Trustees are responsible for running their superannuation fund according to its trust deed and the superannuation laws, and act in the best interest of its members. Failure to comply would affect tax concessions that normally apply to superannuation funds and result in possible penalties.

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As a trustee, you need to ensure the trust deed is regularly reviewed and updated to ensure that it complies with current superannuation laws and any action or activities that you may undertake is allowed as per the rules of the trust deed.

As an auditor, I get to see a lot of trust deeds which are outdated and do not provide for some of the recent changes that have been introduced in the SIS legislation. You should consider whether your deed is up-to-date and includes the following provisions:

  • The deed allows the SMSF trustee to invest in property and to borrow money on a limited recourse borrowing arrangement (LRBA) as per the new rules introduced on 7 July 2010 contained within Sec 67A.
  • Whether the trust deed allows payment of an Account Based Pension (ABP) and Transition to Retirement Income Stream (TRIS). Any deeds dated prior to 1 July 2007, will not have these provisions.
  • From an estate planning perspective, whether the trust deed allows for non-lapsing Binding Death Benefit Nominations.
  • Does the trust deed have provision to reject and refund contributions received by the fund in excess of the concessional and non-concessional contribution caps.
  • Whether splitting of contributions between spouses is incorporated into the provisions of the deed.
  • Are minors (under 18 years) permitted to be members of the superannuation fund.
  • Is the trust deed compliant with Auditing and Assurance Standards Board (AUASB) Guidance Statement GS 009.
  • Does the deed allow for acceptance of government co-contributions.
  • Is automatic payment of reversionary pension to nominated death beneficiary permitted by the deed.
  • Does the deed allow for in-specie contributions made by members.
  • Does the deed allow for purchase of insurance policies.

The above is not an exhaustive list, but a guide for the trustees to consider that their trust deeds have the latest provisions of the Superannuation Industry (Supervision) Act 1993 (SISA) and the Superannuation Industry (Supervision) Regulations 1994 (SISR).

Trustees are urged to seek appropriate legal advice if they have any specific concerns in relation to their trust deeds.