ATO, Documentation

No part for ATO in deed changes

ATO SMSF trust deeds

SMSF trust deeds stipulating any that change to them requires ATO approval cannot satisfy this condition as the regulator has no authority in this area,

The ATO has confirmed it has no authority to approve a change to a SMSF trust deed, making documents containing this provision problematic, a law firm partner has said.

Cooper Grace Ward partner Clinton Jackson revealed during a plenary session at the SMSF Association Technical Day 2020 held last week that clarification on this issue was sought as a result of the legal firm witnessing a few fund trust deeds containing a provision that any variations to it would only be valid if they received ATO consent.

“We’ve written to the tax office and … they’ve helped guide us in terms of what they would be prepared to do. But the ATO have said that they don’t actually have the power under their authorisations from government to give consent to those types of documents,” Jackson noted.

He said trust deeds containing this clause face great complications if valid changes are to be made to them.

“The only thing that we could do for clients in those circumstances would be to take a very expensive application to court where we would have to join the ATO in those proceedings in order to be able to vary the deed,” he said.

“Often it’s simpler to set up a new fund and roll [the member’s benefits] over [to it].”

Fellow presenter Cooper Grace Ward partner Scott Hay-Bartlem pointed out these types of deeds were drafted in the 1980s and the inability to make any valid changes to them creates a serious issue for their associated SMSFs.

“So every variation since has not been valid, including the SIS (Superannuation Industry (Supervision)) [Act] ones,” Hay-Bartlem said.

“So [the fund] can’t start pensions, can’t pay death benefits.”

Without the ability to take these actions, Jackson questioned whether the SMSFs affected by these types of trust deeds are actually complying funds.

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