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Record Keeping for a SMSF

Record Keeping for SMSF’s

Introduction (SMSF)
Most SMSF trustees are aware that record keeping is important to ensure their fund remains compliant and eligible for tax concessions, but few trustees understand the actual ramifications of what happens when you don’t keep the right records.

Record Keeping Requirements
The ATO website contains a great deal of helpful information for SMSF trustees including the records a fund must keep. See https://www.ato.gov.au/super/self-managed-super-funds/administering-and-reporting/record-keeping-requirements/

For example, copies of annual returns must be retained for at least 5 years but records of changes of trustees and minutes recording investment decisions must be kept for at least 10 years.

Wrong Turns – Real Life Examples

1. Maintaining the Chain of Deeds
A and B set up the AB Super Fund in 1987.  They are the trustees of the fund in their own capacity.

In 1990 and again in 1998 they updated the provisions of their SMSF trust deed.  Their accountant arranges this for them.

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Implications – SMSF Record Keeping (or lack thereof)

Following on from the previous blog on record keeping, below is yet another example which highlights the importance of record keeping for SMSFs.

Where it can go wrong – another real life example

Lost Deeds 

L and M are members of the L & M Super Fund and are the original trustees.  In 1993 a newly incorporated company called LM Holdings Pty Ltd was appointed trustee.

In 1997 the Fund buys a property.  A title search for the property shows that ‘LM Holdings Pty Ltd’ is the registered owner.

In 2014 L and M divorce and M becomes the sole member of the Fund. A new trustee, Life after L Pty Ltd is appointed.

The appropriate forms are completed to change the name on the title of the property. An application is submitted to the Office of State Revenue (OSR) for concessional stamping.

OSR requests evidence that LM Holdings Pty Ltd owns the property as trustee of the Fund. The records showing that company’s appointment as trustee in 1993 have been lost.  The contract of sale (which showed ‘LM Holdings Pty Ltd as trustee for the L & M Super Fund’ as purchaser) has also been lost.
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Record Keeping (or lack thereof) for SMSFs

By Natalie Gosper, a Solicitor in our Commercial Law team

Most trustees of SMSFs are aware that record keeping is important to ensure their Fund remains compliant and eligible for tax concessions, but few trustees understand the actual ramifications of what happens when you don’t keep the right records.

The task of record keeping is often left to the Fund’s accountant or adviser, which should be a wise choice however there are records the trustees must retain which are often overlooked.

The ATO website contains a great deal of helpful information for SMSF trustees including the records a fund must keep. See https://www.ato.gov.au/super/self-managed-super-funds/administering-and-reporting/record-keeping-requirements/  For example, copies of annual returns must be retained for at least 5 years but records of changes of trustees and minutes recording investment decisions must be kept for at least 10 years.

Where it can go wrong – a real life example

Maintaining the chain of deeds

A and B set up the AB Super Fund in 1987.  They are the trustees of the Fund in their own capacity.
Continue reading…

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Do you have a SMSF?

The ATO website has a great deal of information about SMSF.  They have published a number of checklists that you can use from setting up your SMSF to paying a pension or winding it up. Follow this link for the checklists –https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/SMSF-resources/SMSF-checklists/

Our Commercial Lawyer and Business Lawyer Parramatta can assist you in establishing your own SMSF and can  provide advice in relation to paying pensions and borrowing through your SMSF.

Contact our Business Lawyer Parramatta if you require advice about any aspect of your SMSF.

Phillip Brophy – phillipb@matthewsfolbigg.com.au or 9635 7966

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Guidelines for banks when lending to SMSFs

The SMSF Professional Association of Australia (SPAA) has released guidelines of disclosures that should be made to trustees of a SMSF by lenders.
Your bank should explain to you the advantages and disadvantages of Limited Recourse Borrowing Arrangements. They also need to explain to you what happens in the event of a default on the loan.

If you have any questions or concerns about your SMSF borrowing arrangement, contact our Business Lawyer Parramatta who can provide comprehensive advice and assistance.

Phillip Brophy – phillipb@matthewsfolbigg.com.au or 9635 7966

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What Lender’s must tell you when borrowing through your SMSF

The SMSF Professional Association of Australia (SPAA) has released guidelines of disclosures that should be made to trustees of a SMSF by lenders.

The guidelines include the disclosure that the Lender will not be responsible if the borrowing arrangement does not comply with the SIS Act.  The ultimate responsibility for SIS Act compliance lies with the trustees of the SMSF.

Our Business Lawyer Parramatta can review your SMSF loan documents and provide advice in relation to compliance.  As the penalties for non-compliance can be harsh, we encourage SMSF’s to contact our Business Lawyer Parramatta to discuss the proposed arrangement before any loan is entered into.

Phillip Brophy – phillipb@matthewsfolbigg.com.au or 9635 7966

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Is your Self Managed Superannuation Fund compliant?

Our commercial law team at Matthews Folbigg strive to keep you up to date with the latest information and legal advice on self managed superannuation funds.

The Superannuation Industry (Supervision) Act 1993 (Cth) sets out a number of particular requirements which a self managed superannuation fund must meet in order to remain legally compliant.

As seen in the recent case of Coshott v Prentice [2014] FCAFC 88 it is extremely important that you seek legal advice not only upon the establishment of a self managed superannuation fund but also during the life of the fund, particularly when purchasing property.

If you would like a commercial lawyer to review your self managed superannuation fund or would like more information on this area of law please contact us.

Phillip Brophy – phillipb@matthewsfolbigg.com.au or 9635 7966

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Recent Federal Court decision spells disaster for bankrupt and his non-compliant self managed superannuation fund

The recent case of Coshott v Prentice [2014] FCAFC 88 highlights the importance of seeking legal advice to ensure that your self managed superannuation fund (SMSF) is compliant under the Superannuation Industry (Supervision) Act 1993 (Cth).

In this case, the Full Federal Court found that although a property was claimed to be held by a SMSF it was in fact beneficially owned by the bankrupt. Consequently, the property would be dealt with as being part of the bankrupt estate.

If you wish to ensure the protection of assets held in a SMSF the fund must operate as a compliant fund.  Contact Matthews Folbigg today to speak with a commercial lawyer about asset protection or to check the compliance of your SMSF.

Phillip Brophy – phillipb@matthewsfolbigg.com.au or 9635 7966