Self Managed Superannuation Fund Deed

This kit provides you with all the formalities to establish a Self-Managed Superannuation Fund (SMSF) that is compliant with the Superannuation Industry (Supervision) Act 1993.

This kit contains:

1. A SMSF Trust Deed and the Rules of the Fund,
2. Minutes of the Trustees meeting to be signed by the Trustee(s) to adopt the Rules,
3. Investment Strategy,
4. Product Disclosure Statement (PDS),
5. Application for membership,
6. Register of members,
7. Death Benefit Nomination.

What is a SMSF?
A SMSF is a special purpose trust into which individuals and employers can pay a person’s superannuation. It has particular tax and asset protection status under Australian law that is designed to encourage people to save for their retirement. The fundamental rules that apply to a SMSF are no different to those that apply to large public offered ***or*** Government superannuation schemes. The essential difference is expressed in its name, self managed superannuation fund. It is an investment structure that is operated by its members.

A SMSF consists of 1 to 4 members, all of whom are trustees of the Fund ***or*** are directors of a company that acts as the trustee. Even though a SMSF is operated by its members, you may require assistance from an Accountant ***or*** Adviser for the administration of the Fund. You will also need to have the Fund’s financial accounts audited each year.

Why have a SMSF
A SMSF allows you to have personal control over your superannuation both during the phase that it is building up and also during the draw down phase. As a SMSF is operated by its members, it is the members who decide when and how the SMSF invests and who are responsible, with the help of professionals if desired, for ensuring this complies with superannuation law. A SMSF provides flexibility for its members to structure their retirement funds to best suit their personal circumstances.

Should I have a SMSF?
Really that is a question for you. Another way of expressing this is, do you want to exercise personal direction and control at whatever level you may choose and at whatever time you may wish? If the answer is yes, then a SMSF may be for you. It is important that you understand that as a self managed superannuation fund it is all about self management. If you embrace a SMSF you need to ensure that it complies on a continuous basis with the laws that apply and which are necessary for keeping its taxation advantaged status.

Many consider that the minimum amount to justify a personal SMSF is $200,000. Certainly this is the view of Government bodies such as the Australian Taxation Office, the Australian Securities & Investments Commission and the Australian Prudential Regulatory Authority. But it is not a prescriptive amount, just a suggestion of the amount needed to justify the costs of self management. There is no prescribed minimum for creation of a SMSF.

Download the Self Managed Superannuation Fund Deed Checklist

Sample is not available for this document.

Fund Name
• What is in a name?
• Can I call my Super Fund anything I want?
• Can there be duplicate SMSF names?
• Who dates and signs the Deed?
• Who helps me maintain this Superannuation fund?
• What do I get from Law Central?
• Moving from accumulation to pension phase?
• Do I need a PDS and what is it?
Fund Members
• Who can be a Member?
• Who can't be a Member?
• What is an employee
• Who is related to you?
• "Genuine Domestic Basis" is different to de facto?
• How many can I have in my SMSF?
• Can a young child be a member of a SMSF?
• Can my spouse receive my SMSF pension benefits when I die even though they are not a member?
Fund Trustee
• Mum and Dad are Members
• Company Trustee or a Natural Person?
• Can You Have a One Member SMSF?
Co Trustee
• Co trustees
Company Trustee
• Company Trustee
Preferred Address
• Please DON'T use a Post Office Box
• What address should I use?
Jurisdiction
• Law of the Trust
• Perpetuity Period

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Fund Name

• What is in a name?

  You can call your Self Managed Super Fund anything you like. You may want to name the fund after yourself.
  
  Eg. If your name is John Smith, you can call it the "Smith Superannuation Fund" or the "Smith Family Superannuation Fund". Or maybe you could name it after a goal that you are aiming for; "My Retire Rich Fund".
  
  You don't need to include the word "Fund". We will do that for you.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Can I call my Super Fund anything I want?

  QUESTION: Does ASIC or another government body have a list of super fund names?
  
  ANSWER: Yes you can find this at superfundlookup.gov.au which lists all super funds that have an ABN, large and small.
  
  QUESTION: Can I check to see whether the SMSF name I want has been used before?
  
  ANSWER: Yes you can at superfundlookup.gov.au. This does not list all SMSF names, just the ones with ABN's. But don't worry too much about duplicate names. For example, many Funds may well have the name "Smith Family Pension Fund". There is no requirement for your SMSF to have an original name.
  

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Can there be duplicate SMSF names?

  You can call your SMSF whatever you like. Duplicates are allowed. For example, it is likely that there would be many SMSF's with the name "Smith Family Pension Fund".
  
  Won't duplicate SMSF names cause some confusion?
  
  It is unlikely that your SMSF will be confused with another but if you want to be safe, be inventive in your name. Usually the most appropriate distinguishing factor will be the different ABN's.
  

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Who dates and signs the Deed?
  1. After you build, purchase and print out your new SMSF Deed, you need to:
     1. have all the Trustees sign the Deed;
     2. date the Deed;
     3. lodge the Deed for stamping (where applicable);
     4. notify the Australian Taxation Office that your SMSF has been established and apply for registration; and
     5. sign the Trustee Declaration (each trustee or director of the company trustee must sign) and retain the document with your SMSF records.
  Once you have purchased the deed, all of the above required forms are either provided in your SMSF Kit or are available separately on the website. To access the relevant manuals and forms after you purchase your new SMSF Deed, simply go to the "My Account" section. In "My Account" you can get a copy of your Tax Invoice, your SMSF Deed and the relevant forms and manuals you may require. The required Trustee declaration is available on the Australian Taxation Office website.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Who helps me maintain this Superannuation fund?

  Who manages and how it is managed is up to you, after all it is a self-managed superannuation fund. You must have a registered SMSF Auditor to review and report on your SMSF each year and you may seek the following assistance:
  

  1. an accountant to audit the fund each year;
  2. a financial advisor to help you assess and put in place member insurances;
  3. a financial advisor to help you work out your investments and strategies; and
  4. an administration company or your accountant to attend to your day to day affairs. For example, you may want to roll over assets from one Superannuation Fund to another. Don't know how to do this? Then you need your accountant, advisor or an administration company to help you.
  These professional advisers can help you work with the Australian Taxation Office who is the Government regulator of SMSFs.
  
  These services are not available through Law Central.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• What do I get from Law Central?

  You get:
  

  1. SMSF Deed (which is the rules of your superannuation fund);
  2. A Product Disclosure Statement;
  3. Minutes for the Trustees to sign to set it up;
  4. Certificate of Compliance for the Trustees to sign;
  5. Application for membership;
  6. Schedule of members; and
  7. Hints on how to complete the above and direction for completing the Australian Taxation Office forms required to register.
  
  After you have purchased the SMSF pack you will also have access to:
  
  1. Our manual detailing the next steps, including stamping the Deed (where applicable) and lodging an application with the Australian Taxation Office;
  2. Our fully compliant Investment Strategy (ready for you to include the investment percentages) in Microsoft Word format; and
  3. The Australian Taxation Office forms you will be required to complete.
  In short, the SMSF pack provides everything you should need to establish your SMSF. If you don't know how to do certain things - like the annual tax return, or investment strategy - you will need to employ the services of your accountant or financial planner. The accountant and financial planner can do as much or as little work as you require. Law Central is not able to provide this additional support.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Moving from accumulation to pension phase?

  Accumulation phase refers to when your SMSF is building your retirement funds by way of; contributions from you, contributions from your employer, co-contributions from the Government, contributions from a Family Law super splitting or from earnings or capital gains your SMSF is making.
  
  Pension phase is when you have reached a prescribed pension age and you have in part or wholly commenced pension distributions from your SMSF.
  
  Your SMSF Deed (and the Product Disclosure Statement) is compliant in both phases.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Do I need a PDS and what is it?

  A Product Disclosure Statement (PDS) is just a summary statement of what your SMSF is and how it works for you. It contains references to important information members should consider before making a decision to invest. A PDS is commonly not required under superannuation or corporations law for a new interest in an SMSF. This is because it is reasonable to expect that any new member who also becomes a trustee or director of a trustee company will have access to the sort of information that they reasonably need to have to understand their superannuation interest. However there are limited occasions when this reasonable expectation cannot be held, such as when a child or person with a disability is to join a SMSF and another is to be the trustee or director on their behalf.
  To accommodate the limited occasions when a PDS is required and also to assist you and others to understand superannuation and your SMSF, it is prudent for all members to receive a PDS which contains general information together with the Application for Membership form and Trustee Declaration. The PDS should also be retained by the Trustee.
  
  
  The PDS clearly and simply shows:
  1) how the member’s benefits are to be calculated;
  2) when and how to access those benefits;
  3) what and how a member may exercise member rights;
  4) risk issues that members and trustees should consider;
  5) how to access insurance benefits; and
  6) what happens when the member dies.
  

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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Fund Members

• Who can be a Member?

  Any person you want to allow to be a member of your SMSF can be a member, subject to very few limitations.
  
  However all Members of the fund must be trustees of the fund (or directors of the trustee company), and all Trustees of the fund must be members of the fund.
  
  This forces each member to participate in the decision making process and thereby allows all of the members to actively participate in their superannuation.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Who can't be a Member?

  Only natural person individuals can be members of a SMSF. Companies and Trusts cannot be members.
  
  A person who has been disqualified from being a trustee of a SMSF cannot, whilst the disqualification remains in place, be a trustee and so cannot be a member.
  
  A person who is not able to contribute to the SMSF and thereby start up an account balance for them cannot become a member in this way, but they may later become a member by receiving a death benefit pension.
  
  No member can be the employee of another member, except where they are "relatives" (as defined for superannuation law purposes).
  

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• What is an employee

  An "employee" is someone who works for another, they are employed by the other person. If you do not know if this rule applies to you and your other intended member of the SMSF, please consult a professional to assist you.
  

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Who is related to you?

  For superannuation law purposes, your mum, dad, son, daughter, grandchild, grandmother, grandfather, brother, sister, aunt, uncle, great-aunt, great-uncle, niece, nephew, first or second cousin of you and your spouse (or former spouse) are all considered relatives. Relative for these purposes extends also to the spouse or former spouse of any of them and 'child' is extended to trace through domestic partnerships where one of them has a child.
  
  Your 'spouse' certainly includes married persons, those who have a registered relationship, a de facto spouse and extends further to include persons who although not legally married live with a person on a genuine domestic basis in a relationship as a couple.
  

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• "Genuine Domestic Basis" is different to de facto?

  Yes, for superannuation law purposes a spouse is wider than simply a de facto. Under the common de facto laws of Australia the individuals will only be defined as such where there is a genuine domestic relationship as a couple and there is at least two years of such cohabitation or there is a child of the relationship. The superannuation law only requires living with a person on a genuine domestic basis as a couple for any (short) length of time.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• How many can I have in my SMSF?

  A SMSF cannot have more than four members.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Can a young child be a member of a SMSF?

  Yes they can, there is no lower or upper limit for superannuation membership. However, persons under 18 years of age do not have the required legal capacity to act as a trustee or a director of a trustee. Because of the general rule that all trustees must be members and all members must be trustees, an under age of 18 person who joins a SMSF needs a parent, legal guardian of them or their legal personal representative to act as trustee on their behalf until they reach 18 years.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Can my spouse receive my SMSF pension benefits when I die even though they are not a member?

  Yes, your spouse can receive your death benefit in a pension form to them and they will become a member. You can nominate your spouse as a Reversionary Beneficiary. The form to give effect to such a nomination is included in the pack you will receive after purchasing your SMSF Deed.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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Fund Trustee

• Mum and Dad are Members

  As all members must be trustees and all trustees must be members, Mum and Dad as members of the Fund will also be Trustees, unless a company trustee is appointed. If a company trustee is appointed, Mum and Dad must be the Directors of the trustee company.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Company Trustee or a Natural Person?

  This is your choice, certainly having natural persons as trustees is cheaper and more direct but there are very good reasons to use a company.
  
  Trustees of a SMSF may be either the natural person members of the Fund or alternatively a company trustee may be appointed. Where a company trustee is appointed, the natural person members of the Fund must be the directors of the trustee company. The company trustee must not have any directors who are not members of the Fund unless they are legal personal representatives of a member.
  
  Whilst there is cost involved in establishing and administering a company trustee, a company trustee can be beneficial by aiding the administration processes at critical times and providing an additional level of asset protection rather than holding superannuation assets in the personal names of the members of the Fund.
  
  Aiding the administration processes? Having a company separates and provides clarity as to when a person is acting for their superannuation fund or when they are doing something for themselves. It makes it easier to identify a public company shareholding that belongs to the SMSF, the certificate, notices and dividend statement will have the company name on it.
  
  Aiding the administration processes at critical times? Single member SMSF's may not have a single person trustee structure. On the death of one of a two member SMSF where both were trustees, if the survivor wants to have sole control of the SMSF they must adopt a company structure anyway. Or if they are willing to accept another person to act with them as a co-trustee, all of the assets and investments of the SMSF need to be altered to the new company or co-trustee names. This could be at a critical time of grief in the event of a death or a falling or rising asset market when urgent action and attention is needed. Having a company means the trustee name on assets and investments of the SMSF does not need to change, only a notice to ASIC of a change in the directors is needed.
  
  How does the company as the SMSF trustee enhance asset protection? If a SMSF holds 'active assets' such as real estate that is rented to another and a person on the property suffers an injury, they are entitled to sue and be compensated. They can only bring their claim upon the trustee of the SMSF who is entitled (and likely also to be legally obliged) to pay the successful injury claim from the SMSF assets.
  
  Such a claim falls personally upon the trustee or trustees of the SMSF. If the claim consumes the whole of the SMSF wealth and there is a shortfall, the balance can be demanded from the trustee or trustees personally. Where they are natural persons this means that their personal non-SMSF wealth will also be liable to pay the shortfall of the claim. Where the trustee of the SMSF is a company that is dedicated to the trustee role of the SMSF, only its assets and commonly not the assets and wealth interests of its directors or shareholders will be liable to pay the shortfall.
  
  In short, the adoption of a company as trustee of the SMSF is prudent.
  
  If you are in doubt, talk with your Accountant and Adviser about the costs and benefits of having a Corporate Trustee.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Can You Have a One Member SMSF?

  Yes. However, there are some rules to follow:
  
  If the trustee is a company trustee:
  

  1. the single member of the SMSF must be the sole director of the trustee company; or
  2. the single member of the SMSF must be one of two directors of the trustee company, with the second director being:
     1. a relative of the member director; or
     2. any other person who is not an employer of the member director.
  
  If a company trustee is not used, the single member SMSF must have two natural person trustees. One of the trustees being the member of the SMSF and the other trustee being:
  
  1. any relative of the member; or
  2. any other person that is not the members' employer.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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Co Trustee

• Co trustees

  A co-trustee refers to the second trustee / director of the trustee company in a single member Fund scenario. Co-trustees in such a situation can only be natural persons.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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Company Trustee

• Company Trustee

  If you have a company trustee, all of the members of the SMSF must be the directors of the company. The company cannot have any other non-member directors unless they are a personal legal representative of the member.
  
  If your SMSF is a single member Fund and has a company trustee, either:
  

  1. the single member must be the sole director of the trustee company; or
  2. there must be a second director of the trustee company who is either related to the single member of the Fund or who is any other person other than an employer of the single member. The second director will not become a member of the Fund by virtue of the directorship.
  
  Whether the trustee of the Fund is a natural person or a company trustee, the Fund will be administered in much the same way. The benefit of using a company trustee being that the superannuation assets will not be held in the personal names of the SMSF members. There are however costs for establishing and maintaining the company trustee that should be borne in mind.
  
  Please consult your Accountant and Adviser about the costs and benefits of having a company trustee.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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Preferred Address

• Please DON'T use a Post Office Box

  So that the minutes of meeting can be formally prepared we commonly identify the place of the meeting to be the usual place of address of the SMSF. This is why we need a physical address, not a Post Office Box number.
  
  The address could be your home or office or perhaps the office address of your accountant or adviser. Please identify what is practical for you.
  

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• What address should I use?

  A single address is required in the Trust Deed and will serve as the address of the Fund for all trustees.
  The address provided in the Trust Deed is not recorded anywhere else.
  
  The individual contact addresses for each Trustee may be required upon registering your SMSF with the Australian Taxation Office. You may also provide the addresses of your professional advisers on your Australian Taxation Office registration forms who may receive notices on your behalf if you choose.
  

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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Jurisdiction

• Law of the Trust

  There are two levels of law in Australia; federal and state. Many believe that superannuation is regulated at a Federal level only. Yes, it is important that your self managed superannuation fund complies with the federal laws. By doing so it enjoys all of the federal taxation concessions. However, if there is any issue or dispute involving your self managed superannuation fund, it is the law of the state of Australia or territory under which that dispute will be resolved. If you live in one state and your trust superannuation fund law is identified with another state of Australia, you may have a real conflict of laws problem. How do you deal with this? By choosing the applicable law of the state or territory that you want to apply to your superannuation fund. The most common one that you may wish to choose is where you live. But remember, if you move to another state or territory of Australia, you should think about updating the law of your superannuation fund to your new home.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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• Perpetuity Period

  For very many superannuation funds the perpetuity period is not an issue. Many state laws overcome the rule that limit a superannuation trust to exist for a defined period of time. However, these rules vary across Australia. In some circumstances (which differ throughout Australia) it is necessary for a superannuation fund trust to comply with the perpetuity rule. That is, a superannuation trust must be created for a specific length of time. Commonly, this is 80 years. The most common occasion that requires perpetuity period compliance is where the superannuation fund is created by a retired person who is rolling over their superannuation from other funds into their newly created self managed superannuation fund. It is common throughout Australia that this type of superannuation fund created by a person in such circumstances is not protected from the perpetuity rule. If in setting up this fund the superannuation trust deed did not have a perpetuity limiting clause, the superannuation fund trust fails from the beginning. This is why we incorporate as a general rule a clause into your superannuation fund that addresses the perpetuity rule.

  This hint is provided by Peter Bobbin (Argyle Lawyers).

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This document has been prepared by Peter Bobbin (Argyle Lawyers)

Having an up to date Self Managed Superannuation Fund (SMSF) Deed is a vital part of keeping your SMSF compliant. Superannuation is a complex area of law that is constantly evolving and it is difficult for SMSF Trustees to ascertain how changes affect the compliance of their SMSF Deed. Law Central has introduced a service which assists Trustees by automatically ensuring that their SMSF Deed is kept up to date. To subscribe to this update service, simply select the option to add the update service at the time of purchasing your Self Managed Superannuation Fund Deed or SMSF - Update Rules document.

How does it work?

Whenever there are changes to Superannuation Law that affect your Law Central SMSF Deed, a compliance update, done by way of a Deed of Variation is automatically prepared and emailed to you. You simply print the Deed of Variation, sign it and keep with your SMSF records.

What happens if no updates are needed?

Shortly after 1 July each year, you will receive a certificate from our authoring lawyers stating that your Deed is compliant with Superannuation Laws and Regulations. If no compliance updates were required throughout the year, then simply present your SMSF auditor with the certificate as evidence that you have fulfilled your Trustee duties to ensure that the Deed remains compliant.

How will I know I have the most up to date version?

Rules in each Law Central SMSF Deed and SMSF Update Rules document has a version number. Your annual compliance certificate will refer to the most recent version of the Rules. If you have missed or not actioned an email containing your compliance update, then you can download a copy of your most recent update from the My Account area on Law Central.

What does it cost?

The cost of the subscription service is $99 (including GST) per annum. This is paid at the time you first purchase your SMSF Deed (or update an existing SMSF Deed). This cost includes any and all compliance updates prepared during the subscription period, plus the certificate of compliance. Each year, you are invited to renew your subscription shortly before it expires. A tax invoice and payment gateway to process your renewal is provided in the My Account area of Law Central.

What if my subscription lapses?

If your subscription lapses, then you will no longer be entitled to receive automatic compliance updates or certificates of compliance, however you will still be able to access the updates and compliance certificates prepared whilst your subscription was active. If you wish to renew your subscription after it has lapsed, then the start date of your renewal period will be backdated to the previous subscription's expiry date.

Can I subscribe an existing SMSF to the service?

If you have an existing SMSF deed, you can only add the deed to our update system by preparing a SMSF - Update Rules to bring your deed into the current Law Central SMSF deed format. This includes any previously prepared Law Central SMSF deeds.

What if I supervise a number of SMSFs?

Law Central allows you to maintain multiple SMSFs under the one login. If you are an accountant or adviser that supervises a number of funds, please contact us on 08 9476 4900 or support@lawcentral.com.au to arrange a demonstration of the service and find out how Law Central can simplify your SMSF client management.