The Australian Taxation Office (ATO) is cracking down on the number of self-managed super funds (SMSFs) with outdated trust deeds. An outdated deed can prevent an SMSF from establishing pensions, accepting contributions or investing under a limited recourse borrowing arrangement (LRBA), depending on when the deed was last reviewed.
It is very important that the governing rules be kept up-to-date with the latest developments, not only in relation to changes to the laws relating to superannuation but also regulations, case decisions, the ATO or ASIC pronouncements and industry practice including the requirements of organisations like banks and investment managers.
Your superannuation deed should be reviewed regularly due to the changes in rules and regulations. Good management of the fund dictates that you must keep the fund’s governing rules updated and failure to do so may constitute a breach of your duty as trustee and put the fund’s tax concessions in danger.
As you may be aware legislation introducing a new SMSF Penalty Regime providing the ATO with administrative and financial penalties for SMSF trustees who breach governing legislation came into effect from 1 July 2014. Penalties imposed under this regime by the ATO cannot be paid for or reimbursed from assets of the Fund – Trustees will have to pay the fine personally.
Proposed fines range from $850 for simple breaches and other fines of $1,700 to $3,400 for breaches such as failure to prepare Financial Statements, and failure to notify the ATO of a change of status of the SMSF up to $10,700 for breaches of lending or providing financial assistance to members and their relatives.
The fines are levied on a ‘per trustee’ basis. The maximum fine for each trustee is currently $10,700.
– A corporate trustee is one trustee and one fine.
– 2, 3 or 4 individual trustees will incur 2, 3 or 4 individual fines.
One of the legislative requirements for SMSF trustees is to sign a declaration undertaking to meet your requirements and responsibilities as a trustee. Some of these duties include: –
– Act honestly in all matters concerning the fund.
– Exercise skill, skill, care and diligence in managing the fund
– Act in the best interests of all the members of the fund
– Ensure that members only access their super benefits if they have met a legitimate condition of release.
– Refrain from entering into transactions that circumvent restrictions on the payment of benefits.
– Ensure that my money and other assets are kept separate from the money and other assets of the fund.
– Take appropriate action to protect the fund’s assets (for example, have sufficient evidence of the ownership of fund assets).
– Refrain from entering into any contract or do anything that would prevent me from, or hinder me in, properly performing or exercising my functions or powers as a trustee or director of the corporate trustee of the fund.
– Allow all members of the fund to have access to information and documents as required, including details about
– The financial situation of the fund
– The investments of the fund
– The members’ benefit entitlements
If you would like a copy of the trustee declaration form, click here.
If you would like any more information on the responsibilities and duties as trustee for a SMSF, please contact Grange Business Partners – we’re here to help!