The ATO regulates SMSFs in Australia. Upon changing the SMSF trustee you notify the ATO. You let the ATO know within 28 days. That is easy to do. Our covering letter that comes with the Deed of Variation tells you how to do that.
However, what happens when you let the ATO know that you updated the SMSF trustee? The ATO carries out a ‘risk assessment process’.
The ATO automatically starts a mini-investigation when you change your SMSF trustee. The 5 primary checks into your new SMSF trustee are:
The ATO operates a website called the Super Fund Lookup.
It is the go-to website to see if a super fund ‘compliant’. It has “Status: Complying“. Well, my SMSF states that. I hope yours does as well.
However, when you change the trustee of your SMSF then you suffer the indignity of “Status: regulations details withheld“. This is when you notify the ATO of the changes to the SMSF trustee. You must do this within 28 days. The whole world sees a change of status.
These organisations only deal with ‘complying‘ SMSFs:
The shameful badge of “Status: regulations details withheld” is a warning to the above. Something may be wrong.
The dreaded “Status: regulations details withheld” does not go away. You only escape this indignation when the ATO gets around to completing its ‘risk assessment process’. If you pass then your SMSF goes back to “Status: Complying“.
But the ATO process takes time. They may also interview the new trustee or the SMSF company’s directors.
However, your SMSF is ‘complying’. This is during the ‘process’.
Our SMSF Trustee update seeks to make the ATO’s job easier.
The ATO states:
“Adding a new member or trustee
As part of our ‘secure front door’ process, we may review new trustees and members if we find reason to. If you add a new member or trustee and we initiate a review, the SMSF is taken offline. Currently our secure front door process takes up to 56 days to complete. This is one of the many steps we are taking to safeguard the retirement of Australians.”
But most commonly you are converting to a company as trustee of an SMSF.
The SMSF has a group of humans as human trustees of the SMSF. The members want to change to a company as trustees of the SMSF. They want to replace humans with a corporate trustee of an SMSF.
There are two choices of trustee for an SMSF:
The appointment or resignation of a trustee must be carefully documented. The SMSF Trustee update is a Deed. It must be a ‘Deed’. Minutes are not enough. The Superannuation Industry (Supervision) Act 1993 (Cth) (‘SIS’) is complex.
1. updating legislation to allow you remove and change Trustees
2. removing any outgoing trustees
3. adding any new trustees complies with Moss Super Pty Ltd v Hayne  VSC 158
4. confirming any trustees that are remaining
5. reduction of tax clauses for use by the Trustee
6. ensuring that there is no resettlement
7. grandfathering structures and defined benefits
8. augmenting trustee powers to comply with the latest Australian budget
9. dealing with conflict of interest between trustees
10. increasing power of appointment and delegation for the trustees
11. allowing meetings via the Internet and other forms of communication
12. minutes to confirm and accept the Deed of Variation
13. covering letter confirming the above (for accountant’s due diligence file)
The above reduces problems arising from divorce, ATO audit and a trustee’s death. See Katz v Grossman and oppolo & Hesford v Conti  WASC 389
Your Self-Managed Superannuation Fund update of your Trustee contains:
It is a chicken and egg dilemma. Which do you update first? Do you make him a trustee/director or a member first?
But the SISA legislation is clear on the order of proceedings when you change an SMSF trustee.
Your Trustee is either a Company or all the members.
See section 17A SIS Act.
Example: Mavis and John are trustees of their SMSF. By law, they must be the only members.
Example: Futuris Pty Ltd is the trustee of the Futuris SMSF. The members are Karen and Peter. Therefore, by law, the only directors of Futuris Pty Ltd are Karen and Peter.
You have a corporate trustee of your SMSF. The corporate trustee is called McDuck Pty Ltd. It is a special purpose company. It is the trustee of your SMSF.
But you now do not like the name. So you log into ASIC and change the name of your company.
You now need to build an SMSF Change of Trustee Deed. Put in the ‘outgoing’ company name and the ABN. And put in the new ‘incoming’ company name with the same ABN.
E.g. McDuck Pty Ltd ACN 123456789 is the trustee of the Smith SMSF:
The SMSF Trustee update also updates your Trustees, even if they are dead or otherwise incapacitated.
There are many training videos and hints to help you as you build the SMSF Trustee Update Deed.
The Deed of Variation only updates the Trustees. It does not update the members of the Self-Managed Superannuation Fund. Your accountant and financial planner changes the ‘members’ by minute.
The Trustee name (e.g. Smith Nominees Pty Ltd) is NOT the trust name. The Trustee is just a trustee. Don’t put in the trustee name. Put in the SMSF’s name.
Have a look at the original Trust Deed that set up your SMSF. Your Self-Managed Superannuation Fund is usually called after your name. For example:
1. Smith Self-Managed Super Fund
2. Mary and Colin Firth Superannuation Fund
3. Collins Family Retirement Fund
1. retain Legal Professional Privilege
2. benefit from our law firm’s Professional Indemnity Insurance
3. receive legal advice
4. get a letter on our law firm’s letterhead setting out what you have built
Only a law firm can provide the above.
1. Deed of Variation, which updates completely the Trustees of your SMSF.
2. Minutes for the Trustee to accept the Deed of Variation
Updating your SMSF Trustee update through Legal Consolidated will not result in the resettlement of your SMSF as we retain those parts of the old Deed that are required to not affect a resettlement based on both the legislation and previous court decisions.
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]