The Cleardocs self-managed superannuation fund (SMSF) trust deed and associated product disclosure statement (PDS) is being updated in order to reflect new legislative requirements and a recent decision of the High Court of Australia. The updates include changes to death benefits provisions, forfeiture accounts, caps and rates, and electronic signing and execution clauses. This article explains the importance of keeping your SMSF trust deeds up to date, and what these changes mean for SMSFs.Stephen Dyason, Maddocks
A SMSF trust deed is an SMSF’s most important legal document as it contains rules for the operation and management of the fund. The SMSF trust deed and superannuation laws together form a fund’s governing rules, with the trust deed setting out what trustees can do, while legislation typically sets out what trustees cannot do or what rules must be followed when exercising trustee powers.
Trustees have an obligation to ensure they make decisions based on current laws, even if those laws have not yet been reflected in the trust deed. An old SMSF trust deed which has not been updated, could result in a trustee inadvertently acting upon outdated rules, risking ATO investigations and penalties for non-compliance with current legislative requirements.
Without an up-to-date SMSF trust deed, the trustee may not be able to fulfil its obligations without being in breach of the trust. For example, in acting in the best interests of the trust, a trustee may wish to invest in a new type of investment such as cryptocurrency. However, if this type of investment is not allowed under the fund’s trust deed, the beneficiaries could take action against the trustee (or third parties such as accountants or financial planners) for any resulting losses and damage.
As a trust deed is often used as the tool to guide decision making and administration of the trust, reviewing and updating the trust deed regularly will help to proactively prevent any breaches and ensure you are getting the most out of the SMSF.
Generally, a SMSF trust deed should be updated every 3-4 years to ensure that it is complying with all legislative requirements. However, there are a number of other important junctures at which updating a SMSF deed is highly recommended:
In March 2022, the Cleardocs Standard SMSF Deed was updated to make changes to rates and caps to reflect legislative changes to contributions rules, as well as annual changes to contribution caps, benefits rules and thresholds, transfer balance cap limits, co-contribution rules, catch-up contribution rules for non-concessional contributions and low-income spouse offset rules. Signing clauses were also updated to reflect best practice execution of the SMSF deed by companies.
In December 2022, the Cleardocs Standard SMSF Deed will be further updated with the following:
The Cleardocs SMSF trust deed is reviewed regularly to ensure it is up to date with the latest requirements and best practices.
Update to SMSF enables you to easily update your deed to the most current version, and the Bulk Updates feature enables you to update multiple deeds at once. Even if you don’t currently have a Cleardocs Deed, you can still update to a compliant Cleardocs deed, even in bulk.
For more information, contact Maddocks on (03) 9288 0555 and ask to speak to a member of the Corporate and Private Clients team.
Leigh is a partner in the Maddocks Tax & Revenue team.
Leigh regularly provides advice on:
His advice covers both direct and indirect tax considerations.
Leigh advises Australian and multinational companies, high net worth individuals, accountants and financial advisers on all areas of taxation law.
The legal information and commentary on this site is general only. Documents ordered through Cleardocs affect the user's legal rights and liabilities. To assess their suitability for the user, legal accounting and financial advice must be obtained.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.