25/02/2010

It seems that the Government could soon be your superannuation lawyer. The Federal Government’s Review into superannuation (the Cooper Review) has suggested that a standard trust deed for SMSFs could be provided by the Tax Office (at no cost). 

Just why the Review thinks this is worth considering is not stated.  It might be like Gareth Evans’ reasoning for having an RAAF bomber spy on the Franklin Dam: “it seemed like a good idea at the time”.

There are many reasons why this is not a good idea.

Without the benefit of knowing their thinking we can only surmise on what the Cooper Review seeks to achieve.

Greater quality of deeds?  Surely not.  Our Superannuation Division here at TBCL spends a lot of time studying the law and regulations and improving the documents.  Many other private providers do likewise.

Cheaper cost?  The cost of setting up a new SMSF is very small currently.  Our associate business SuperCentral charges just $275 and some online services are even cheaper.  The model deed won’t make the fixed costs any cheaper than that because there are too many other documents that are provided at the same time like the PDS, resolutions, consents, explanations etc.

There are lots of other issues as well.

·         Would the model deed be influenced by the Tax Office’s wishes for the running of an SMSF rather than the wishes of the members? 

·         Is the Tax Office able to allocate adequate resources to ensure the terms of the deed are up to date?  

·         SMSF specialist lawyers will take different approaches to addressing some issues within their respective deeds (eg the mechanics of appointing trustees on death of SMSF members).  The Tax Office would have to adopt a default position on each of these issues.

·         The Tax Office model deed would not be automatically updated.  Trustees and advisers would be responsible for monitoring regulatory changes and arranging an update to a revised model trust deed as required.

A model trust deed is also inconsistent with the desire of SMSF members to control their superannuation and ensure the terms of their deed align with their estate plan.  A model deed would be a standardized product for a market that values tailored solutions. 

There is sufficient competition amongst deed providers that the cost of deed establishment and amendment is relatively inexpensive when compared to other costs of administering an SMSF.  We think the Government should not make a rod for its own back and not try to fix something that frankly isn’t broken.

If you would like further information regarding Trust Deeds, please contact Peter Townsend of TOWNSENDS BUSINESS & CORPORATE LAYWERS on (02) 8296 6222