Running a self-managed super fund (SMSF) comes with many different roles, responsibilities and administrative requirements to ensure compliance in the fund. One of the first things you will need to arrange when setting up an SMSF is a trust deed. In this article, we will run through some general information about what an SMSF trust deed is and how you may choose to get one suitable for your needs.
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A trust deed for SMSFs is an important legal document that outlines how the SMSF operates and how the fund is set up. In conjunction with Australian super laws, the trust deed outlines the fund’s operational rules, details the responsibilities of the trustees, and dictates what the members of the fund are entitled to.
The requirement for a trust deed comes back to the SMSFs legal structure. An SMSF has to be set up as a trust, and this is because a company or individual trustee holds the fund’s assets in trust for the beneficiaries. A self-managed super fund is a particular type of trust that’s sole purpose is to provide retirement benefits to the fund’s members when they retire. So the fund can receive all the special tax benefits that a super fund receives, the fund must be set up in the right way and maintain compliance at all times. The Australian Tax Office oversees SMSFs ensure they are compliant with the superannuation legislation. Non-complying SMSFs may incur penalties, so it’s best to take the fund’s compliance seriously.
The fund’s trust deed is a multiple page legal document and would generally include the following information:
While it’s possible to get self-managed superannuation fund trust deed templates online, this really depends on the complexity of your SMSF, structure type and investment strategy. The more complex the fund is, the more likely you are to need the oversight of a financial professional. Getting assistance will ensure the fund is compliant with super laws and legislation. It’s a good idea to involve all trustees, directors or members in the trust deed set-up process to ensure everyone has a clear understanding of how the SMSF will be managed from the beginning.
The following financial professionals can assist you in the set up of your SMSF trust deed:
An SMSF trust deed should be reviewed at least once every year to ensure it’s up to date with any changes to superannuation legislation and any changes to the fund’s members. A good example of the importance of reviewing your SMSF trust deed is the changes in the transfer balance cap, which was introduced in July 2017. The cap is the total amount that can be transferred to any eligible member’s pension account tax-free and is currently $1.7 million in 2022, up from $1.6 million prior to the 1st of July 2021.
Another example is the before tax (concessional) and after-tax (non-concessional) caps on super contributions that are indexed each year. Changes to these caps impact the maximum amount that SMSF members can contribute to their SMSF each year. The annual concessional contributions cap increased from $25,000 to $27,500 on July 1st 2021, as did the non-concessional cap from $100,000 to $110,000.
Any changes or deeds of variation to your SMSF trust deed should always be handled by experienced financial professionals to ensure the fund is compliant. Costs generally vary depending on the nature of the update and how extensive it is.
If any minor updates need to be made to cover things like grammatical or spelling errors of a member’s name, for example, a deed of variation can be used for this purpose. This is much more cost-effective than drafting and updating the trust deed itself. Any changes via a deed of variation need to be prepared and signed by all trustees/directors and attached to the SMSF trust deed.General Advice Warning
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