24/09/2008

Not likely. Since 1 July 2007 self managed superannuation funds need to hold a trustee declaration in an ATO specified format for each new trustee or director of a company trustee. The trustee is also responsible for lodging a change of trustee details form with the ATO within 28 days of the change occurring. As with all significant decisions those involved with or as the trustees, whether companies or not, need to minute the appointment and cessation and keep the minute as a record. Unless the addition entails only a change in the directors of a company trustee the change usually should involve a deed of change where the new trustee adopts the duties and responsibilities of trustee:

·         under the fund's trust deed; and

·         in compliance with the fund's trust deed and the law;

notably because the adoption is in essence an alteration to the party/ies to the superannuation trust deed. Australian courts routinely find that a deed is required to override or impact on a former deed entered into by the parties even when seemingly lesser formality has been prescribed.

The requirements don't end there. Unless the change is a very short term arrangement the addition of a trustee to an SMSF will usually mean that the fund is admitting a member too bearing in mind the required parity of trustees and members in SMSFs. The most likely exception is where someone is being added as a second trustee of a single member fund to satisfy the minimum two individual trustees requirement.

If the new trustee/director is also a new member of the SMSF then the addition of that person as a member is another decision of the trustee/s that needs to be taken and recorded in compliance with the fund's trust deed and the law. Participation as a member in a SMSF is a financial product which normally means that the trustee/s are usually required to issue a product disclosure statement (PDS) to the new member. Just because a trustee obviously conveys what they know about the SMSF to a member because they are the same person doesn’t mean that that they convey what a new member ought to know. Unless the new member is an SMSF expert there is a big difference. So a PDS should be provided to a new member.

It follows that we at Townsends believe that the addition of a trustee to an SMSF is work that should be done by us as we have the people to check it has been done correctly and the systems to do it as efficiently as possible.