Corporate SMSF trustees not running their fund via special purpose trust will have to formally declare they are not a disqualified person on an annual basis following recent changes to insolvency laws.
Heffron SMSF technical and education services director Leigh Mansell said changes to the insolvency framework within the Corporations Act, which in turn led to changes to the Superannuation Industry (Supervision) (SIS) Act, have had a number of flow-on effects for SMSFs who ran their fund via a company structure under which a business also operated.
Mansell noted under the changes, which apply from 8 December 2021, the corporate trustees of a superannuation entity – including an SMSF – could be disqualified from managing a superannuation entity when a restructuring practitioner was appointed in an insolvency event.
“There will be a number of things to watch out for whenever you lodge forms with the ATO and some disclosures or declarations that need to be made by the trustee,” Mansell said during a recent webinar.
“One of the things we understand will happen is the ATO will update its forms and there will be an additional declaration question which needs to be answered stating this [appointment of a restructuring practitioner] has not happened to the corporate trustee of the fund.
“One of the other things to watch for is whenever a new trustee is being appointed, there’s a requirement in the super law to have a ‘consent to act’ document prepared where the trustee agrees to be the trustee of the fund.
“You can’t do that if you’re a disqualified person so run through your documents with your supplier to make sure you have got that extra one line which confirms someone is not a disqualified person in your documents.”
Mansell pointed out a similar declaration will also need to appear in year-end documents created by the same person who completed the accounts for the corporate SMSF.
“Often we find accountants in the year end minutes will have some sort of commentary where the trustees are signing off on the financials and also confirming they are not disqualified people.
“So make sure that wherever you have got that declaration, whatever has been worded in there, has the expanded definition of corporate trustee from the SIS Act. It’s only a single line but we’ve just got a different definition of disqualified trustees when dealing with corporate trustees.”
