SMSFs require active participation by trustees

Article

Published: September 22, 2026 |

A recent South Australian Supreme Court decision serves as a timely reminder that while professional advisers can assist with managing a self-managed superannuation fund (SMSF), trustees remain accountable for ensuring the fund meets its compliance obligations.

The case highlights the importance of active trustee oversight and demonstrates the risks that can arise when regulatory obligations are not closely monitored.

Court decision reinforces trustee accountability

In Schmidt v The King [2026] SASC 101, an SMSF trustee was fined after failing to lodge annual returns for the 2021, 2022 and 2023 financial years. The trustee had engaged an accountant to manage the fund's tax affairs and argued that the missed lodgements resulted from the accountant's failure to submit the returns despite assurances they would be completed.

The court upheld the conviction and fine, finding that responsibility for ensuring the SMSF complied with its reporting obligations remained with the trustee. Importantly, the court considered that the issue had continued long enough for the trustee to make further enquiries or consider alternative professional support.

While the circumstances of every SMSF will differ, the decision reinforces a longstanding principle of SMSF governance: engaging professional advisers does not remove a trustee's legal obligations.

Why timely lodgement matters

The SMSF annual return is a key compliance requirement. It provides the Australian Taxation Office (ATO) with information needed to assess a fund's income tax position, monitor regulatory obligations and maintain records relating to the fund's compliance status.

Failure to lodge annual returns on time may result in:

Administrative penalties and fines
Increased ATO scrutiny
Additional professional costs associated with resolving outstanding obligations
Delays in addressing compliance matters
Potential regulatory action where reporting obligations remain outstanding.

Importantly, compliance issues that are not addressed promptly can become complex and costly to resolve.

Key actions for SMSF trustees

Many trustees rely on accountants, administrators and other advisers to assist with the operation of their SMSF. While professional support remains critical, trustees should maintain visibility over the fund's key compliance obligations and reporting deadlines.

Practical steps trustees can take include:

Understanding the fund's annual reporting requirements
Confirming annual returns have been prepared and lodged on time
Reviewing ATO correspondence promptly
Maintaining accurate records and documentation
Following up on outstanding matters before deadlines are missed
Seeking alternative professional support where existing arrangements are not meeting the fund's needs.

Where trustees become aware of overdue lodgements or unresolved compliance issues, early action can help minimise the risk of penalties and further regulatory attention.

Good governance can reduce compliance risk

Beyond annual return lodgements, effective SMSF governance requires trustees to actively oversee the management of their fund throughout the year.

This includes maintaining regular communication with advisers, ensuring accurate record-keeping, understanding key compliance obligations and implementing processes to monitor critical deadlines.

Trustees may not have the same technical expertise as their advisers, but they should take reasonable steps to ensure the fund is being managed appropriately. Establishing good governance practices can help identify issues early and reduce the likelihood of compliance failures.

BDO comment

Although this case centred on missed annual return lodgements, the broader lesson is that trustee oversight cannot be a ‘set and forget’ system.

SMSF trustees often work with multiple service providers, including accountants, administrators and financial advisers. Having clear processes in place to monitor compliance obligations, track key deadlines and obtain confirmation that important tasks have been completed can help reduce the risk of oversights and regulatory issues.

Where an issue is identified, early action is important. Following up promptly, escalating unresolved matters and seeking alternative support where needed can help reduce the risk of penalties, additional costs and regulatory attention.

How BDO can help

Keeping up with SMSF compliance obligations can be challenging, particularly as regulatory requirements continue to evolve.

BDO's Superannuation team can assist with:

SMSF compliance reviews
Trustee governance and compliance obligations
Annual reporting and lodgement requirements
Identifying and managing compliance risks
Addressing outstanding lodgements and rectification matters.

If you would like to discuss your SMSF compliance obligations or review your fund's governance processes, contact your local BDO adviser.

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