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SMSF Specialist Advisor (SSA) Exam study materials
SMSF Specialist Advisor (SSA) Exam study resources

SMSF Specialist Advisor (SSA) Exam practice questions

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Question 1SMSF Specialist Advisor (SSA) Accreditation Program

Under the Superannuation Industry (Supervision) Act, which standard condition must be met for a fund to qualify as a self managed superannuation fund?

  1. The fund must have at least two members who are unrelated and hold equal balances.
  2. The fund must have an approved auditor who is also a trustee of the fund.
  3. The fund must have no more than six members and each member must be a trustee or a director of a corporate trustee. Correct answer.
  4. The fund must be a public offer entity with an RSE licence held by the trustee.

Explanation

The core SIS definition requires that an SMSF have fewer than five members (so a maximum of four) and that each member be a trustee, or a director of the corporate trustee. Failure to satisfy either condition means the fund is not an SMSF and loses the associated concessions.

Question 2SMSF Specialist Advisor (SSA) Accreditation Program

A fund has four members. One member dies and the trustee decides to admit the deceased member's adult daughter as a new member before the death benefit is paid out. How many members can the fund have after this admission?

  1. Four, because the deceased member is still counted until the benefit is paid.
  2. Five, because the deceased member no longer counts but the daughter does.
  3. Four, because the maximum member limit applies at all times. Correct answer.
  4. Six, because deceased estates are excluded from the count.

Explanation

An SMSF can never have more than four members at any point in time. Admitting a fifth person, even temporarily, would cause the fund to fail the definition and cease to be an SMSF. The trustee must resolve the estate before considering any new member.

Question 3SMSF Specialist Advisor (SSA) Accreditation Program

Which document principally governs the internal operation of an SMSF and can impose rules stricter than the SIS Act?

  1. The annual return.
  2. The investment strategy.
  3. The auditor's management letter.
  4. The fund's trust deed. Correct answer.

Explanation

The trust deed establishes the fund and sets out the powers, duties and procedures of the trustee. It may impose restrictions beyond those in the SIS Act and regulations, so trustees must comply with both.

Question 4SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF trustee wants to borrow to purchase a commercial property. Which arrangement complies with the limited recourse borrowing rules?

  1. The fund borrows and uses existing fund cash as additional security for the lender.
  2. The trustee borrows and grants the lender a mortgage over all fund assets.
  3. The trustee borrows personally and later transfers the property to the fund.
  4. A separate bare trust holds the property while the fund pays off the loan. Correct answer.

Explanation

The limited recourse borrowing rules require the borrowed asset to be held on trust by a separate trustee until the loan is repaid. The lender's recourse is limited to that asset, protecting the other fund assets.

Question 5SMSF Specialist Advisor (SSA) Accreditation Program

Which of the following best describes the sole purpose test for an SMSF?

  1. The fund must provide retirement benefits to members, or benefits on death or incapacity, and no other purpose. Correct answer.
  2. The fund must hold at least half its assets in cash for liquidity.
  3. The fund must distribute all income to members each financial year.
  4. The fund must invest only in assets that produce retirement income for members.

Explanation

The sole purpose test requires the fund to be maintained for the provision of benefits to members on retirement, death, disability or similar circumstances. Providing benefits to members before retirement or to third parties breaches the test.

Question 6SMSF Specialist Advisor (SSA) Accreditation Program

A member of an SMSF uses a fund-owned holiday house for two weeks each year without paying rent. Which rule is most directly breached?

  1. The borrowing rule.
  2. The in-house asset rule.
  3. The sole purpose test. Correct answer.
  4. The contribution rule.

Explanation

Using fund assets for the private benefit of a member is a classic breach of the sole purpose test because fund resources are applied to a purpose other than providing retirement or related benefits. The trustee may also face an investment strategy issue.

Question 7SMSF Specialist Advisor (SSA) Accreditation Program

Which of the following is an example of an in-house asset of an SMSF?

  1. A term deposit held with an unrelated bank.
  2. A residential property leased to an unrelated tenant.
  3. A listed Australian share held by the fund.
  4. A loan made by the fund to a member of the fund. Correct answer.

Explanation

A loan to a member or a related party is an in-house asset, and the fund's in-house assets must not exceed 5% of total assets. Loans to members are generally prohibited outright in any event.

Question 8SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF has total assets of $800,000. It holds a loan to a related company of $50,000. What is the maximum permitted value of in-house assets?

  1. $0, because related-party loans are always prohibited.
  2. $50,000.
  3. $40,000. Correct answer.
  4. $80,000.

Explanation

The in-house asset limit is 5% of the fund's total assets, measured at the end of each income year. Five per cent of $800,000 is $40,000, so the existing $50,000 loan exceeds the limit and must be reduced.

Question 9SMSF Specialist Advisor (SSA) Accreditation Program

Which investment must an SMSF trustee generally avoid acquiring from a member or related party?

  1. Listed shares purchased on market from a broker.
  2. A business real property leased back to the member's business.
  3. A commercial property purchased at market value from a member.
  4. A residential property purchased from the member's spouse at market value. Correct answer.

Explanation

SMSFs are generally prohibited from acquiring assets from members or related parties, with limited exceptions such as listed securities acquired at market value and business real property. A residential property bought from a related party does not fall within an exception.

Question 10SMSF Specialist Advisor (SSA) Accreditation Program

Which statement about the trustee structure of an SMSF is correct?

  1. A corporate trustee is prohibited for single-member funds.
  2. A single-member fund must always have two individual trustees.
  3. Individual trustees are prohibited where members are unrelated.
  4. A single-member fund may have a corporate trustee with one director who is the member. Correct answer.

Explanation

A single-member SMSF can operate with a corporate trustee where the sole member is the sole director, provided the member is not an employee of the other director. Individual trustee structures are also permitted but require a second trustee who is a relative or the member's legal personal representative.

Question 11SMSF Specialist Advisor (SSA) Accreditation Program

A member contributes $30,000 as a personal concessional contribution and notifies the trustee of the intent to claim a deduction. Which event must occur for the deduction to be valid?

  1. The notice may be given at any time within five years of the contribution.
  2. The notice must be lodged with the ATO rather than the trustee.
  3. The notice must be given and acknowledged before the earlier of lodgement of the return and the end of the next income year. Correct answer.
  4. The notice must be given before the contribution is made.

Explanation

A valid deduction notice must be given to the trustee and acknowledged before the member lodges their tax return for the year, and no later than the end of the income year following the contribution year. Without a valid notice the contribution is treated as non-concessional.

Question 12SMSF Specialist Advisor (SSA) Accreditation Program

Which of the following is a standard condition of release permitting access to preserved benefits?

  1. Reducing working hours to part time.
  2. Reaching age 55 while still employed full time.
  3. Reaching age 65. Correct answer.
  4. Taking a six-month overseas holiday.

Explanation

Reaching age 65 is a full condition of release, so benefits become unrestricted regardless of employment status. The preservation age condition also requires the member to cease employment.

Question 13SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF member turns 65 and wishes to commence an account-based pension. What is the minimum annual payment requirement?

  1. A minimum of 2% of the account balance applies.
  2. A minimum of 4% of the account balance applies. Correct answer.
  3. A minimum of 5% of the account balance applies.
  4. No minimum applies because the member is over 65.

Explanation

For account-based pensions, the minimum payment factor for a member aged 65 to 74 is 4% of the account balance. The minimum is calculated on the balance at the start of the year or at commencement.

Question 14SMSF Specialist Advisor (SSA) Accreditation Program

Which statement about the transfer balance cap is correct?

  1. It limits the total amount that can be transferred into the retirement phase across all funds. Correct answer.
  2. It limits the total value of assets an SMSF may hold.
  3. It limits the amount that can be withdrawn tax-free after age 60.
  4. It limits total concessional contributions for a financial year.

Explanation

The transfer balance cap limits the amount a member can transfer into retirement phase, such as an account-based pension, across all funds. Exceeding the cap results in excess transfer balance tax.

Question 15SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF trustee is considering investing in collectables and personal-use assets. Which requirement applies?

  1. The assets are prohibited entirely for SMSFs.
  2. The assets must be sold within 12 months of acquisition.
  3. The assets may be stored at a member's home if the member signs a declaration.
  4. The assets must be insured in the fund's name within seven days of acquisition and stored separately. Correct answer.

Explanation

Collectables and personal-use assets must be insured in the fund's name within seven days, stored separately from personal assets, and not used by members or related parties. Leasing to related parties is prohibited.

Question 16SMSF Specialist Advisor (SSA) Accreditation Program

A trustee of an SMSF is also the sole director of a company that leases a commercial property from the fund. Which statement is correct?

  1. The lease is prohibited because the tenant is a related party.
  2. The lease is permitted only if the member pays rent into their personal account.
  3. The lease is permitted if it is on arm's-length terms and the property is business real property. Correct answer.
  4. The lease is permitted only if the fund holds less than 5% in the company.

Explanation

An SMSF may lease business real property to a related party provided the terms are arm's length and the arrangement complies with the sole purpose test and investment strategy requirements.

Question 17SMSF Specialist Advisor (SSA) Accreditation Program

Which of the following best describes the auditor's role for an SMSF?

  1. To prepare the fund's tax return and financial statements.
  2. To express an opinion on the fund's financial statements and compliance with SIS requirements. Correct answer.
  3. To provide investment advice to the trustees.
  4. To act as a trustee of the fund.

Explanation

An approved SMSF auditor conducts an annual audit and reports on the financial statements and the fund's compliance with the SIS Act and regulations. The auditor must be independent of the fund.

Question 18SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF trustee discovers a breach of the in-house asset rules. Under the regulator's approach, what is the appropriate first step?

  1. Transfer the asset to a member personally to remove it from the fund.
  2. Rectify the breach and document the contravention and remediation in the fund's records. Correct answer.
  3. Wait until the next annual audit to disclose the breach.
  4. Resign as trustee to avoid personal liability.

Explanation

Trustees should act promptly to rectify a contravention and document the circumstances, the remediation and the steps taken to prevent recurrence. This record supports the auditor and demonstrates good faith.

Question 19SMSF Specialist Advisor (SSA) Accreditation Program

Which of the following statements about the non-concessional contributions cap is correct?

  1. The cap is a fixed amount that never changes regardless of indexation.
  2. Eligible members may access a bring-forward arrangement that allows contributions for up to three years. Correct answer.
  3. The cap applies only to members over age 65.
  4. The cap is reduced by the amount of any concessional contributions made.

Explanation

The non-concessional cap is subject to indexation and eligible members can bring forward up to three years of contributions based on their total superannuation balance. The bring-forward period depends on the amount contributed.

Question 20SMSF Specialist Advisor (SSA) Accreditation Program

A member aged 67 who is not working wishes to make a non-concessional contribution. Which requirement is relevant?

  1. No work test applies to non-concessional contributions for any member.
  2. The member must be under age 65 to contribute.
  3. The member must make the contribution through a salary sacrifice arrangement.
  4. The member must satisfy the work test or the work test exemption to contribute. Correct answer.

Explanation

Members aged 67 to 74 generally must satisfy the work test or the work test exemption to make contributions. The work test requires gainful employment of at least 40 hours over 30 consecutive days in the financial year.

Question 21SMSF Specialist Advisor (SSA) Accreditation Program

Which document should an SMSF trustee prepare before making a significant investment in direct property?

  1. A written investment strategy that considers diversification, liquidity and the fund's cash flow needs. Correct answer.
  2. An auditor's independence declaration.
  3. A member benefit statement.
  4. A transfer balance cap election form.

Explanation

Trustees must formulate and give effect to an investment strategy that considers diversification, liquidity, cash flow and the fund's ability to meet liabilities. A significant property investment should be supported by a documented strategy.

Question 22SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF trustee is reviewing the fund's liquidity. Which factor is most relevant to the trustee's obligation?

  1. The fund's ability to avoid holding cash.
  2. The fund's ability to maximise investment returns each year.
  3. The fund's ability to pay benefits and expenses as they fall due. Correct answer.
  4. The fund's ability to lend money to members.

Explanation

The investment strategy must consider the fund's cash flow requirements, including the need to pay benefits, taxes and expenses. Adequate liquidity ensures the trustee can meet obligations without forced asset sales.

Question 23SMSF Specialist Advisor (SSA) Accreditation Program

Which of the following best describes the consequences of an SMSF failing to comply with the sole purpose test?

  1. The fund is exempt from audit for the following year.
  2. The fund is required to transfer all assets to the ATO.
  3. The fund automatically loses its trustee structure.
  4. The fund may be treated as non-complying and face significant tax consequences. Correct answer.

Explanation

A breach of the sole purpose test is a serious contravention that can lead to the fund being treated as non-complying, with tax on the fund's assets at the highest marginal rate. The regulator may also take enforcement action.

Question 24SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF trustee wants to accept a contribution from a member's employer. What must the trustee ensure?

  1. The contribution is accepted regardless of the member's age.
  2. The contribution is paid into the member's personal bank account first.
  3. The contribution is made in accordance with the fund's trust deed and contribution rules. Correct answer.
  4. The contribution is reported only to the employer.

Explanation

The trustee must ensure contributions are accepted in accordance with the trust deed and the SIS contribution rules, including age and cap restrictions. Contributions must be paid to the fund and reported appropriately.

Question 25SMSF Specialist Advisor (SSA) Accreditation Program

Which statement about the trustee's duty to act in the best interests of members is correct?

  1. The trustee may delegate all duties to an investment adviser.
  2. The trustee may use fund assets for personal benefit if disclosed.
  3. The trustee may prefer the interests of the member with the largest balance.
  4. The trustee must act honestly and in the best interests of all members when exercising powers. Correct answer.

Explanation

Trustees must act honestly and in the best interests of members as a whole, exercising care and diligence. Personal benefit and preferential treatment of individual members are inconsistent with these duties.

Question 26SMSF Specialist Advisor (SSA) Accreditation Program

Which investment approach best satisfies an SMSF trustee's duty to formulate and give effect to an investment strategy for the fund?

  1. Delegating the strategy entirely to the fund's administrator without trustee involvement
  2. Documenting a strategy that considers diversification, liquidity, cash flow and member circumstances, then reviewing it regularly Correct answer.
  3. Selecting investments solely on the basis of the highest expected return regardless of risk
  4. Adopting the strategy used by the fund's auditor to simplify the annual audit process

Explanation

Trustees must formulate and give effect to an investment strategy that considers diversification, the risk and return profile, liquidity and cash flow needs, and the circumstances of members. The strategy must be documented and reviewed regularly as member circumstances change. Delegation of the decision does not remove the trustee's responsibility.

Question 27SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF trustee is offered a residential property by a member's adult daughter at market value. Which rule most directly determines whether the fund may acquire it?

  1. The purchase is permitted provided the property is rented to the daughter at market rent
  2. The acquisition of assets from related parties is restricted, so the purchase from the daughter is generally prohibited Correct answer.
  3. The purchase is permitted because it is at market value and the daughter is not a member
  4. The purchase is permitted if the trustee obtains a valuation from a licensed valuer

Explanation

SMSF trustees are generally prohibited from intentionally acquiring assets from members or related parties, and a member's adult daughter is a related party. Market value does not cure the prohibition. Limited exceptions apply, such as listed securities acquired at market value, but residential property is not one of them.

Question 28SMSF Specialist Advisor (SSA) Accreditation Program

Which statement correctly describes the treatment of a contribution made by a member's spouse on the member's behalf?

  1. It is treated as a contribution to the spouse's account until the member reimburses the spouse
  2. It is treated as a contribution made by the spouse and counts against the spouse's cap
  3. It is not a contribution at all because the member did not provide the funds
  4. It is treated as a contribution made by the member and counts against the member's relevant cap Correct answer.

Explanation

A contribution made by another person on behalf of a member is credited to that member and counted against that member's relevant contribution cap. The source of the money does not change whose cap applies. Acceptance rules, such as the work test for older members, are also assessed on the member receiving the contribution.

Question 29SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF has one corporate trustee and two individual members, neither of whom is a director of the trustee company. Which statement describes the compliance position?

  1. The fund is non-compliant unless the members are appointed as directors within 30 days
  2. The fund is compliant provided the members are shareholders of the trustee company
  3. The fund is compliant because a corporate trustee is always preferred over individual trustees
  4. The fund is non-compliant because each member must be a director of the corporate trustee Correct answer.

Explanation

Where an SMSF has a corporate trustee, each member of the fund must be a director of the trustee company, and each director must be a member. Shareholding alone does not satisfy this requirement. Allowing non-member directors or member non-directors breaches the basic trustee rules.

Question 30SMSF Specialist Advisor (SSA) Accreditation Program

Which document is the primary governing instrument that sets out the powers, terms and rules of an SMSF?

  1. The investment strategy document
  2. The trust deed Correct answer.
  3. The member's binding death benefit nomination
  4. The annual return lodged with the regulator

Explanation

The trust deed establishes the fund and defines the trustee's powers, the terms of membership and the rules for benefits and investments. Other documents operate within the framework it creates. Trustees should ensure the deed is current and permits the activities they intend to undertake.

Question 31SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF trustee is evaluating a proposal to borrow to purchase an industrial property. Which requirement is central to the permitted limited recourse borrowing arrangement?

  1. The property must be leased to a member to generate income for the fund
  2. The lender must be a related party of the fund to satisfy the arm's length rule
  3. The asset must be held on a separate trust until the borrowing is repaid Correct answer.
  4. The borrowing must be repaid within five years of settlement

Explanation

Under a limited recourse borrowing arrangement, the asset acquired must be held in a separate trust until the borrowing is fully repaid. The lender's recourse is limited to that asset, protecting the fund's other assets. The arrangement must also satisfy the other conditions, including that the borrowed money is used to acquire the asset.

Question 32SMSF Specialist Advisor (SSA) Accreditation Program

A member's total superannuation balance affects which of the following for that member?

  1. Whether the fund must appoint an auditor each year
  2. Eligibility to make non-concessional contributions and to use the carry-forward concessional cap Correct answer.
  3. The minimum pension payment percentage the fund must pay
  4. The rate of tax payable on the fund's investment income

Explanation

A member's total superannuation balance determines eligibility for non-concessional contributions, the bring-forward arrangement and access to unused concessional cap amounts. It is measured at the end of the previous financial year. Other obligations, such as audit and minimum pension standards, are not determined by that balance.

Question 33SMSF Specialist Advisor (SSA) Accreditation Program

Which statement best describes the standard for an SMSF trustee's investment decisions under the sole purpose test?

  1. Investments must be made to provide retirement benefits to members or their dependants, not to provide a present-day benefit Correct answer.
  2. Investments must be limited to assets that can be sold within 12 months
  3. Investments must always produce a positive return in the year they are acquired
  4. Investments must be approved by every member before settlement

Explanation

The sole purpose test requires the fund to be maintained for the purpose of providing retirement and related benefits to members and their dependants. Providing a financial or lifestyle benefit to members before retirement can breach the test. Investment choice must therefore be consistent with that purpose.

Question 34SMSF Specialist Advisor (SSA) Accreditation Program

A trustee is considering how to value an unlisted asset for the fund's financial statements. Which approach is most consistent with the trustee's obligations?

  1. Adopt the highest available valuation to strengthen the fund's reported position
  2. Retain the original purchase price indefinitely to avoid volatility in reported earnings
  3. Rely on a verbal estimate from a member who works in the relevant industry
  4. Use a reasonable valuation method applied consistently and documented with supporting evidence Correct answer.

Explanation

Assets must be valued at market value, using a reasonable and consistently applied methodology supported by objective evidence. The trustee remains responsible for the valuation even when an expert is engaged. Documenting the basis protects the fund and supports the audit.

Question 35SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF trustee is reviewing the fund's insurance arrangements. Which statement about holding insurance through the fund is correct?

  1. The trustee may hold policies for members where permitted by the trust deed and applicable law Correct answer.
  2. Insurance proceeds must always be paid to the estate of the insured member
  3. Insurance may only be held if the fund has a corporate trustee
  4. The trustee must hold life insurance for every member as a condition of complying with the sole purpose test

Explanation

An SMSF may hold insurance for members where the trust deed allows it and the relevant superannuation law permits it. The trustee must consider the members' circumstances when deciding what cover to provide. Payment of benefits on death depends on the governing rules and any valid nomination.

Question 36SMSF Specialist Advisor (SSA) Accreditation Program

A member asks the trustee to pay a benefit as a lump sum. Which consideration is most relevant to the trustee's decision?

  1. Whether the member has held the benefit for at least ten years
  2. Whether the member has nominated a beneficiary for the remaining balance
  3. Whether a condition of release has been met and whether the trust deed permits the payment Correct answer.
  4. Whether the fund has sufficient assets to pay the benefit without borrowing

Explanation

A benefit can only be paid once a condition of release is satisfied and the governing rules permit it. The trustee must also ensure the payment complies with preservation and payment standards. Beneficiary nominations are relevant to death benefits, not to whether a living member can be paid.

Question 37SMSF Specialist Advisor (SSA) Accreditation Program

Which statement about an SMSF's annual return obligations is correct?

  1. The annual return is only required in years when the fund makes contributions
  2. The trustee must lodge the annual return and the auditor's report by the applicable due date each year Correct answer.
  3. The annual return may be lodged by the fund's administrator without trustee sign-off
  4. The annual return is optional for funds with fewer than two members

Explanation

SMSF trustees must lodge an annual return with the regulator, accompanied by the approved auditor's report, by the due date each year. Lodgment is a trustee obligation and cannot be delegated away. Failure to lodge can result in penalties and loss of compliance status.

Question 38SMSF Specialist Advisor (SSA) Accreditation Program

A trustee discovers that a member has exceeded the concessional contributions cap. Which consequence is most likely?

  1. The excess is automatically returned to the member's employer
  2. The excess is transferred to the member's spouse's account
  3. The excess is included in the member's assessable income and taxed at the member's marginal rate, with a tax offset for the fund-level tax Correct answer.
  4. The fund becomes non-complying and loses its tax exemption

Explanation

Excess concessional contributions are included in the member's assessable income and taxed at the member's marginal rate. The member receives a tax offset reflecting the contributions tax already paid by the fund, and may elect to release some or all of the excess. The fund does not automatically become non-complying.

Question 39SMSF Specialist Advisor (SSA) Accreditation Program

Which statement best describes the trustee's obligation when a member requests a binding death benefit nomination in a non-self-managed form?

  1. The trustee must obtain the auditor's approval before acting on the nomination
  2. The trustee must convert the nomination into a reversionary pension
  3. The trustee may ignore the nomination if it prefers a different beneficiary
  4. The trustee must follow the nomination if it is valid under the deed and meets the legal requirements Correct answer.

Explanation

Where a binding death benefit nomination is valid and the trust deed permits binding nominations, the trustee must pay the benefit in accordance with it. The trustee cannot substitute its own preference. Validity depends on matters such as the form of the nomination, its currency and whether the nominated beneficiary is a dependant.

Question 40SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF trustee is considering whether to accept a downsizer contribution from an eligible member. Which requirement is most relevant?

  1. The contribution must be counted against the member's concessional cap
  2. The contribution must relate to proceeds from the sale of an eligible main residence and be notified to the fund by the required time Correct answer.
  3. The member must be under age 55 at the time of the contribution
  4. The contribution must be made from the member's employer's funds

Explanation

Downsizer contributions relate to proceeds from selling an eligible main residence and are subject to the applicable age, timing and notification requirements. They are not counted against the concessional or non-concessional caps, subject to the lifetime limit. The trustee must receive the required notification when the contribution is made.

Question 41SMSF Specialist Advisor (SSA) Accreditation Program

Which statement about the audit of an SMSF is correct?

  1. The auditor is appointed by the regulator rather than the trustee
  2. The audit is only required every three years
  3. The approved auditor must be independent of the fund and report on compliance with the relevant law Correct answer.
  4. The auditor may also prepare the fund's financial statements and audit them

Explanation

An SMSF must appoint an approved auditor who is independent of the fund and its trustees. The auditor examines the financial statements and assesses compliance, reporting any contraventions. The trustee appoints the auditor, and the audit is required annually.

Question 42SMSF Specialist Advisor (SSA) Accreditation Program

A trustee is considering an investment in a related unit trust. Which condition is most relevant to whether the investment is permitted?

  1. The trustee must satisfy the requirements for related non-geared unit trust investments, including the fund's level of in-house assets Correct answer.
  2. The investment is always prohibited because the trust is related
  3. The investment is permitted only if the trust holds residential property
  4. The investment is permitted if the trustee and the trust share the same accountant

Explanation

Investments in related unit trusts may be permitted where the trust meets the requirements for non-geared unit trusts and the fund complies with the in-house asset limits. The trustee must monitor the fund's in-house asset ratio. Not every related trust investment is prohibited.

Question 43SMSF Specialist Advisor (SSA) Accreditation Program

Which statement about the trustee's obligation to keep records for an SMSF is correct?

  1. Records only need to be kept until the annual return is lodged
  2. Records must be kept for at least 20 years in all cases
  3. Records may be discarded once the auditor has signed the report
  4. Records supporting the fund's transactions and decisions must be kept for at least five years Correct answer.

Explanation

Trustees must keep records of the fund's transactions, decisions and member information for at least five years. Accurate records support the audit and demonstrate compliance. Some records, such as those relating to member benefits, may need to be kept longer.

Question 44SMSF Specialist Advisor (SSA) Accreditation Program

A trustee is assessing whether a proposed investment complies with the fund's investment strategy. Which step is most appropriate?

  1. Compare the investment's risk, return, liquidity and diversification impact against the documented strategy Correct answer.
  2. Proceed if the investment has a guaranteed return
  3. Proceed if the investment is popular among other SMSFs
  4. Proceed if the investment is recommended by a member's friend who is a broker

Explanation

The trustee must evaluate each investment against the fund's documented strategy, including risk, return, liquidity and diversification. This demonstrates that the strategy is being given effect. Popularity or personal recommendations are not substitutes for that assessment.

Question 45SMSF Specialist Advisor (SSA) Accreditation Program

Which statement best describes the treatment of a pension paid from an SMSF to a member aged 60?

  1. The pension payments are taxed at the member's marginal rate in full
  2. The pension payments are tax-free only if the member has retired
  3. The pension payments must be reinvested in the fund
  4. The pension payments are generally tax-free to the member and count toward the minimum payment for the year Correct answer.

Explanation

For a member aged 60 or over, superannuation pension payments are generally tax-free in the member's hands. The trustee must still ensure the minimum annual payment is met. The tax treatment does not depend on the member having retired.

Question 46SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF trustee is considering accepting a contribution for a member aged 75 who has not been gainfully employed in the financial year. Which requirement is most relevant?

  1. The member must satisfy the work test or another applicable acceptance condition before the contribution can be accepted Correct answer.
  2. The contribution must be a downsizer contribution to be accepted
  3. The member must be retired permanently before any contribution is accepted
  4. The member must be a director of the trustee company

Explanation

For members above the relevant age threshold, the trustee must ensure an acceptance condition, such as the work test or the work test exemption, is met before accepting certain contributions. The trustee is responsible for confirming eligibility. Being a director is a structural matter, not an acceptance condition.

Question 47SMSF Specialist Advisor (SSA) Accreditation Program

Which statement about the trustee's power to amend the trust deed is correct?

  1. The trustee may amend the deed freely to remove member rights at any time
  2. The power to amend exists only to the extent the deed and law permit, and amendments must not breach the fund's governing rules Correct answer.
  3. The deed may only be amended with the regulator's written consent
  4. The deed cannot be amended once the fund has more than two members

Explanation

A trust deed typically contains a power of amendment, but amendments must comply with the deed's own requirements and with superannuation law. Amendments cannot be used to defeat accrued member benefits improperly. The regulator does not generally need to approve amendments.

Question 48SMSF Specialist Advisor (SSA) Accreditation Program

A trustee is reviewing the fund's exposure to a single asset class. Which principle is most relevant to the trustee's diversification obligation?

  1. The trustee must hold at least ten separate investments at all times
  2. The trustee must consider diversification of investments and document the reasoning where concentration is chosen Correct answer.
  3. The trustee must avoid all investments in a single asset class
  4. The trustee must obtain member consent for each additional investment

Explanation

The trustee's covenant requires consideration of diversification, but the law does not prescribe a minimum number of investments or forbid concentration. Where concentration is chosen, the trustee should document the reasons and consider the risk to members. Member consent is not the mechanism for meeting the covenant.

Question 49SMSF Specialist Advisor (SSA) Accreditation Program

Which statement about the trustee's liability for breaches of the superannuation law is correct?

  1. Penalties apply only where the fund has a corporate trustee
  2. Trustees can be subject to administrative penalties and directions, and may be disqualified in serious cases Correct answer.
  3. Trustees are personally immune from penalties because the fund is a trust
  4. Only the fund's administrator can be penalised for breaches

Explanation

SMSF trustees are responsible for compliance and may face administrative penalties, directions and, in serious cases, disqualification. The corporate form of the trustee does not remove this accountability. Advisers and administrators may also face consequences, but that does not excuse the trustee.

Question 50SMSF Specialist Advisor (SSA) Accreditation Program

An SMSF trustee is considering a proposal to lend fund money to a member's business. Which analysis is most accurate?

  1. The loan is permitted if the member provides a personal guarantee
  2. The loan is permitted if it is documented in writing and carries a commercial interest rate
  3. The loan is likely prohibited as a financial accommodation to a related party and may also breach the in-house asset rules Correct answer.
  4. The loan is permitted because the fund is lending to a member rather than acquiring an asset from one

Explanation

SMSF trustees are generally prohibited from providing financial accommodation to members or their relatives, and such a loan would also raise in-house asset issues. Documentation, interest and guarantees do not cure the prohibition. The trustee must avoid arrangements that expose the fund to related-party risk.