Complex Products

Scenario: 

This product is designed for these scenarios:

• Lost SMSF trust deed
  (or lost recent SMSF deed update, where
  older SMSF trust deed version is still available)

• Invalid SMSF trust deed
  (e.g. missing consents / signatures, deceased party)

• Deceased member
  (i.e. requiring new SMSF trust deed
  showing current parties)

Issue - Member Consent to Replace Trust Deed: 

Your client's latest SMSF trust deed may deal with trustee and membership cessation upon death differently to another SMSF trust deed. 

The T Legal © SMSF Trust Deed allows for the deceased member's legal personal representative (e.g. their executor) to exercise powers in place of the deceased member for the appointment of a replacement trustee.

Then any consent requirements for updating the SMSF trust deed upon death of a member may be satisfied by the legal personal representative as appointed trustee.

If the SMSF trust deed is lost then all available SMSF parties would be required to sign their consent to a lost deed of replacement to replace the lost SMSF trust deed rules. 

This is due to widespread member consent requirements for varying any SMSF trust deed, which are assumed to apply without evidence (e.g. if the SMSF trust deed is lost) that the variation clause does not have member consent requirements. 

See for example EM McPherson where discretionary trust beneficiary consents for a Court ordered trust deed variation were analysed by the Victorian Supreme Court.

Technical Notes: 

Section 126-130 of the ITAA 1997 provides that there is no CGT trigger (i.e. it's a rollover, and there is no trust resettlement) for updating or replacing a lost SMSF trust deed with a new version where the assets and members of the SMSF do not change. 

SMSF trust deeds are therefore updated (called a "deed update") every 5-7 years to ensure the SMSF is administered according to the latest changes in superannuation law and legal features.

You can also order a deed update to adopt new SMSF trust deed provisions in place where the SMSF's trust deed is lost or otherwise defective (e.g. no signature, missing consenting party, member has passed away).

This type of update is not available in the same way for a discretionary trust or a unit trust. 

Service: 

T Legal provides expert review of the current SMSF trust deed as part of preparation of your replacement SMSF trust deed and/or change of trustee documentation required to maintain superannuation law compliance after a member and trustee / director has ceased. 

Contact T Legal on the number / email below or submit a response to the SMSF deed update / lost deed online order form 

Scenario: 

This product is designed for this scenario:

• Past payments / distributions made from SMSF

• Recipient was past retirement age at the time

• Those payments / distributions from SMSF were not recorded on transaction statements as a lump sum

• Preparing SMSF financial statements (in progress)

• Auditor has confirmed that placing ABP documents with commencement date before the first payment will be accepted as SMSF compliant pension commencement

Issue - Exempt Current Pension Income: 

Your client may have received distributions from their SMSF and seek to claim exempt current pension income (ECPI) capital gains tax benefits for the SMSF asset supporting the distributions, which are only available if the distributions were made from certain compliant superannuation income streams (e.g. not being a TRIS, see below).

Compliant account based pension (ABP) documentation is one method to seek to evidence the compliant superannuation income stream to claim ECPI if all the assets of the SMSF are segregated for pension purposes and/or the SMSF does not have a member who has over $1.6 million in super. 

Technical Notes: 

An ABP is a basic type of pension available for payment from your SMSF once you have reached age 65 or have retired after age 60.

To meet the requirements of a superannuation income stream under ITAR 2021 regulation 307.70.02(1)(a)(ii) which points towards regulation 1.06(9A) of the SIS Regs, the rules for the provision of the superannuation benefit (including the SMSF trust deed and the pension deed) must 'ensure' that a number of specified requirements are met.

The ATO in its finalised Taxation Ruling TR 2013/5 notes that what is required for an income stream is a 'liability' to pay a series of periodic payments to the member over an identifiable period of time. The recurring intervals need not be the same. The payment amounts may vary. Liability to pay a single payment annually will satisfy the ATO's requirements, but a single payment in a single year will not.

Compliant ABP documentation is one method that will set out the requirements for the pension to be evidenced as a compliant superannuation income stream under the SIS Act and ITAA 1997.

See a recent example of commencement of pension analysis in the case of QWYN.

Service: 

T Legal provides expert review of the current SMSF trust deed and financial statements as part of preparation of your ABP documentation required to maintain compliance with superannuation income stream requirements. 

If the current SMSF trust deed is found to be deficient, an SMSF deed update may be purchased to be signed first for an affordable fixed price.

Contact T Legal on the number / email below or submit a response to the ABP online order form 

Scenario:

This product is designed for these scenarios:

• SMSF member considering losing capacity in future
  (but has not yet lost capacity)

• Particularly if: 

  • no surviving spouse to receive BDBN / pension 

  • or no children to receive BDBN benefits

• Or an intention to spend remaining superannuation soon:

  • receive SMSF death benefits earlier to purchase assets

  • financial adviser confirms amounts in SMSF not required to remain in SMSF - they will be excess to needs
    (but member does not want to withdraw the amounts now)

Issue - Deciding When to Withdraw Super: 

Your client may be concerned that they do / will not have dependent children under 18 years of age or a remaining spouse to receive BDBN distributions or a reversionary pension after their death tax-free. 

Although this is not a requirement to receive the superannuation death benefit, only for the tax advantage.

They may withdraw their superannuation as a lump sum tax-free after age 65 or after retirement (or other conditions of release).

Or they may give another trusted advisor or family member the power to sign the required documentation to withdraw their superannuation from their SMSF into an account of their choosing after they have lost capacity (but this must be done before death).

This could be particularly useful as a strategy in place where spouses have reciprocally nominated each other in their BDBNs. 

But the authorised person cannot be the other spouse or this would not work as intended.

Technical Notes: 

The current SMSF trust deed should allow the member to delegate the required authority to a person to sign documentation on their behalf as being their prior instructions to the SMSF for their superannuation benefits to be withdrawn all as a lump sum once they have met a condition of release. 

The T Legal © SMSF trust deed allows for these authorisations.

If the SMSF member does not wish to withdraw all their superannuation at certain times, they may delegate their powers as member to another person who may sign the withdrawal of superannuation documents on behalf of the member for the SMSF trustee then to action.

The recipient of the power may also hold an enduring power of attorney for the SMSF member allowing them to replace the member as director of the corporate trustee where required (e.g. for a sole member SMSF they may appoint themselves under Corporations Act 2001 section 201F(2)).

Service: 

T Legal provides expert review of the current SMSF trust deed as part of preparation of your SMSF withdrawal authority documentation required to maintain compliance with your SMSF trust deed. 

If the current SMSF trust deed is found to be deficient, an SMSF deed update may be purchased to be signed first for an affordable fixed price.

Contact T Legal on the number / email below or submit a response to the SMSF withdrawal authority online order form 

Scenario: 

This product is designed for this scenario:

• Past payments / distributions made from SMSF

• Recipient was past preservation age at the time

• Those payments / distributions from SMSF were not recorded on transaction statements as a lump sum

• Preparing SMSF financial statements (in progress)

• Auditor has confirmed that placing TRIS documents with commencement date before the first payment will be accepted as SMSF compliant pension commencement

Issue - Potential Early Withdrawal of Super: 

Your client may have received distributions from their SMSF for which they were not yet eligible to receive (e.g. they had not yet retired) and cannot pay back into the SMSF (e.g. for cashflow or risk of the return of funds being deemed a contribution). 

Compliant transition to retirement income stream (TRIS) documentation (that may be confirmatory) is one method to seek to evidence that those payments were made under a compliant superannuation income stream that commenced after the member reached their preservation age (but had not yet retired). 

Technical Notes: 

A TRIS allows an SMSF member to access their superannuation after their preservation age before retiring, subject to a maximum withdrawal per year.

The ATO in its finalised Taxation Ruling TR 2013/5 notes that the commencement date of a superannuation income stream must be agreed by the trustee and the member (i.e. by a compliant drafted Transition to Retirement Income Stream Deed) in accordance with the SMSF trust deed.

The ATO also states that a ‘superannuation income stream’ refers to the complying agreement / deed itself between the SMSF and its member and not to each actual payment made from the SMSF accounts. 

Compliant pension documentation is one method that will set out the requirements for the pension to be evidenced as a compliant superannuation income stream.

The ATO has stated in its Trustee Resolutions Checklist QC 25912 that it would accept written records of a resolution signed after the fact if actual evidence exists that the actual transaction took place previously (e.g. by transaction receipts). 

However the ATO has also stated that a pension's commencement date cannot precede the member's request or application for the pension. In some cases even if the SMSF may not have a formal application process, the member is still required to have requested the pension and agreed to its terms before its commencement. 

Confirmatory TRIS documentation, if not precluded under the SMSF governing rules, may seek to confirm that the TRIS arrangement had commenced at an earlier date, but the ATO has not provided any ruling on how far after the purported commencement that TRIS documentation could reasonably be signed.

Service: 

T Legal provides expert review of the current SMSF trust deed as part of preparation of your transition to retirement income stream documentation required to maintain compliance with superannuation income stream requirements. 

If the current SMSF trust deed is found to be deficient, an SMSF deed update (including as standard an investment strategy template allowing for the confirmatory TRIS) may be purchased to be signed first for an affordable fixed price.

Contact T Legal on the number / email below or submit a response to the TRIS online order form