Our Self Managed Super Fund deed complies with the 15 main changes to SMSF Deeds. This is under the Budget:
1. Internally ‘rollback’ pensions to accumulation
2. Segregate assets between accumulation and pension phases
3. Reject contributions
4. Refund contributions;
5. Deal with excess transfer balance tax and excess non-concessional contributions
6. Allow income streams and Account Based Pension (grandfathered)
7. Specify guardians for incapacity and death
8. Identify the Power of Attorney when living overseas for more than 2 years
9. Resettle pensions with flexible timing without mingling with accumulation account
10. Allow reversionary beneficiary nominations
11. Provide for CGT relief
12. Deal with segregated and unsegregated assets
13. Cease or keep Transition to Retirement Income Streams
14. Calculate member balances, across different funds
15. Calculate internal pension rollbacks to accumulation
These are all required to give maximum flexibility to your accountant and adviser.
A Self Managed Super Fund Deed holds your retirement money. This is called superannuation. The SMSF gives you greater control.
The Australian government provides generous tax concessions from operating a ‘compliant’ self-managed superannuation fund. You comply if:
The treatment of transition to retirement income streams and limited recourse borrowing arrangements passed on 15 June 2017: Treasury Laws Amendment (Fair & Sustainable Superannuation) Bill 2016. The 2016 Budget affects those with a TRIS or about to enter into an LRBA.
The 2016 Budget affect all TRISs from 1 July 2017. This is because the TRIS is no longer able to benefit from the exempt current pension income status. This is on the earnings supporting a TRIS.
If a pension started as a TRIS, the ECPI exemption never applies. This is even where the pensioner subsequently satisfied a condition of release with no cashing restrictions.
Our Self Managed Super Fund deed fully complies with the new rules.
Self-Managed Super Funds are audited every financial year. The auditor relies on Auditing and Assurance Standards Board’s (AUASB) Standards.
The new Standard identifies, clarifies and summarises the existing responsibilities which approved self-managed superannuation fund (SMSF) auditors use when conducting SMSF audit engagements. It also provides guidance to the auditor on matters which the auditor considers when planning, conducting and reporting on the financial and compliance engagement of an SMSF audit.
The 106-page standard is called the Guidance Statement GS 009 Auditing Self-Managed Superannuation Funds (GS 009).
The appendices to GS 009 includes an example engagement and representation letter, illustrative trust deed checklists and financial audit procedures, and illustrative examples of threats to the auditor’s independence.
Legal Consolidated’s Self-Managed Superannuation Deed is updated to fully comply with the Standard. Because you are building your SMSF at our website you also receive a signed letter on our law firm’s letterhead to confirm compliance with the Standard.
Firstly, build the SMSF Deed on our website, print out and the trustee signs. Secondly, within 60 days register the SMSF with the ATO. You do this by merely applying for an Australian business number (ABN). Our covering letter, that comes with the SMSF Deed, gives you the link to the ATO website. It is free to get an ABN from the ATO. You also apply for a Tax File Number (TFN) from the ATO (as well).
Currently, about half of the Self-Managed Super Fund deeds built on our website are for pension phase. These funds may have just passive investments. And there may only be investments via platforms. Nevertheless, all Australian compliant SMSF Deeds must have an ABN, at all times.
Most SMSF have a company as the trustee. If your company is only doing that one job – acting as trustee of the SMSF – then the company has neither an ABN or TFN. The trust needs the ABN and TFN, not the corporate trustee.
When I lecture superannuation to my students I tell them that:
1. all members must also be the only trustees; or
2. if there is a company as trustee then all the members must be the only directors
But that is not always the case.
What if a member loses capacity or gone overseas? Or the person cannot be bothered running the SMSF?
Section 17A(1) requires all members be trustees or directors. That draconian rule is tempered by section 17A(3)(b)(ii) SIS Act 1993. It gives discretion. The member can give someone an Enduring POA. Let’s say you have two members: a mum and dad. Both mum and dad can give a POA to their son, or their accountant or anyone they trust.
The ATO sets out the POAs rules in SMSFR 2010/2.
In SMSFR 2010/2 an example is given where two members are replaced by their friend who is not a member of the fund as trustee.
However, a POA does not work when you have a corporate trustee. And, these days, 94% of all SMSFs built on our website have a company as trustee.
Well the ATO believes you can. In SMSFR 2010/2:
Andrew works for a large international group of companies. He and his wife, Jane, are trustees and members of their SMSF. From 1 February 2009 Andrew is transferred to an overseas company for an indefinite period of time. In accordance with the relevant State legislation, Andrew and his wife each execute an enduring power of attorney in favour of their friend and retired accountant, Trevor. In addition, Andrew and Jane both resign as trustees of their SMSF and appoint Trevor as the trustee. The appointment of Trevor as trustee is in accordance with the terms of the trust deed. Other than the fact that Andrew and Jane are not trustees of the SMSF, the superannuation fund satisfies the other requirements of the definition of an SMSF in subsection 17A(1).
Trevor is a legal personal representative of both of the members, Andrew and Jane, by virtue of holding an enduring power of attorney in respect of each of them. In addition, Trevor is now the trustee of the SMSF in place of both Andrew and Jane. Once appointed as trustee, Trevor is subject to civil and criminal penalties in the event that he breaches his duties. Provided that the enduring power of attorney remains valid during the period Trevor is the trustee and given that the other requirements of subparagraph 17A(3)(b)(ii) are satisfied, the superannuation fund continues to satisfy the definition of an SMSF in subsection 17A(1), notwithstanding that Andrew and Jane are no longer trustees.
Obviously, Trevor cannot take a fee as remuneration for acting as the Trustee. Taking a fee breaches section 17A(1) SIS Act 1993.
The superannuation guarantee rates are as per the table below.
Employers pay the relevant minimum superannuation rate as per the table.
This is on an employee’s ordinary time earnings in each quarter. The amount contributed cannot include any employee salary sacrifice contributions. And it is based on an employee’s ordinary time earnings before any salary sacrifice superannuation amounts are deducted.
The superannuation guarantee rate is legislated:
To update your SMSF Deed see here.
Because we are a law firm, you retain Legal Professional Privilege, we are responsible for the document and receive legal advice.
Telephone us for legal advice on building your document.
Adj Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
National Australian law firm
National: 1800 141 612
Mobile: 0477 796 959
Email: [email protected]