A discretionary trust allows trustees to decide how income and capital are distributed, while a unit trust allocates benefits based on fixed units held by beneficiaries.

 Yes, but it must comply with SMSF regulations, including the sole purpose test and borrowing restrictions. Legal and financial advice is recommended to ensure compliance.

A trustee must manage the trust or SMSF according to its governing documents, comply with legal obligations, and act in the best interests of beneficiaries.  

No, but a lawyer is highly recommended when setting up a trust to ensure compliance with legal requirements and alignment with your financial goals. Establishing a trust involves several important steps, including nominating trustees and beneficiaries, drafting the trust deed, settling, signing, and stamping the trust. Additionally, there are regulatory requirements such as paying stamp duty and obtaining a TFN and ABN. A lawyer can guide you through the process, helping you make informed decisions and avoid potential pitfalls.

If you are in breach of superannuation laws, the ATO may take action depending on the severity of the breach, including issuing an education direction, requiring trustees to complete training; an enforceable undertaking, where trustees commit to rectifying the issue; or a rectification direction, mandating specific corrective actions. More serious consequences include administrative penalties, trustee disqualification, civil and criminal penalties, or even requiring the SMSF to wind up. If a notice of non-compliance is issued, the fund loses its compliant status, potentially resulting in a tax rate of up to 45% on its assets. In extreme cases, the ATO may freeze SMSF assets to prevent further breaches. To avoid non-compliance, trustees should ensure ongoing compliance with super laws, seek professional advice, and promptly address any audit concerns.