30/11/2018

Mary and John have recently changed the trustee structure of their SMSF from individual trustees to a corporate trustee and are both the members and directors of the new corporate trustee.

Mary and John reside in NSW and wish to enter into a limited recourse borrowing arrangement within the next year or so. They have heard that in some States and Territories it is a requirement to register the Deed of Change of Trustee with the local Land Titles Office.

The above scenario is a frequent scenario that we often get asked by our clients - does a Deed of Change of Trustee need to be registered or not? The answer to this question is ‘it depends’ on which State or Territory’s applicable law applies to your client’s trust deed and your client’s circumstances.

New South Wales ('NSW')

In NSW, there is uncertainty as to whether the Deed of Change of Trustee should be registered under the Trustee Act 1925 (NSW) in order to be fully effective.

As a first point of reference, Mary and John should determine whether their SMSF’s trust deed expressly empowers the change of trustee. The common view here is that if the change of trustee was effected pursuant to an express power in the SMSF’s trust deed then the Deed of Change of Trustee registration is not necessary. This view however has not been clearly endorsed by case law or by statute.

It is worth noting that the SUPERCentral Governing Rules (‘SCGR’) takes this approach as the SCGR expressly empowers the change of trustee in its governing rules.

If, however, the SMSF’s trust deed does not expressly empower the change of trustee and the SMSF is therefore relying on the powers in sections 6, 7 or 8 of the Trustee Act (these sections deals with the appointment of a new trustee, additional trustee and the retirement of a trustee) then registration is necessary.

Other factors which Mary and John may need to consider is that some major lenders (such as the National Australia Bank) require the Deed of Change of Trustee to be registered as part of their loan approval process when entering into a limited recourse borrowing arrangement regardless of whether or not the SMSF trust deed expressly confers the change of trustee.

In NSW the fee to register a Deed of Change of Trustee is currently $141.60 and is payable to the NSW Land Registry Services.

Queensland ('QLD')

In QLD, the Trusts Act 1973 (Qld) provides that the appointment or retirement of a trustee can be empowered by an instrument in writing, but makes no reference as to whether the instrument in writing may be registered or not. Accordingly, if the applicable law of the Deed of Change of Trustee is QLD law then it is unlikely that the deed would need to be registered by the local registry as the trustee of an SMSF can rely on sections 12 and 14 of the Trusts Act.

Victoria (‘VIC’)

The approach in VIC is similar to the approach taken in QLD in that the Deed of Change of Trustee does not need to be registered. A trustee may rely on sections 41 and 44 of the Trustee Act 1958 if there is no express power in the deed that expressly empowers the change of trustee. It is unlikely that the deed needs to be registered with the local registry.

Tasmania (‘TAS’)

A similar approach to VIC is taken in TAS. The Trustee Act 1898 (Tas) empowers the trustee of an SMSF to rely on sections 13 and 14 of the Trustee Act 1898 where there is no express power in the SMSF deed regarding the change in trustee. It is also unlikely that the Deed of Change of Trustee will need to be registered with the local registry.  

South Australia (‘SA’)

In SA registration of the Deed of Change of Trustee is not necessary where there is an express power provided for in the SMSF trust deed. Mary and John may rely on sections 14 and 15 of the Trustee Act 1936 (SA) if their SMSF trust deed does not provide an express power of the change of trustee. Mary and John may also need to lodge Form B2 – Appointment of New Trustees and be required to produce the trust deed to ensure that the power of appointment has been properly exercised. The total registration fee (which includes a transaction fee of $15) to lodge this form with the local Land Titles Office is currently $163.00.

Western Australia (‘WA’)

If Mary and John’s SMSF’s trust deed expressly empowered the change of trustee then registration of the Deed of Change of Trustee is not required. If there is no express power, sections 7 and 9 of the Trustees Act 1962 (WA) may be relied upon regarding the appointment of a new trustee and retirement of a trustee, and no further documents would need to be lodged and registered with the local registry.

Australian Capital Territory (‘ACT’)

The Trustee Act 1925 (ACT) provides a similar approach to that of NSW. Where there is an express power in the Deed of Change of Trustee to change the trustee deed registration is not necessary. If the SMSF is relying on the powers under sections 6, 7 and 8 of the ACT Trustee Act (these deal with the appointment of a new trustee, additional trustee and the retirement of a trustee) then in Mary and John’s case the trustee of their SMSF may make an application under section 9 of the Registration of Deeds Act 1957 (ACT) to the registrar-general by lodging Form 109 REGD to register the Deed of Change of Trustee. The current fee to register the Deed of Change of Trustee with Access Canberra is $124.00.

Norther Territory (‘NT’)

A similar view to that in NSW and the ACT is also taken in NT. If the change of trustee is expressly empowered in the SMSF trust deed no registration is required. Where there is no express power sections 11 and 12 of the Trustee Act 1893 (NT) may be relied on. The trustee may make an application to the registrar-general to note the appointment of a trustee by lodging Form 71. The fee to register the notice of the appointment of a new trustee is $145.

For further information on each State and Territory’s specific requirements regarding registration of the Deed of Change of Trustee or if you require assistance with registering a Deed of Change of Trustee with your local Land Titles Office, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222 or email info@townsendslaw.com.au to see how we can assist