation in Australia
– Explain the purpose of superannuation
– Formulate an abstract definition of an SMSF
– Evaluate who can and cannot be a trustee and member of an SMSF