Suite 8 / 260 Auburn Road, Hawthorn 3122
Phone: 03 9214 4100
Fax: 03 9818 6008
eWombat Search
Hot Issues
Why your retirement intentions are critical
Plans for study into elder abuse
Our website is really our digital office.
Dissecting the downsizer contribution
The Goldilocks effect - Economic and market update 4Q 17
Rates, inflation and yield - five graphs to help make sense of it all
Australia. All you need to know to be the expert.
Potential pension minefields
Confusion lingers over post-death insurance
Non-lodgement numbers slashed, 30,000 funds still in ATO’s sights
Business confidence hits 5-month high: NAB
New Year resolutions, New Year strategies
How will downsizer contributions work for SMSFs?
Where Australia is at. Our leading indicators.
‘Read the tea leaves,’ brace for cryptocurrency regulation, advisers told
Power of retiree super dollars
Beyond share prices
Financial advice is the leading trigger to review insurance inside Super
Opinion – 2018 to be the year of the machine
Rising risks to the status quo
UPDATE: Australia's vital statistics
As share prices rise, the risk-return trade-off gets tricky
Technical expert flags top 3 traps with CGT relief
Become a better investor through your holiday reading
Australia's vital statistics
Made in Albania? How globalisation is creating challenges for Chinese policymakers
Our Advent calendar for 2017
Articles archive
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
SMSFs warned on ‘ticking time bomb’ with outdated deeds

A surprising number of older SMSF deeds pre-dating the 2008 financial year still remain, some of which contain inappropriate clauses exposing members to unforeseen risks, an industry lawyer warns.



DBA Lawyers senior associate William Fettes said while reviewing and updating a trust deed can be a costly exercise, it is generally recommended that SMSF trust deeds are updated every four or five years or when there is a major legislative change.

The last major legislative change to superannuation that warranted a wholesale update, he said, occurred in mid-2007.

“[So] I think these pre-FY 2008 deeds are very much in the category where it's a no brainer — it's strongly encouraged that you would get an update,” said Mr Fettes.

“The ones that are even older than that are going to be worse. They really can be ticking time bombs. For example, where you've got some sort of principal employer entity there that's associated with the fund.”

The client may not realise it, he said, but if they, for example, deregister that company, some deeds have provisions that say the fund just has to be wound up.

“There's no way around it, and you end up tainting the fund significantly without even really realising it,” he said.

“Occasionally you can resurrect the company in order to try and fix that, but that's a whole big exercise in itself to deal with ASIC around resurrecting a company, and so it can be a real ticking time bomb for clients that have those really old deeds and so we still see plenty of that around.”

While it may not be strictly necessary for a trust deed to be updated following the more recent changes to the system, SMSF trustees may still want to in order to take advantage of certain strategies, he said.

“There is an argument that you can be fully compliant with the law because a lot of the major [changes] that were implemented with the tax provisions, around the transfer balance cap, the different interactions with the caps and a lot of the other concessions, are imposed by tax law. But you're not going to have the type of flexibility and features that you necessarily want in order to take full advantage of the best strategies and so forth.”


By: Miranda Brownlee
22 NOVEMBER 2017

Trumpet Financial Pty Ltd ABN 11 443 516 384 Corporate Authorised Representative (No 327756) of Aon Hewitt Financial Advice Limited AFSL 239183 ABN 13 091 225 642
Registered Address: Level 33  201 Kent Street, Sydney NSW 2000 | Sitemap | Disclaimer | Privacy Policy | About Aon Hewitt Positioning