SMSF trustees are responsible for managing the fund’s investments in the best financial interests of fund members and in accordance with superannuation law. 

All SMSF assets must be kept separate from the personal and the business affairs of the members. 

Sole purpose test

The most important rule behind all investment decisions for an SMSF is the sole purpose test. 

This test measures and limits the purpose and use of the fund’s investments. Essentially, all investments must be maintained solely for one or more of “core purposes” but can also include an “ancillary purpose”. 

The core purposes are to provide:

• retirement benefits;
• benefits for members over age 65; and
• death benefits to dependents.

The ancillary purposes are to provide death and disability benefits, which allows for personal insurance cover, or access to benefits in limited circumstances such as hardship.