Fundamentally a SMSF Trustee must act in accordance with its SMSF Trust Deed and the Law - and auditors are increasingly facing pressure to ensure that SMSF trust deeds are up to scratch. We therefore recommend to our clients that any SMSF Trust Deed older than five years should be reviewed to ensure they remain compliant and reflect industry best practice. Importantly when a significant change in the law occurs, such as in July 2017, the SMSF Trust Deed should be revised as a matter of course.
ABNAustralia.com.au specialises in the establishment of SMSF trust deeds and is now offering clients the opportunity to update their existing SMSF trust deeds. Read on further below to find out why you should be updating your SMSF trust deeds to remain compliant and up-to-date.
Our fees are $300 + GST delivered to you either in soft or bound hard copy.
Our SMSF Trust Deeds are fully compliant, individually drafted by expert lawyers providing you with legal assurance, and represent excellent value for money. We can assist staff in your office to facilitate a smooth transition in updating your clients’ deeds. If you would like to download our PDF deed update order form please click below.
Changes to the superannuation system announced by the Government in the May 2016 Budget and implemented on 1 July 2017 were designed to improve Australia’s super system in a number of ways, once again affecting the way in which SMSFs operate - and represent another instance of when SMSF Trustees should ensure their Trust Deeds are up to date.
Importantly, if any of your client's trust deeds were established prior to 1 July 2017 there is a risk they are missing out on financial opportunities, and at worst may be in breach of the Law. This could result in additional tax and financial penalties, succession issues, and a range of other disputes.
Key elements of superannuation fund changes for 2017/2018 include:
- Introduction of a $1.6 million transfer balance cap
- Annual concessional (before-tax) contributions cap reduced to $25,000
- Expansion of tax-deductible super contributions to all Australians
- Annual non-concessional (after-tax) contributions cap reduced to $100,000
- Increase in income threshold for spouse superannuation contributions tax offset to $37,000 (and $40,000)
- Low Income Superannuation Tax Offset replaces LISC
- Removal of tax exemption for transition-to-retirement pensions (TRIPs)
- Tax hike for more Australians: 30% tax on concessional (before-tax) super contributions
- Preservation age now at least 57 years
- Age Pension increases to at least 65.5 years
- SMSF trustees face bigger penalties from 2017/2018 year
- Introduction of First Home Super Saver Scheme
- Removal of option to treat a pension payment as a lump sum payment, for tax purposes
- Removal of anti-detriment provisions
- Extension of tax exemption for other types of retirement products
- Non-super change: Delivery of personal income tax cuts
- Proposed introduction of non-financial superannuation changes
In addition to legislative changes, continual innovation in superannuation has tended to ‘age’ SMSF Trust Deeds which have not kept up-to-date. There have been a myriad of tax determinations, rulings, court cases & ATO guidance on a range of issues resulting in new strategies developed and changes in best practice which require an up to date SMSF trust deed to protect your interests and get the most from your SMSF
Some of the areas in which older Deeds can cause difficulties for Trustees and Members include:
- the unnecessary linking of a Binding Death Benefit Nomination with the requirements in the SIS Legislation for non SMSFs, effectively making the nomination lapse after three years, unless renewed;
- no indication as to whether a Binding Death Benefit Nomination will be non-lapsing – industry consensus is that the trust deed should specifically state that a Nomination will not lapse, if that is the intention of the member, because of the passage of time;
- The ability for the SMSF Trustee to borrow in Limited Recourse Arrangements;
- the provision of appropriate powers for the payment of income streams, given that many trust deeds do not provide for an account based pension, even though it has been the predominant pension paid by an SMSF since 2007;
- incorporating safeguards, such as a Member Benefit Guardian, to protect a member’s interests in the event of their incapacity or death; and
- the removal of unnecessary parties to the deed. Those parties include roles which have become irrelevant over time, such as the Principal, Principal Employer (and other employer roles), Founder and similar positions.
- In many instances, when attempting to vary an SMSF trust deed, or change the trustee of an SMSF, the power to do so rests with one of those ‘unnecessary parties’ referred to above. A significant complication arises when it is discovered that the party, which is often a company, has been deregistered because it was no longer required, and is therefore not in a position to attend to the role assigned to it under the trust deed. The removal of those unnecessary parties is one of the reasons why trustees should update their SMSF deed sooner rather than later.
The adoption of a modern and well-prepared SMSF Trust Deed as available through ABNAUstralia.com.au will provide clients with the necessary provisions to ensure they are taking advantage of industry best practice. You can download our order form here.
How To Look After Your Clients (Cost Effectively)If you or your clients would like to adopt a modern and well-prepared SMSF Trust Deed now, please do not hesitate to contact us. Our SMSF Trust Deeds are fully compliant and we can assist staff in your office to facilitate a smooth transition in updating your clients’ deeds.
Our fees are $300 + GST delivered to you either in soft or hard copy.
You are welcome to call us on 1300 226 226 or emails us on firstname.lastname@example.org.
If you would like to download our PDF deed update order form please click below.
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Please note this article is for information purposes only and does not constitute legal advice. Should you have any queries or require more information, please contact the team at ABNAustralia.com.au.